Justice
Litigation has become less common – the propensity to sue has fallen sharply
There are fewer complaints in Germany. However, the judiciary cannot sit back and relax. The sometimes difficult financing of civil lawsuits has given rise to a business model.
Germans’ willingness to argue in court has decreased significantly in recent years. From 2007 to 2023, the number of new civil cases filed in the courts fell almost steadily, according to data from the Federal Statistical Office. At the district courts, the decline is almost 39 percent: from a good 1.26 million new cases in 2007 to almost 773,400 in 2023.
The development is also pronounced in the regional courts – which are responsible for the more expensive civil cases with a dispute value of 5,000 euros or more – with a decline of almost 19 percent: from a good 373,300 cases filed in 2007 to almost 301,000 in 2023. The traffic light coalition wanted this limit in dispute increase to 8,000 euros, but the law has not yet been passed.
All federal states, almost all subject areas
“The decline in receipts affects all disputed value groups and affects all federal states,” says a spokeswoman for the Federal Ministry of Justice. “Almost all subject areas are affected.”
The corona pandemic in particular was accompanied by a dip in lawsuits, as the example of Bavaria shows: in 2019, according to figures from the Munich Ministry of Justice, the white and blue district courts received almost 126,000 proceedings. In 2022, the previous low was reached with fewer than 102,000 civil cases, before there was an increase again in 2023.
The Germans are seen as litigators who even take disputes about the trees in the neighbor’s garden to court. But the population has obviously become more peaceful, at least in this respect. “A clear explanation for the decline in the number of cases cannot be found,” says a spokesman for the North Rhine-Westphalia Ministry of Justice in Düsseldorf. In the most populous federal state, almost 85,000 civil proceedings were filed in the regional courts in 2013; in 2023 there were fewer than 70,000.
Even though there are still significant differences between western and eastern countries almost 35 years after reunification, the propensity to sue in the east has also fallen: a total of 8,285 civil proceedings were received in the Brandenburg regional courts in 2013, and in 2023 there were still 7,438 the state Ministry of Justice announced.
Several reasons probably
In a research project by the Federal Ministry of Justice that was completed in 2023, the authors named several possible reasons, including the high costs and psychological stress, and the willingness to pay for legal protection insurance may also have decreased. The traffic light coalition wanted to make it easier for citizens to go to court and planned to test online lawsuits, intended for low amounts in dispute.
But mass litigation is increasing
However, judges cannot sit back and relax. The cause is mass litigation, in which a large number of plaintiffs sue a company. The best-known example is the wave of lawsuits against VW and other car manufacturers in the emissions scandal. The Munich I Regional Court has filed 8,500 civil lawsuits against former CEO Markus Braun, the auditing firm EY and other parties in connection with the Wirecard affair alone.
As a rule, these are briefs with many hundreds of pages of similar content. In the Wirecard complex, the law firms involved probably sent several million sheets of paper to the court, all of which must be read. The mass proceedings are a “significant burden,” says a spokeswoman for the Bavarian Ministry of Justice.
Civil litigation business model for investors
The drop in the number of cases is unpleasant for law firms, especially because, according to data from the Federal Bar Association, the number of admitted lawyers has by no means fallen in sync since 2013. The result is increased competition. Nevertheless, a growing industry has transformed civil litigation into an obviously profitable business model: litigation financiers.
These companies advance all expenses and the complaining customers have no costs. If the lawsuit is won, the financier receives a hefty commission. Therefore, litigation financiers generally only jump on mass litigation with a high chance of success.
One of the largest litigation financiers in Europe is the Czech Republic-based company Litfin. According to partner Ondřej Tyleček, Litfin represents 5,500 plaintiffs in the Wirecard scandal. Depending on the extent of the damage, Litfin charges approximately 20 percent commission if the case is successful. The lawyer defends himself against criticism and points out that large corporations have much deeper pockets than complaining consumers: “When you fight against giants like Apple or Google, i.e. the typical David versus Goliath fight, then you need a strong partner, and that is the litigation funder.”
Economically attractive and morally right?
In order to cover its own financial needs, Litfin has discovered civil litigation as a financial instrument for investors: Last year, the company launched its first fund for investors to pre-finance the truck antitrust lawsuits, with more to follow. The funds are intended for investors “who find investing in litigation financing economically attractive and morally right because it makes access to justice easier,” says Tyleček. Opinions are divided among lawyers.
dpa
Source: Stern
