PROFIT FROM JUSTICE: COMPARATIVE LEGAL AND REGULATORY APPROACHES TO THIRD-PARTY LITIGATION FINANCING

Third-party litigation funding (TPLF) consists of the practice where an independent third party offers financial support to a claimant in order to cover his litigation expenses, in return for a share of damages if the claim is successful, or nothing if the case is lost. TPLF is subject to apparently very different legal and regulatory regimes in the common law and civil law world, respectively. While in the common law ancient doctrines may apply and prohibit TPLF, in the civil law this practice is unregulated. However, while TPLF has been rapidly developing in the common law world, in the civil law world its existence is very limited. On both sides of the Ocean, a heated debate is dividing supporters and critics of TPLF, regarding its legality and desirability. This work uses the tools of comparative law in order to address two key questions: (i) should TPLF be permitted?; and, if so, (ii) should it be regulated? First, the dissertation reviews the law of TPLF in both the common law and civil law worlds. In particular, a comparative analysis of the law governing TPLF, carried out through an observation of the interplay of different legal formants, leads to the conclusion that both traditions share common problems and similar operative rules. Second, the comparative analysis also explains the counterintuitive fact that TPLF is more developed in the common law than in the civil law world. In particular, the reasons for this state of facts may be found in the context in which TPLF operates, including both structural features and cultural characteristics (cryptotypes) of the two legal traditions. Thereafter, the work analyzes the political debate that stands behind the evolution of the law of TPLF, identifying the key actors involved and the real driving forces that steer the law in the area. The last chapter lifts the veil on the political debate on TPLF, using economic and sociological analysis in order to test the main policy arguments raised in favor and against this practice, and reveal which are genuine policy arguments and which are false rhetoric narratives. The work comes to the conclusion that TPLF should be permitted, as a further liberalization of TPLF would be socially beneficial, while some form of regulation may be appropriate in order to ensure the proper functioning of the industry. Finally, challenging the common perception that litigation funding stands in a competitive relationship with justice, this work argues that TPLF makes it possible to ‘profit from justice.’