Since the late 1990s litigation funding has been widely accepted in Germany, resulting in an established litigation funding market – with three German funders holding almost all market share – of both domestic litigation and arbitration seated in Germany permitted by German law.

German law does not recognise the common law doctrines of champerty and maintenance, and no contractual obstacles need be overcome to offer litigation funding. Litigation funding does not qualify as insurance or financial service, nor does it fall within the scope of legal services, and hence, is unregulated.

The prevailing doctrine views the litigation funding agreement as a kind of partnership (Gesellschaft) between claimant and funder. German litigation funders usually cover the liability for adverse costs, since, under the German statutory fee schedules, these can be predicted with great accuracy in most cases.