Insuring vs. investing in litigation: a comparative legal history of litigation insurance and claim investment

Abstract

Today, liability insurance and legal expenses insurance are generally accepted as benefits to the society and the idea of insuring against litigation risks does not repel us. In the past, however, it was held that such litigation insurance was fuelling litigation at best or going against good morals at worst. What are the reasons behind this? And how does this compare to the legal history of investment in litigation gains? Claim investment has been frowned upon for centuries and today a dismissive narrative continues to dog this ‘product’. So, the legal discourses surrounding insurance and claim investments have developed in different directions. How can this be possibly explained? This paper attempts to answer these questions by comparing the historical developments within European jurisdictions of the concept of insurance against litigation loss and that of the concept of litigation investment. Thus, it aims to improve our understanding of historical paths of both phenomena.