Every year, more than one million civil lawsuits are filed in Germany. Many of them fail not because the legal claim lacks merit, but because the claimant cannot afford to pursue it. In practice, the party with the stronger legal team and the financial endurance often prevails, not necessarily the one who is right. Litigation funding changes this dynamic.
An independent litigation funder covers the claimant’s legal fees and court costs in full, assumes the financial risk of losing the case, and, if the claim succeeds, receives a contractually agreed share of the proceeds. However, not every case qualifies. Litigation funders assess opportunities much like investors. They carefully evaluate both the legal merits and the economic viability before deciding whether to provide funding.
At a Glance
- Most litigation funders require a minimum claim value of €100,000. Insolvency proceedings are an exception, with some funders accepting claims from €50,000 onward.
- The probability of success generally needs to be at least 60 to 70 percent. Cases with a roughly equal chance of winning and losing are typically rejected by all funders.
- The defendant must be financially solvent. Even a strong legal claim will not be funded if there is no realistic prospect of enforcing a judgment.
- Claimants who receive funding usually pay the funder 20 to 40 percent of the recovered amount if the case is successful. In return, they bear no financial risk if the claim is unsuccessful.
- Defensive litigation, cases where the claimant is only defending against a claim, and disputes without a direct monetary value are generally not eligible for litigation funding.
1. What Is Litigation Funding?
Litigation funding allows claimants to pursue legal claims without having to bear the financial risks associated with legal proceedings. A third party funder covers all costs of a civil lawsuit or arbitration. This typically includes court fees, legal fees, expert witness costs, and, if the case is unsuccessful, any legal costs that may be awarded to the opposing party.
If the case is successful, the litigation funder receives a pre agreed share of the recovered amount. This success fee typically ranges from 20 to 40 percent of the proceeds.
If the claim is unsuccessful, the funder absorbs the financial loss. For the claimant, this means that no personal funds are required to finance the legal dispute.
The European litigation funding market continues to grow. According to Custom Market Insights, investments are expected to increase from USD 3.3 billion to USD 7.6 billion by 2032. A comprehensive overview of how litigation funding works and how funded cases are structured can be found in AEQUIFIN’s complete guide to litigation funding.
2. The Four Key Requirements for Litigation Funding Approval
Litigation funders do not make decisions based on goodwill. Their assessment process is structured, commercially driven, and highly selective. Claimants who meet the following four criteria have a realistic chance of securing funding.
1. A Claim Value of Generally at Least €100,000
Most traditional litigation funders require a minimum claim value of approximately €100,000. The reason is primarily economic. The costs of evaluating a case, conducting legal due diligence, assuming the litigation risk, and committing capital over an extended period must be justified by the potential success fee.
For lower value claims, funding is often not economically viable for institutional funders, even when the legal prospects appear strong.
Platform based models such as AEQUIFIN offer a more flexible approach. Because multiple investors can jointly finance a single case, claims can be assessed individually, making alternative funding thresholds possible.
2. A Probability of Success of at Least 60 to 70 Percent
“As one litigation funder put it in an interview with Legal Tribune Online, ‘If the chances are only fifty fifty, we might as well go to the casino.'” This statement captures the industry’s underlying logic. A marginal chance of success is generally not sufficient. Litigation funders typically require a well supported assessment indicating a probability of success of around 60 to 70 percent or higher before agreeing to finance a case.
The evaluation is based on several factors, including the legal merits of the claim, the quality and completeness of the available evidence, case law from comparable disputes, and the likely assessment of the competent court. Increasingly, funders also use AI supported analysis to evaluate historical litigation data and identify patterns relevant to the case.
Even a legally valid claim may be rejected if the available evidence is not sufficiently convincing. For litigation funders, the decisive question is not only whether a claim exists, but whether it can realistically be enforced successfully.
3. A Solvent and Enforceable Defendant
Winning a lawsuit does not automatically result in payment. A legal victory only creates economic value if the judgment can actually be enforced. If the defendant is insolvent, has no recoverable assets, or cannot realistically be subjected to enforcement proceedings, even a strong legal claim may have little practical value.
For this reason, assessing the defendant’s financial position is an essential part of the funding process. Litigation funders typically review the creditworthiness of companies by examining financial statements, commercial register records, and external credit reports. In cases involving individuals, available information about assets and financial circumstances is assessed to determine whether a successful judgment is likely to be collectible.
This is one of the most underestimated reasons why funding applications are rejected. In many cases, the issue is not the legal strength of the claim, but the absence of recoverable assets on the defendant’s side.
4. A Direct Monetary Claim
Litigation funding is based on the funder’s right to receive a percentage of the amount recovered if the case succeeds. Claims that do not involve a direct financial recovery generally do not provide a basis for this success based compensation. This includes, for example, injunctions, declaratory actions without a claim for damages, or disputes over ownership where no monetary award is expected.
As a result, these types of cases are generally not eligible for litigation funding.
3. Who Is Not Eligible for Litigation Funding? The Key Exclusion Criteria
The rejection rate in litigation funding is relatively high. A significant number of applications are declined after careful review. However, the reason is not always that the legal claim lacks merit. In many cases, the decisive factor is the commercial assessment of the case.
A claim may be legally valid and still fall outside a funder’s investment criteria. This can happen when the expected litigation costs, the anticipated duration of the proceedings, or the potential success fee are not considered proportionate to the overall investment required.
| Exclusion Criterion | Why Funding Is Not Available | Alternative |
|---|---|---|
| Claim value below €50,000 | The costs of evaluating the case exceed the potential return | Legal expenses insurance, legal aid |
| Probability of success below 60 percent | The litigation risk is considered too high for the funder | Out of court settlement, mediation |
| Insolvent or judgment proof defendant | Enforcement may not be realistically possible | Assignment of the claim |
| Unresolved legal issues without precedent | No reliable assessment of the likely outcome is possible | Self funded test case |
| Defensive proceedings or cases involving only a legal defense | There is no monetary claim on which a success based funding model can be based | Legal expenses insurance |
| Claims without a direct monetary value | There is no viable commercial return model for the funder | Individual legal advice |
An overview of the available funding models and alternatives can be found on the litigation funding options page.
4. Which Types of Cases Are Typically Eligible?
Certain areas of law are structurally better suited to litigation funding than others. This is usually due to higher claim values, strong documentary evidence, and financially solvent defendants.
Corporate and Commercial Law: Shareholder disputes, claims against directors and officers for breaches of fiduciary duty, and disputes between shareholders or business partners. These cases often involve substantial claim values, extensive documentation, and financially viable defendants.
Investment and Securities Litigation: Claims arising from investment misrepresentation, prospectus liability, financial misconduct, or cryptocurrency fraud. Investors with claims in the six figure range represent one of the most common categories of funded cases. Learn more in AEQUIFIN’s guide to litigation funding for investors.
Insolvency and Creditor Claims: Creditors seeking to enforce substantial claims in insolvency proceedings or pursue avoidance actions. Some insolvency focused litigation funders consider cases with claim values starting at €50,000.
Inheritance and Estate Disputes: Claims for forced heirship rights, will contests, and disputes involving high value estates. Funding is generally available only where the estate value exceeds the minimum claim threshold and sufficient assets are available for enforcement.
International Arbitration: Commercial disputes conducted under the rules of institutions such as the ICC, DIS, or LCIA frequently involve very high claim values and are among the most commonly funded proceedings worldwide.
The AEQUIFIN GKG and RVG Cost Table 2026 provides an overview of the typical legal costs associated with these types of proceedings.
IN JUST 5 MINUTES:
In just 5 minutes: Become a sponsor – Your entry into attractive litigation financing opportunities
1
Register as a sponsor
2
Select a case
3
Set the bid amount and quota
4
Provide PayPal or credit card details
5
Participate in the litigation proceeds
5. How Much Does Litigation Funding Cost and Who Pays the Costs?
The cost structure of litigation funding is straightforward. The claimant is not required to pay any upfront costs and assumes no financial risk in pursuing the case. The litigation funder covers all expenses associated with the proceedings, including legal fees, court costs, expert witness fees, and any other necessary litigation expenses.
If the case is successful, the funder receives a contractually agreed share of the recovered amount. This success fee typically ranges from 20 to 40 percent of the proceeds, depending on factors such as the claim value, the expected duration of the proceedings, and the overall risk profile of the case.
For example, if a claim results in a recovery of €500,000 and the agreed success fee is 30 percent, the litigation funder receives €150,000. The claimant retains €350,000 without having invested any personal funds or assumed any financial risk throughout the proceedings.
If the case is unsuccessful, the litigation funder bears the litigation costs in full. The claimant is not required to reimburse the funder or make any additional payments after the proceedings have concluded.
Advantages and Disadvantages: A Balanced Assessment
Advantages of Litigation Funding
- The claimant assumes no financial risk. If the case is unsuccessful, the loss is borne entirely by the litigation funder.
- It provides access to high quality legal representation regardless of the claimant’s financial resources.
- The funder’s due diligence offers an independent and professional assessment of the claim’s likelihood of success.
- It protects claimants from well funded opponents who attempt to prevail by prolonging proceedings or increasing litigation costs.
Potential Drawbacks
- The success fee, typically between 20 and 40 percent of the recovered amount, can significantly reduce the claimant’s net recovery.
- The claimant may have to share certain strategic decisions, including settlement discussions and aspects of the litigation strategy, with the funder.
- Claims below the minimum claim value or cases with insufficient evidence generally do not qualify for funding.
The most relevant comparison is not litigation funding versus self funded litigation. It is litigation funding versus not pursuing the claim at all because the necessary financial resources are unavailable. Viewed from that perspective, many claimants reach a very different conclusion.
Three Questions to Ask Before Applying for Litigation Funding
Before contacting a litigation funder, it is worth answering three basic questions. They provide a realistic first indication of whether a case is likely to qualify for funding and address some of the most common reasons why applications are declined.
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Is the Claim Value Above €100,000?
If the claim value is lower, traditional litigation funding is often not available. In these situations, alternatives such as legal expenses insurance, legal aid, or, in the case of clear and uncontested monetary claims, summary payment proceedings may be more appropriate.
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Can the Claim Be Supported with Clear Evidence?
Contracts, invoices, correspondence, expert reports, and other supporting documents play a crucial role in the assessment of a case. The more complete and persuasive the documentation, the easier it is to evaluate the likelihood of success. Even a legally valid claim is unlikely to receive funding if there is insufficient evidence to support it.
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Is the Defendant Financially Able to Pay?
A favorable judgment only has practical value if it can be successfully enforced. For this reason, the defendant’s financial position should be considered before submitting a funding application. A solvent defendant with recoverable assets significantly increases the likelihood that a funded claim can ultimately be collected.
Claimants who can answer yes to all three questions generally have a strong foundation for a positive assessment by a litigation funder.
6. How the Review Process Works at AEQUIFIN
AEQUIFIN evaluates funding applications through a structured process at no upfront cost to the applicant.
Submission
All relevant documents are uploaded securely through the platform. Cases can be submitted directly via the funding application form.
Initial Review
AEQUIFIN conducts a preliminary assessment to determine whether the case meets the core funding requirements. Applicants typically receive an initial response within a few business days.
Due Diligence
If the initial review is positive, the case undergoes a more detailed evaluation. This includes an assessment of the likelihood of success, the claim value, the defendant’s financial position, the litigation risks, and the expected duration of the proceedings.
Funding Offer
If the case satisfies AEQUIFIN’s investment criteria, the applicant receives a formal funding offer setting out the agreed success fee and the key terms of the funding arrangement.
Funding Begins
Once the agreement has been signed, AEQUIFIN assumes responsibility for all litigation related costs throughout the proceedings.
An overview of currently funded cases is available in the AEQUIFIN Case Overview.
