The Principles and Challenges of Litigation Financing and Explaining New Approaches to Iranian Law

It is commonly assumed that the costs of litigation are provided by the parties. However, the increase in litigation costs, the need to manage the risk of litigation along with profit minded have led to the emergence and prevalence of investment in litigation. Under a process called "litigation financing," a third party pays costs to receive a profit in the event of a successful litigation, without relinquishing the right or transferring the litigation. Despite the advantages of this method, concerns have been raised about its adverse consequences on litigation. This article, through an analytical study of the nature and effects of litigation financing, seeks to answer the question of whether the nature of this legal entity is valid or not. And how can we take advantage of it and reduce its negative consequences? What can be accepted is that the financing of litigation is valid and its use will bring benefits to the Iranian legal system, but in order to manage it properly, it is necessary for the legislator to use the experiences of other systems before the popularization of this legal institution. The article brings main issues that should be considered in legal regulating of litigation financing.