PLA publishes the First Survey on the Spanish Litigation Funding Industry (the “Survey“).
The Survey analyses the knowledge and experience that leading Spanish law firms and companies have of litigation funding through a survey of more than 100 professionals. The aim is to determine the current state of the practice in Spain and to monitor its development.
The profiles of the respondents are, among others, partners, counsel or senior associates of law firms and directors of legal counsel, in-house lawyers or financial officers of different companies and law firms, which has allowed us to obtain a cross-sectional view on the state of the litigation finance industry in Spain.
The survey shows that litigation funding is already permeating in Spain, although it still has a long way to go if we consider its use in other jurisdictions. A very high percentage of respondents have heard of litigation and arbitration funding (87%) and are interested in learning more about it (80%).
Interest in utilizing this new tool for boosting litigation assets is also confirmed. Seventy-four percent of respondents have a medium to high probability of using the services of litigation funds in the short to medium term.
This demand from companies and law firms highlights the need to promote alternative financing solutions in Spain, such as third-party funding, which efficiently channel the supply of funds to the Spanish productive network in order to make it more competitive.
The data provided by the Survey confirms the benefits of the practice of litigation funding. Respondents generally agree that litigation funds can help to professionalize justice (87% fully or partially agree) and that, in addition to financing the cost of litigation or arbitration, they can provide law firms and companies with other types of high value-added solutions (98% fully or partially agree).
Some critics of litigation funds argue that this practice leads to an increase in litigation. However, it shows that this assertion is far from reality. Their perception is due to a lack of knowledge of the industry. Debate in this regard is largely outdated.
In this regard, the average conversion rate in the industry does not exceed 3%. Litigation finance funds must follow a strict methodology in line with best market practices to put institutional investors’ money at stake in the framework of their investment policies.
You can download the complete Study here.