Financing of Litigations through Crowdfunding (Ankara Barosu Dergisi)

Summary

• Litigation financing through crowdfunding is gaining prominence as court costs increase, helping to ensure access to justice, particularly in complex or high-cost legal disputes.p.2
• The global crowdfunding litigation market size was $2,530 million in 2024 and is expected to reach $8 billion by 2035.p.4
• In Scotland, 63 different litigation crowdfunding campaigns were launched between 2015 and 2021, raising over £2,300,000 from nearly 78,000 supporters.p.4
• Crowdfunding models are typically classified into investment-based (equity or debt) and non-investment-based (donation or reward) models.p.9
• Under current Turkish legal regulations, litigation crowdfunding faces regulatory hurdles under capital markets law and requires clear legislative framing.p.2

Key insights

1. Crowdfunding provides an alternative and complementary solution to traditional third-party litigation funding.p.6
2. Non-investment models (donations and rewards) are generally considered the most ethically suitable forms for funding legal proceedings.p.10
3. Crowdfunding allows legal costs and litigation risks to be distributed across a broad group of supporters rather than a single funded party.p.25
4. Having multiple small-ticket crowd funders leaves the litigant with greater independence in managing lawsuit strategies compared to single-funder arrangements.p.26
5. Public crowd-funding campaigns can create strategic media exposure, putting public opinion pressure on defendent companies to settle early.p.29
6. The potential rise of frivolous lawsuits is a significant concern raised against non-investment litigation crowdfunding.p.31
7. Publicly launching crowdfunding campaigns for legal cases inherently conflicts with the principle of confidentiality in judicial or arbitral proceedings.p.35
8. Litigation funding contracts generally do not constitute usury under Turkish criminal law since repayment is contingent on winning the lawsuit.p.38