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Litigation funding boosts access to justice

Access to justice is often limited by various factors. The lack of financial resources to undertake litigation, especially when the defendant is a State or a large economic corporation, is one of the main reasons why access to justice can become an impossible act for ordinary citizens.

In recent years, solutions have emerged to address these limitations.through third-party financing called litigation funds. This practice has spread in the United States and some European countries such as England, Germany and more recently Spain.

No doubt the injection of resources to cover legal expenses is, above all and in the first instance, a support to the access to justice. These litigation funds are specifically investment groups specialized in providing financing for various legal proceedings, especially in international arbitration and commercial litigation.

Third-party financing of international arbitration

To obtain funding, the case must first be presented to any of the litigation funds. available and it will be up to them to decide whether or not to participate as an investment organization.

This decision will be evaluated taking into account the scope of the case.The amount of the investment, the estimated time of the legal proceeding, among other factors. The acceptance of a contract for the financing of all the legal costs of a case involves a previous in-depth study of the factors involved in the process, the claims of the financed party.

Third-party financing of international arbitrationalso known as Third Party Funding, is "Third Party Funding".qualified as an investment of claims, where claims are examined and treated as tangible assets subject to valuation".according to the text "Third-party financing in international arbitration", by Enrique Fernández Masiá.

A fundamental aspect to characterize these funds is that they have no interest per se in the substantive aspects of the arbitration, but rather invest with the intention of achieving some percentage gain at the close of the case.

Even though the case must meet specific qualities The fact that the funds decided to finance it, it is clear that it represents a possibility to do justice even if the required economic strength is not available. Having made the prior analysis of the legal process and having accepted it also means that the case has a high probability of being resolved in court, since the financial company is betting on it.

The risks of third-party financing

Likewise, this option has also entailed certain risks such as causing a considerable increase in litigation in the field of international arbitration, as an incentive to take greater risks to maximize the value of the investment portfolio, according to Enrique Fernández Masiá.

The possibility of conflicts of interest due to the presence of a third-party funderAnother of the disadvantages of this type of arbitration is that, for some, the relationship between the client and his lawyer may condition the decision making of the holder of the legal action.

In order to minimize the risks that the ".Third Party Funding".specialists have proposed the need to implement an express and clear regulation on this legal tool, bearing in mind the ethical problems and inconveniences that could arise in its implementation.

However, the emergence of this figure has boosted access to justice. in major international cases, in which the absence of financing would have made legal action and therefore the administration of justice impossible. The situation calls for an in-depth study of the scope and risks to the integrity of the legal processes, in order to deepen in the proper use of the so-called "legal aid". Third Party Funding.

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