Litigation financing in Argentina: a growing perspective
Litigation financing, or third-party funding, is a model that has gained ground in several countries around the world, offering parties involved in litigation the possibility of accessing financial resources without having to assume the economic risk of legal costs. In the case of Argentina, this model has experienced a notable evolution, favored by the dynamism of the legal sector and openness to innovations that allow companies to access capital to manage legal disputes. Loopa, formerly known as Qanlex, has been a pioneer in introducing and consolidating this model in the country, offering a new alternative for both plaintiffs and lawyers representing complex cases.
History of litigation funding in Argentina
Litigation financing began to develop in Argentina in a nascent way in the past decade, influenced by international models, especially those from countries with more developed capital markets. Although the concept of third-party funding is relatively new in Argentina, the figure was quickly adopted by key players in the sector. Qanlex, as the first specialized litigation financing fund in Latin America, played a decisive role in the introduction and consolidation of this model. Its entry into the Argentine market allowed companies and individuals to finance their litigation without having to resort to their own resources, opening the door to new cases and a greater diversity of disputes that would not have been possible before due to the high economic barrier. The creation of these types of funds in the country allowed, for the first time, litigants with limited resources to access justice on an equal footing, without being conditioned by financial ability to meet the costs of the judicial process. This model has also favored the development of new practices in the legal field, providing lawyers with an additional tool to offer their services without assuming financial risk upfront, which is especially useful in high-value and long-term litigation.
The legal framework for litigation funding in Argentina
Litigation financing in Argentina is under the framework of continental law, which implies that litigation funding agreements are private agreements between the parties, and must be analyzed and executed in accordance with the general principles of the country's civil and commercial regulations. These agreements are based on the assignment of litigious rights, a concept originating from the Civil and Commercial Code of the Nation, which regulates private relationships and establishes that a person can assign their credit rights to another, who becomes the holder of these rights within the scope of the litigation. Legally speaking, litigation financing aligns with the concept of a contingency fee, traditionally used by lawyers as an agreement to receive a percentage of the amount obtained in the litigation if the outcome is favorable for the client. The main difference lies in the fact that, in litigation financing, the funding comes from a third party unrelated to the directly involved parties, as is the case with Loopa. This model is based on the assignment of rights over the litigation and can be considered an evolution of the contingency fee, expanding it into a more sophisticated figure with greater optimization possibilities, both for litigants and funders. The Argentine legal framework has been flexible in its interpretation of these agreements, as there is no specific regulation for litigation financing, it is governed by general principles such as freedom of contract and the autonomy of the parties' will. This has allowed for the integration of financing agreements within the legal system without generating conflicts with other pre-existing legal practices. However, as litigation financing becomes more established, it is expected that the judicial system will need to adapt certain regulations to explicitly address this type of agreements and their regulation.
The application in arbitration in Argentina
Litigation funding in Argentina has proven to be a useful tool not only in judicial litigation but also in the field of arbitration, which has been consolidating as a preferred method for resolving commercial disputes in the country. In this context, litigation funding funds, such as Loopa, can offer solutions to companies that need resources to face the cost of arbitration, a procedure that often turns out to be more expensive and technical than judicial litigation. Argentina is home to several recognized arbitration centers, including the International Chamber of Commerce (ICC), the Arbitration Center of the Buenos Aires Stock Exchange (BCRA), and the Business Center for Mediation and Arbitration (CEMA). These centers play a fundamental role in international commercial arbitration, and the inclusion of litigation funding in this area opens up new opportunities for companies that do not have immediate resources to face these procedures. In this sense, funding funds not only contribute to the economic viability of arbitration but also enhance access to justice for companies involved in complex disputes, allowing arbitration to be a viable option even for those companies that traditionally would have been excluded from these processes due to high costs.
Application in judicial disputes: monetization and relief from waiting
One of the main challenges in judicial litigation in Argentina is the duration of the processes. In many cases, these can drag on for years, which implies a prolonged wait for both the plaintiffs and the lawyers involved. While the expenses associated with judicial litigation are not usually as high as in arbitration, the time it takes to obtain a favorable resolution can be a limiting factor. This is where Loopa plays a crucial role, offering a solution to monetize the litigation and alleviate the financial burden derived from the long wait. The traditional model of the contingency fee, which depends on a percentage of the amount recovered at the end of the litigation, is not always suitable for judicial cases that drag on indefinitely. In these litigations, especially those against the State, the process can be endless, generating uncertainty and stress for both the litigant and their lawyer. By financing these litigations, Loopa allows the plaintiff to receive part of the committed funds in advance, easing the economic pressure while awaiting a resolution. This not only facilitates access to justice for those who cannot afford the cost of prolonged litigation but also improves the conditions for lawyers, who can continue with the litigation without the risk of having their work interrupted due to lack of resources. Loopa's ability to cover the costs of judicial litigation, without requiring litigants to bear these expenses upfront, also allows longer and more complex cases, such as those against the State, to proceed without jeopardizing the economic solvency of the plaintiff. In this way, Loopa offers an effective solution for those cases where time is the main obstacle, turning the wait into an opportunity to monetize the litigation rather than a burden.
Conclusion
Litigation funding in Argentina is in the process of consolidation, with a flexible legal framework that adapts to the needs of the parties involved in litigation. Loopa's experience, formerly known as Qanlex, as a pioneer in this model, has allowed many companies and individuals to access justice without having to face the prohibitive costs that traditionally accompany judicial and arbitral proceedings. While the regulatory framework does not yet specifically regulate all aspects of litigation funding, the practice is perfectly framed within the general principles of continental law, in harmony with the assignment of rights and the contingency fee. Furthermore, the application of funding in the field of arbitration, with the collaboration of centers such as CEMA, opens up new opportunities to improve access to justice. Undoubtedly, the future of litigation funding in Argentina is promising, and will continue to be a key tool for access to justice in the country.
