Litigation funding in uncertain times


Litigation funding and arbitration in uncertain times. On April 28, the Spanish Council of Ministers approved the “Plan for the Transition towards a New Normality”, by which the process of gradual de-escalation of the extraordinary measures to restrict mobility and social contact adopted to deal with the expansion of Covid-19 begins. Fortunately, it seems that from the health perspective the worst is over.

However, we are aware that there is still a long way to go and that, from the economic perspective, the short-medium term outlook is not very encouraging. To the impact of Covid-19 we need to add the possible -for some already existing- global economic recession.

By substantially reducing their income, companies will need extra liquidity to be able to operate normally, and in many cases even to survive.

In the legal industry, this crisis will cause an unprecedented increase in litigation and a new wave of insolvency proceedings. Litigation to which many companies will not be able to dedicate as many resources as they would like, among other reasons because they will need to save their resources for other critical aspects of the operation and because of the possible budgetary constraints of in-house legal departments.

All of that will lead to a collapse in our courts, a further slowdown in serving justice, and some companies will be forced to give up pursuing well-founded claims and/or to accept unsatisfactory settlements.

Despite all this, from PLA we would like to give a message of calm and hope. Although the situation at a global level is beyond our control, it is in our hands to focus all our efforts on helping the business community to overcome the present situation in the best possible way, helping them to unblock their litigious assets, mitigate risks, eliminate costs and, in short, to alleviate the difficulties that we will encounter with the utmost professionalism, honesty and effectiveness.

In these difficult and uncertain times, we sincerely believe that litigation and arbitration funding can be part of the solution that companies need. If litigation funding has been shown to be so effective and positive in some countries around us, why not bet on it also in Spain? We would love to have the opportunity to help Spanish companies and do our bit. In fact, we are already doing it.

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