11 Mar '24
The cost of bringing a class action can amount to several million euros. There are several options for funding a lawsuit, but these have limitations in collective actions. For instance, government-subsidised lawyers are not available for collective actions. The same applies to legal expenses insurers, who usually focus only on individual policyholders. Financing an own contribution from the injured parties is often not a viable option due to a lack of financial capacity, although some foundations - such as the Consumers' Association or Environmental Defence - can finance collective actions from membership fees.
Claim foundations have expressed that the available budget is limited, so they have to select in cases. There is therefore a strong need in the market for structural funding through a litigation funder. For the small number of WAMCA damages cases brought to court since 1 January 2020 - as mentioned, the majority of WAMCA cases involve cases other than those in which a monetary claim is central - it has been possible to obtain funding. This may be different in the future, given current developments, if case law shows that the relevant litigant or claim foundation cannot easily meet the admissibility criteria in the WAMCA, making it riskier for litigation funders to fund certain cases.[1]
Yet researchers from Erasmus University Rotterdam and Tilburg University conclude that the time is not yet ripe for a litigation fund. [2] This could be a fund filled with the proceeds from class actions or what remains of them. There are still too many uncertainties surrounding the WAMCA. For instance, it is not clear whether enough will be allocated to flow back into the fund. Also, the market around litigation funding is in full swing, while the market is still only marginally regulated.
We regularly work with companies, litigation funders and claim foundations in the field of mass claims and complex (international) proceedings. Want to know whether your case is eligible for funding? Sparring on what a funding agreement should look like? Or questions about the WAMCA or a complex procedure? Then contact Michel Jacobs and/or Suzanne Poutsma.
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