Are there any particular rules around funding litigation in our jurisdiction that General Counsel should be aware of?

Funding litigation does not have a wide-spread acceptance in the Netherlands, unlike many Anglo-Saxon jurisdictions. Therefore, although it is allowed, there are at the moment no specific legal requirements around funding litigation when it comes to the position of a company. Nevertheless, there is certainly a trend visible that shows that popularity is on the rise. Therefore, despite the lack of any legal provision, there are certain aspects of which a General Counsel should be aware of.

One of those aspects deals with the essential element of funding litigation, i.e. no-cure-no-pay. The General Counsel needs to be aware of the fact that Dutch attorneys, unlike the third party funder, are in general not allowed to offer their legal assistance on the basis of no-cure-no-pay. Therefore, litigation funding should cover a reasonable and cost-covering fee for the attorney. For the same reason, in most cases, a law firm may not offer litigation funding itself. Nevertheless, Dutch attorneys are allowed to agree on a result-fee, however, this will never be based on a percentage of the result!

The General Counsel should furthermore be aware that finding a third party prepared to finance large amounts of cases will likely not be an easy task, given the fact that it is yet fairly uncommon. In addition, the parties that do offer such financing, are currently fairly picky. However, there is a growing number of parties that see the gap in the market and intend to fill it over the course of the coming years.

Apart from this, it is also important to understand that litigation costs awarded by Dutch courts are generally fixed on a certain amount, which is in many cases substantially lower than the actual costs. This can affect the conditions of the funding and more specifically the percentage of the contingency fee.

On a concluding note, it can be said that although litigation funding is currently not common in the Netherlands, it is nevertheless working hard to make a strong case for itself. Given this development, it can be interesting for a General Counsel to consider funding litigation in the Netherlands. In doing so, he should take into account the previous point.