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"Third Party Contingency" Contracts in Settlement and Litigation

  • Roland Kirstein
  • Neil Rickman

We present a model of recent institutional developments in litigation funding across several European jurisdictions. They combine contingency fees with third party cover for cost in the event of losing the case: we call these "Third Party Contingency" (TPC) contracts. A TPC contract can make filing a suit credible and may increase settlement amounts. This does not, however, increase the likelihood of going to trial, since TPC contracts are only of mutual benefit to the plaintiff and the third party when the case settles out of court. We demonstrate that the mere availability of TPCs may generate this strategic effect.

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Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 160 (2004)
Issue (Month): 4 (December)
Pages: 555-

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200412)160:4_555:tpccis_2.0.tx_2-q
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Order Information: Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

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  1. Landes, William M, 1971. "An Economic Analysis of the Courts," Journal of Law and Economics, University of Chicago Press, vol. 14(1), pages 61-107, April.
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