Winand Emons (University of Bern - Institute of Economics; Centre for Economic Policy Research (CEPR)) & Francesco Parisi (University of Minnesota - Law School; University of Bologna; University of Miami, School of Law) has posted The Economics of Litigation Financing on SSRN. Here is the abstract:
Third-party litigation financing involves an external party funding a legal claim, taking on the risk of loss in exchange for a share of any potential recovery. As European regulators prepare to establish a common regulatory framework for third-party litigation financing, this article draws on existing law and economics literature to examine the unique characteristics of third-party litigation financing, vis-a-vis other forms of financial support of litigation. Our findings highlight the strengths and weaknesses of different litigation-financing mechanisms in promoting socially desirable levels.
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