Article Archive - Dr. Arndt Eversberg

Access: The effective funding request

For both the plaintiff and his or her attorney, the question naturally arises as to what and in what form one must provide information, evaluations and documents to a litigation funder. But first, let's take a step back.

In the first place, it should be clarified whether a claim is suitable for litigation funding and whether a litigation financier is interested in it. After an initial selection of funders (see the blog "Which Litigation Funder?"), it is recommended that you pick up the phone and call the funder. Describe your case to the lawyer responsible for the legal area and you will get a first statement about it. By this you will avoid unnecessary work and the frustration of a standard rejection. The person there will also tell you what documents they would like from you and in what form.

Basically, the following applies: The litigation funder needs all the information that is important to get a full picture on the claim. This also includes the history of the claim, i.e. from which facts of life does it result and what has already happened in the past. Do not withhold any information relevant to the evaluation of the claim or provide it "in bits and pieces". This complicates the assessment and prolongs it unnecessarily.

In a first step, the company receives a draft of the claim with the essential attachments or a lawyer's opinion on the prospects of success and the risks. Invoice receipts and similar documentation are not to be sent, especially when they are extensive. What is important, however, is the complete preliminary correspondence with the opponent, legal and technical expert opinions (without attachments), preliminary court decisions (e.g. on legal aid) as well as information on the amount of damages and - if available - on the financial standing of the debtor.

Furthermore, the litigation financier will ask questions and, if necessary, request further documents. Remember: a litigation funder is not a legal protection insurance, but a financier who wants to be convinced of the chances of success of your claim.

I advise you to ask not only one funder, but at least two or three. Let the companies know this and ensure exclusivity (if requested) only for a limited period of time (weeks, not months) and only if the financier invests money himself for the purpose of verification, e.g. in an external expert opinion. Agree on deadlines by when you will receive initial feedback and by when you expect a decision.

I will be happy to support you in compiling the documents and correspondence with the reviewing company(ies).

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Article - 02/03/2023

Important: Which litigation funder?

Effective enforcement of one's own claim requires the right litigation financier. But how do you find one?

The easiest way today – as in almost all situations – is via Google. The search engine then offers, in addition to advertisements, the Wikipedia entry (not suitable), a platform where one can set one's claim (unnecessary) and an overview of the lawyers' association that is quite current as of May 2022. The subdivision of the 18 companies listed there is only helpful to a limited extent, but at least you can easily get to the corresponding company pages via the links there.

Obviously, not every company will fund every claim. Litigation funders can be categorized as follows:

1. International financiers

Claims below higher values in the millions are not wanted here, those with an international connection are better off with smaller litigation financiers. This is especially true if the debtor is located abroad and a judgment has to be enforced outside Germany (Europe). Financiers for this would be e.g. Omni Bridgeway (Amsterdam/Cologne), Deminor (Brussels/Hamburg) and Nivalion (Zurich/Frankfurt).

2. National financiers

The two established financiers FORIS AG (Bonn) and Legial AG (Munich) basically finance all types of claims, which should, however, also amount to at least several hundred thousand euros. The websites provide information on the legal areas in which the companies focus (Legial: including insolvency law, FORIS: including inheritance law).

3. Special financiers

Some companies, often Legal Techs, specialize in niches, such as Erbteilung GmbH (Weilheim), which finances heirs who want to realize their share of inheritance from communities of heirs. Legal Techs usually run campaigns in which they bundle a large number of similar claims (diesel, flight delays, online casinos, fitness clubs, etc.). You can always find them by doing a Google search under the relevant keyword. A comparison of conditions is worthwhile here. In some cases, the claimant's claim is financed by the company itself; in others, the claimant's claim is purchased (RightNow GmbH, Düsseldorf).

4. Arbitration

Arbitration proceedings are a special field in which only a few litigation funders really know their way around and have the necessary financial resources. For Germany/Europe, for example, Omni Bridgeway (Cologne), for the rest of the world, in addition to Omni Bridgeway, Burford Capital (London/Zurich) and Habour Litigation Funding (London) should be mentioned.

Alternatively, you can contact me at any time and I will be happy to help you select the appropriate litigation funder.

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Article - 11/25/2022

Intro: Basic information on the "claim"

Soon, litigation funding will have existed in Germany for a quarter of a century.

What happened to the original idea of giving everyone access to justice? Where does litigation financing stand today? Has it already passed its zenith or is it currently transforming legal claims into a tradable financial product on a grand scale?

I would like to answer these and other exciting questions in this blog. But also purely practical questions: how do I find the right financier or is my claim - my client's claim - suitable for litigation financing at all?

Let's start with this important question: which claims are suitable for litigation funding?

The answer is initially simple: it must be a payment claim with a certain value, the legal enforcement of which appears to be predominantly successful and which can be serviced, i.e. paid, by the debtor in the event of victory.

(A) Payment claim:

A distinction must be made here between individual and mass claims. Whereas until a few years ago a minimum value of EUR 100,000 applied to an individual claim, this is no longer the case today. Claims in the lower hundreds of thousands rarely find a financier anymore. They look for claims with a value in the millions to make the effort and return worthwhile.

Mass claims are different. Here, a few months' dues from the fitness club are enough, provided they can be bundled with a large number of claims that are as similar as possible to form a large claim amount.

(B) Predominant probability of success:

A criterion that is judged differently from financier to financier (as well as from lawyer to lawyer). 51% to 49% is certainly not sufficient. If one arrives at a probability of success of more than two-thirds, taking into account many criteria (more on this in a later article), it can become interesting for a litigation financier. It is important to know that it is not so much a question of winning or losing 100%, but rather a question of what proportion of the raised claim can be realized as a result. From a financial point of view, the realistically achievable share should be ten times the probable costs or, in other words, 3 to 4 times the investment of the litigation financier as its return. More on these calculations in a later block article.

(C) Creditworthiness of the debtor:

Winning in court is only fun if you get the profit afterwards. It is not always the case that the defendant has something left at the end or that it is clear at the beginning how much is available to service a judgment. See the Wirecard case: the claims made there far exceed the capital still available in the insolvency and the coverage provided by liability and D&O insurance. Nevertheless, there seems to be so much there that lawsuits are worthwhile and they are also litigation-financed.

One will see...