Litigation financing in Puerto Rico
Third-party litigation funding is gaining ground as an effective tool to facilitate access to justice and allow legitimate claims to move forward without depending on the financial capacity of the plaintiffs. In Puerto Rico, a territory with a hybrid legal system that combines elements of civil law and American common law, third-party funding is in an emerging stage, but with a legal and economic environment that makes it increasingly relevant. The complexity of litigation, the duration of processes, and the influence of the American federal system create an opportunity for the development of this model.
A recent story: the gradual arrival of third party funding
Historically, the concept of external litigation financing was not common in Puerto Rico. The island's legal tradition, influenced by both Spanish civil law and U.S. common law, maintained a conservative view for years regarding the involvement of third parties in legal disputes. However, in the last decade, and in line with the evolution of the U.S. legal market, the first cases of third party funding have been recorded, especially in large-scale litigation, commercial arbitrations, and class actions. While there is still no consolidated local industry of litigation funding funds, the experience of Loopa and other international players opens the door to a progressive expansion of this mechanism. In an environment with high legal costs, lengthy procedural delays, and growing liquidity needs, litigation finance emerges as an innovative and timely solution.
Legal framework: between civil law and common law
Puerto Rico's legal system is unique in Latin America: although it retains its civil law base in many areas of private law, it has adopted numerous elements of U.S. common law, especially in procedural and commercial matters. This duality creates a flexible legal environment that allows for the structuring of financing contracts in harmony with general legal principles. Third party funding, being a private agreement between parties, is not expressly regulated or prohibited by Puerto Rican legislation. Contractual freedom, the assignment of litigation rights, and the structuring of contingent fees—already contemplated in the practice of attorneys' contingency fees—provide a legal framework compatible with this type of financing. Additionally, U.S. case law, which directly influences the island, has validated and normalized these types of agreements in multiple jurisdictions.
Arbitration: a growing avenue for external financing
Puerto Rico has institutional arbitration centers such as the Conflict Resolution Center of the Puerto Rico Bar Association, as well as private institutions that offer arbitration services both nationally and internationally. While arbitration is not yet as developed as in other Latin American jurisdictions, its use has expanded significantly in sectors such as construction, energy, insurance, and complex commercial contracts. Third-party funding is particularly useful in arbitrations, where costs are often high and the duration can extend for years. The involvement of external funds allows companies and individuals with strong claims to face the process without compromising their liquidity. Loopa, in this sense, brings international experience and financial support to enhance the effectiveness of arbitration as a real alternative to the traditional judicial system.
Judicial disputes: monetization versus long and costly processes
Judicial disputes in Puerto Rico, especially those processed in federal courts or involving the State, can drag on for years. Added to this are legal costs, which can be prohibitive in complex cases. In this context, third-party financing plays a key role: easing the economic burden of the process and allowing plaintiffs to partially monetize their claim before obtaining a final judgment. Unlike other Latin American jurisdictions where legal costs are usually low, in Puerto Rico, attorney fees, expert fees, and court expenses can be considerable. This makes litigation finance a tool not only to cover costs but also to transform a future expectation into available capital today. Especially in litigation against public entities or in cases with difficult resolution, Loopa offers a strategic solution to move forward without time or money becoming an obstacle.
Conclusion: a hybrid jurisdiction with high potential
Puerto Rico represents a particular case within the Latin American landscape: a jurisdiction with civil law foundations, influence of common law, and direct access to the federal system of the United States. This combination creates a legal and economic environment with high potential for the development of litigation financing. Loopa positions itself as a key player to lead this evolution, providing capital, know-how, and technology in a market that demands more agile and efficient legal solutions. In a context where an increasing number of litigations require financial strategy in addition to legal arguments, litigation finance becomes an essential tool to transform justice into an accessible reality. Puerto Rico is ready to join this global trend.
