The history of third-party litigation funding as an institutional market begins, depending on where you draw the line, in Australia in the mid-1990s or in England and Wales in the early 2000s. Both jurisdictions share a common law tradition, an adversarial legal system and, after some initial uncertainty about the boundaries of maintenance and champerty, a legal environment that became broadly permissive of third-party funding arrangements.
By the early 2010s, litigation funding in England was a recognised commercial product with established funders, a developing body of case law, and growing awareness among large law firms and their corporate clients that external funding was a viable tool for managing litigation risk and working capital. The Association of Litigation Funders published its voluntary code of conduct in 2011. The UK Civil Justice Council's working group reported the same year. The market had, in effect, normalised.
Continental Europe was, at the same point, still working out whether third-party litigation funding was permissible at all.
Why the Gap Opened
The divergence was not purely about legal culture, though that played a role. Civil law jurisdictions in continental Europe approached litigation costs and fee structures differently from common law systems. Success fees and contingency arrangements were historically restricted or prohibited in several European jurisdictions, limiting the development of a commercial ecosystem between funders and law firms.
There were also structural differences in how litigation was conducted. Continental European proceedings, particularly in the Netherlands, Germany, and Belgium, tended to involve lower overall costs than English High Court or commercial arbitration proceedings, which reduced the economic case for external funding on individual matters below a certain size.
The absence of developed collective action mechanisms in most European jurisdictions until relatively recently also constrained the market. The economies of scale that make large-scale litigation funding commercially viable, spreading fixed costs over a large affected class, were simply not available in the same form as in Australian securities class actions or English group litigation orders.
What Changed
Several developments between roughly 2015 and 2022 materially altered the conditions for litigation funding in continental Europe.
The EU Damages Directive, adopted in 2014 and implemented across Member States by 2016, created a standardised framework for private enforcement of competition law. Follow-on damages claims became structurally more viable across Europe, and the Netherlands in particular saw a significant increase in the number and scale of such proceedings.
The WAMCA procedure, which came into force in the Netherlands on 1 January 2020, added collective damages actions to the Dutch legal toolkit for the first time, creating a mechanism through which large claimant groups could pursue a single funded action rather than fragmented individual proceedings. The practical significance of that development has become clearer with each successive year of WAMCA filings.
The Representative Actions Directive, adopted in 2020 and requiring implementation by Member States by June 2023, extended a baseline collective redress framework across the broader EU for consumer claims. Several Member States have since implemented frameworks that go beyond the Directive's minimum requirements, and the developing jurisprudence across European jurisdictions is gradually creating more predictable conditions for collective action funders.
Regulatory attitudes to third-party funding have also evolved. The European Parliament's 2022 report on responsible private funding of litigation brought the market into mainstream policy discussion. The European Law Institute published its Principles Governing the Third Party Funding of Litigation in 2023, providing a soft-law framework that has influenced how funders and courts in civil law jurisdictions approach disclosure, conflicts of interest, and funder conduct. That visibility has accelerated awareness among corporate legal departments who previously had limited exposure to litigation finance as a product.
Where the Market Stands in 2025
The European litigation funding market remains significantly smaller than the UK market in absolute terms. But the directional change is clear and the structural drivers behind it are durable.
The Netherlands continues to attract pan-European competition and securities claims, with the Amsterdam courts and the Netherlands Commercial Court handling matters of genuine scale and complexity. Belgium and Luxembourg are developing as venues for cross-border commercial and investment disputes. International arbitration seated in European jurisdictions, including in Amsterdam, Paris, and Geneva, creates continuing demand for funded proceedings where costs are significant and duration is long.
The law firm market has also shifted. A generation of disputes partners across the Benelux region are now familiar with litigation funding and discuss it actively with clients at the outset of a matter rather than as a last resort. That familiarity shortens the time between a client identifying a potential claim and a funder completing an initial assessment.
The regulatory conversation at EU level is ongoing. Proposals for a binding EU litigation funding regulation have been discussed, and the direction of travel points towards greater transparency requirements and potentially some form of funder registration or authorisation in certain jurisdictions. How that framework develops will shape the market over the next five years, but it is unlikely to reverse the fundamental commercial logic that has driven growth to this point.
The gap between the UK and continental Europe on litigation finance is real. It is also closing, and the conditions that will sustain that convergence are firmly in place.
← Insights