There is no legislation in effect in France to question the validity of litigation funding arrangements and in the only reported case on litigation funding, the validity of funding agreements has been indirectly confirmed by the French courts.
Article 11.3 of the French National Bar Regulation provides that “the lawyer can receive payment of his fees only from his client or someone granted power of attorney by the latter”. This article also prohibits pure contingency fee arrangements. As long as these two rules are complied with, it seems that nothing prevents a French lawyer from representing a party whose litigation is funded by a third party.
The European Commission issued a non-binding recommendation to EU Member States in June 2013 in respect of funding collective anti-trust damages cases. It stated that any third party funding arrangement for compensatory collective redress should be regulated by a public authority to ensure the interests of the parties. To date, the recommendation has not been adopted at the national level in EU Member States. However, in its Final Report on Third Party Funding (November 2015), the National Bar Association of France suggested a change in legislation which would adopt the European Commission’s recommendations as part of the French Civil Code.
Furthermore, on 21 February 2017 the Paris Bar Council passed a Resolution indicating its support for third-party funding and confirming that it is a positive development for access to justice in international arbitration.
Despite the absence of legal barriers litigation in France is less costly compared to other jurisdictions such as England & Wales, and may explain why the use of private capital to fund litigation is less widespread in France (for now).