Abstract
Funding of mass litigation encounters severe problems in the German legal system. Traditionally, lawyers must not enter into contingency fee arrangements or provide litigation funding. Third party funding (TPF) is also of minor importance as case law prohibits consumer associations from using TPF. A growing number of debt collecting companies is operating on the market today. They offer enforcement of damages claims based on assignments and in exchange for a considerable success fee. The German Legal Services Act which restricts legal services provided by non-lawyers has turned out to be a real obstacle for this business model due to very strict interpretations by German courts. In 2021, the German legislature proposed a reform in order to allow contingency fees for lawyers in some cases and to provide a level playing field for professional debt collecting companies and lawyers.
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