FRANCE Law and Practice Contributed by: Emmanuèle Lutfalla and Louis Fer, Signature Litigation AARPI
Multi-party disputes make matters more difficult. Product liability and construction cases may involve numerous manufacturers, suppliers, contractors and insurers, each represented by separate counsel and participating in the expert proceedings. Cross border disputes add another layer, with local counsel, trans- lation costs and sometimes parallel proceedings in several jurisdictions. This is increasingly affecting the relationship between insurers and insureds. Insurers are paying closer atten- tion to defence budgets, the choice of counsel and the proportionality of fees, particularly where defence costs erode policy limits. This can create tensions when insureds want to appoint their preferred law- yers or experts. As a result, disputes over the funding and reasonableness of defence costs are becoming an increasingly important part of coverage disputes themselves. 5.4 Cost Risk Management and Funding Solutions France offers several mechanisms for managing liti- gation cost risk, although the market remains less developed than in common law jurisdictions. Legal expenses insurance is widely available and commonly used by individuals and SMEs, but its coverage limits generally make it less relevant for large commercial disputes. Third party funding has grown steadily over the past decade, initially driven by international arbitration in Paris and increasingly extending to domestic com- mercial litigation. It remains less common than in some common law jurisdictions, but sophisticated claimants are increasingly considering it where the amount in dispute justifies the cost of funding. It can be particu- larly relevant for high value subrogation claims or cov- erage disputes where the claimant does not want to bear the litigation costs upfront. France does not have a specific regulatory framework for litigation funding, with arrangements largely governed by general con- tract law and professional rules. After-the-event insur- ance exists but remains relatively uncommon. For larger disputes, parties are also increasingly using phased billing, fee caps and detailed budgets. Suc- cess fees are permitted provided they are combined
with a fixed fee for the work performed, although fees based exclusively on the outcome of the case are not allowed. 5.5 AI-Driven Claims Volumes and Complaints AI generated and AI assisted claims are still a relatively new issue in France, so it is probably too early to say that they have materially increased claims volumes across the market. However, the use of AI tools by claimants, lawyers and consumers is making it easier and cheaper to generate complaints, organise sup- porting material and bring claims, particularly where a large number of individuals are affected by the same event. An emerging issue is the reliability of evidence sub- mitted in support of claims. AI can now be used to generate or alter photographs, documents, record- ings or other material, making it increasingly difficult to establish whether evidence accurately reflects the underlying events. This creates obvious challenges for insurers, particularly in high volume claims where eve- ry piece of evidence cannot be independently verified. AI also raises questions around the preparation of the defence itself. Insureds and their lawyers may increas- ingly use AI to review large volumes of documents, identify relevant evidence or prepare initial drafts. This can reduce costs, but creates concerns around confi- dentiality, accuracy and the reliability of AI generated material. 6. Third-Party Claims and Defence Trends 6.1 Third-Party Claims and Direct Actions French law provides a broad right of direct action against liability insurers. It allows an injured third party to claim directly against the insurer of the par- ty responsible for the loss, without having to obtain payment from the insured first. This is a fundamental feature of the French system and applies across most lines of liability insurance. Direct actions are particularly common in product liability, construction and professional negligence claims. They are also frequently used by subrogated
111 I NSURANCE L I T IGATI O N 2026
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