New Trends in Financing Civil Litigation in Europe

New Trends in Financing Civil Litigation in Europe

A Legal, Empirical, and Economic Analysis

New Horizons in Law and Economics series

Edited by Mark Tuil and Louis Visscher

This unique and timely book analyses the problem of financing civil litigation. The expert contributors discuss the legal possibilities and difficulties associated with several instruments – including cost shifting, fee arrangements, legal expense insurance and group litigation.

Chapter 3: No Cure, No Pay and Contingency Fees

Michael Faure, Fokke Fernhout and Niels Philipsen

Subjects: economics and finance, law and economics, law - academic, european law, law and economics


Michael Faure, Fokke Fernhout and Niels Philipsen 1. INTRODUCTION In many European countries lawyers are prohibited in one way or another from charging fees on the basis of the outcome of the case. Such prohibitions can be found in statutes as well as in codes of conduct of law societies and comparable organizations. These prohibitions are mostly rooted in a firm belief that lawyers – especially lawyers who represent their clients in litigation, like solicitors and barristers – can only maintain their independence and can only serve justice if their private interests are not in any way affected by the outcome of a case (Faure, Fernhout and Philipsen 2009, p. 19). However, recent developments show that conflicting points of view are adopted by those responsible for policy in matters with European implications. On the one hand, the object of attaining free competition and free movement of services is responsible for an impulse towards abolishing all restrictions on lawyers’ fees, as was reflected in 2004 in the Report on Competition in Professional Services issued by the European Commission (COM 2004, 83, 9 February 2004).1 Apparently, according to the European Commission, lawyers’ fees should be liberalized and unimpeded by state and professional regulations. On the other hand, the Council of the Bars and Law Societies of the European Union (CCBE) still requires its member organizations to proscribe the ‘quota pars litis’ agreement and has its doubts about ‘no win no fee’ agreements (for a precise definition of these terms see below). If these...

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