GERMANY Law and Practice Contributed by: Tanja Pfitzner, Fabian von Schlabrendorff and Niklas-Arne Hecht, Pfitzner Legal
tions on grounds of constitutional rights are, however, rarely granted. 1.3 Court Filings and Proceedings As a rule, the German Basic Law requires that court proceedings are open to the public. Restrictions and exceptions may apply – eg, to the protection of trade secrets, other secrets, the safety of a person or state interests. Court records are not public. While any third party may apply to the court for access to certain court files, such a request will be granted only if the applicant has a legitimate legal interest in inspecting the files. Judgments are only published in an edited and anony- mous form. 1.4 Legal Representation in Court Only attorneys admitted to the German bar can repre- sent a party before regional courts and higher regional courts. However, certain acts may be performed by the party itself at the court’s offices. Also, in cases where the Code of Civil Procedure does not require representation by lawyers, the parties may conduct the litigation themselves. With respect to the Fed- eral Court of Justice, in civil cases only lawyers who are admitted to the specialised Bar of this court may appear before it. Foreign lawyers can conduct cases in German courts if they have been admitted to the German Bar. Euro- pean lawyers can be admitted to the Bar as Estab- lished European Lawyers who are entitled to practice as attorneys in Germany under the professional title of their country of origin.
funder concludes the financing agreement with their client, and the client instructs an attorney so that the funder and attorney have no contractual relationship with each other. Except in the case of Representative Actions (see 2.2 Third-Party Funding: Lawsuits and 3.7 Representative or Collective Actions ), there is no obligation to disclose a funding arrangement in court. One particular variant of third-party funding, used pri- marily by legal technology companies such as online platforms and service providers that do not finance legal disputes in the conventional sense, involves having their customer’s claims assigned to them and then asserting them in court in their own name and at their own risk. In the event of success, the customers receive a certain percentage of the sum awarded. In 2023, the first distressed finance model litigation funding was publicised, in which a lawsuit for the reas- signment of company shares was financed, which, if successful, results in the litigation funder taking a share in the company. Such a model can also be applied, for example, to real estate. 2.2 Third-Party Funding: Lawsuits The Federal Court of Justice has classified the profit sharing of litigation funders in profit absorption actions as an abuse of law. Otherwise, there are currently no restrictions on third-party funding for individual actions. Therefore, in general, all types of lawsuits are available for third-party funding. However, there is a limitation to the Model Declaratory Action and the Redress Action (see 3.7 Representa- tive or Collective Actions ). This law allows third-party funding for these Representative Actions, but sets rather strict requirements. If the requirements are not met, the Representative Action will be dismissed. A third-party funder must not be a competitor of the defendant or in any way dependent on the defend- ant. In addition, the third-party funder’s share must not exceed 10% of the compensation awarded. The qualified entity plaintiff is obliged to disclose the origin of the funds to finance the Redress Action as well as any agreements with the third-party funder.
2. Litigation Funding 2.1 Third-Party Litigation Funding
Third-party litigation funding is becoming increasing- ly common. There are no legal regulations that deal directly with such funding. Its framework derives from statutes such as the Legal Services Act, the Federal Lawyers’ Act and the Lawyers’ Fees Act. It emerges from them – eg, that the funder is prohibited from providing legal advice to their client. In general, the
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