The Challenges of Third-Party Litigation Funding for Funded Party, Third-Party Funder and Opposing Side in the Case

The increase in litigation costs, including court costs, attorneys' fees, expert's fees, etc., has made access to justice challenging for some people. Therefore, potential claimants turn to existing tools, including third-party litigation funding (TPLF), to cover these costs. In TPLF, the third-party funder, who is not originally a party to the suit, finances the party’s litigation costs in return for a share of the proceeds of the court verdict or settlement. Although the TPLF can meet the needs of some people to cover the costs of litigation, due to its infancy, it brings with it major challenges. Challenges have different dimensions and involve the judicial system as well as TPLF actors, including imposing a high rate of return on the funded party, funding frivolous lawsuits, control of litigation by the third-party funder, Problems with disclosure, breach of confidentiality, and Inadequacy of capital and many other challenges. The Islamic Republic of Iran is no exception to these challenges. Allowing TPLF in the absence of regulatory bodies and governing regulations, in addition to creating the above fundamental challenges for the funded party and the other party to the dispute, can lead to increase problems in the judicial system.