Who pays the other side’s costs in a funded case?

As of October 2026, the losing party pays part of the other side’s costs in England, Germany and France, to different extents. The English rules in principle order it to pay what the winner spent Source [1]. German law limits the reimbursement of lawyers’ fees to a statutory scale Source [2]. In France, the loser in principle bears the court costs (dépens), and the court may add a procedural indemnity it sets (article 700) Source [3]. In a funded case, the funding agreement says who carries that burden.

The rules compared.

The English loser‑pays rule.

In England and Wales, the Civil Procedure Rules (CPR) leave it to the court to decide whether costs are payable, how much and when Source [1]. The court applies a general rule: “the unsuccessful party will be ordered to pay the costs of the successful party” Source [1]. The conduct of the parties, partial success or an offer to settle can lead it to depart from that rule. On the so‑called standard basis, rule 44.3 allows only costs that are proportionate to the matters in issue, and any doubt is resolved in favour of the paying party Source [1]. Under this loser pays rule, the losing party pays its own lawyer, then the share of the other side’s costs that the court allows.

After‑the‑event insurance (ATE), taken out once the dispute has arisen, mainly covers that risk. Since 1 April 2013, except in certain proceedings, a costs order cannot include the premium of such insurance Source [8]. Regulations may, however, allow an order to include the part of a premium that covers certain expert reports in clinical negligence proceedings Source [8]. Outside these exceptions, the insured party bears its own premium.

Security for costs and the funder’s liability.

The defendant may also obtain security for costs Source [4]. The court may order it if it considers it just and, for example, the claimant is resident out of the jurisdiction Source [4]. Rule 25.28 allows such an order against a person who has contributed to the claimant’s costs “in return for a share of any recovery in the proceedings” Source [4]. A funder paid out of the outcome fits that description.

Section 51 of the Senior Courts Act 1981 also allows the court to order the funder itself to pay costs. It gives the court “full power to determine by whom and to what extent the costs are to be paid” Source [5]. In 2005, the Arkin decision limited such an order to the amount of the funding Source [9]. On 25 February 2020, in Chapelgate, the Court of Appeal held that this limit is not a binding rule, and that judges retain their discretion Source [9].

The Civil Justice Council, which advises the Lord Chancellor on civil justice, recommended on 2 June 2025 that this approach be written into the rules of procedure Source [10]. It notes that, in practice, funders undertake in their agreements to indemnify the client against adverse costs, and can insure that risk themselves Source [10]. The Association of Litigation Funders’ code of conduct (January 2018) binds its members Source [11]. Each funding agreement must state whether the funder pays those costs and the insurance premium, and whether it provides security for costs Source [11]. Our analysis of the PACCAR ruling explains how the funder is paid under these arrangements.

The German fee scale.

In Germany, section 91 of the Code of Civil Procedure (Zivilprozessordnung, ZPO) provides: “Die unterliegende Partei hat die Kosten des Rechtsstreits zu tragen” (the losing party bears the costs of the proceedings, our translation) Source [2]. It reimburses the other side’s necessary costs and, for that side’s lawyer, the statutory fees and expenses Source [2]. The Lawyers’ Remuneration Act (RVG) calculates those fees on the value of the matter Source [6]. The Court Fees Act (GKG) does the same for the court’s fees Source [12]. For a claim worth €100,000, decided at first instance after a hearing, the scales published in 2025 give the following amounts Source [6] Source [12].

The losing party bears the court fees and reimburses the winner €4,407.50 for its lawyer, before the VAT the lawyer charges (no. 7008) Source [6]. It also pays its own lawyer. Reimbursement stops at this scale Source [2] Source [7].

According to the study published by the European Commission on 21 March 2025, the client and the lawyer nevertheless often agree on a higher fee in difficult cases Source [7]. The difference then rests with the claimant and is borne by the funder Source [7]. “If the case is lost, the funder bears the court fees, the claimant’s lawyer’s fees and the defendant’s lawyer’s fees” Source [7]. The funder undertakes this only to its client Source [7]. Finally, section 110 of the ZPO requires a claimant habitually resident outside the EU and the EEA to provide security for costs if the defendant asks, subject to exceptions Source [13].

Court costs and article 700 in France.

In France, article 695 of the Code of Civil Procedure lists the court costs (dépens) Source [3]. They include duties collected by court registries or the tax authorities, the remuneration of technical experts and the fees of public and ministerial officers Source [3]. Lawyers’ remuneration is included only to the extent that it is regulated, such as pleading fees Source [3]. The €50 tax stamp required, with some exceptions, to bring a claim before a first‑instance civil court is one of them Source [14]. Lawyers’ fees, which are set freely, remain frais irrépétibles, outside the court costs Source [14].

Under article 696, the losing party is ordered to pay the court costs, unless the judge, by a reasoned decision, places all or part of them on another party Source [3]. Article 700 also allows the judge to order the losing party to pay the other side a sum the judge sets for expenses outside the court costs Source [3]. The text refers to no scale: the judge takes into account fairness or the financial situation of the party ordered to pay, and may refuse such an order Source [3]. The judge is therefore not bound to make the loser pay the fees the other side paid Source [14].

Legal expenses insurance.

French legal expenses insurance (protection juridique) is taken out in anticipation of future disputes. Under article L. 127-1 of the Insurance Code, the insurer covers procedural costs or provides services when the insured has a dispute with a third party Source [15]. In return, the insured pays a premium agreed in advance. According to service-public.fr, the policy may exclude disputes already known when it is taken out, and it generally sets limits on reimbursement Source [16]. Articles L. 127-1 to L. 127-8 do not expressly address sums the insured might owe its opponent: the policy decides that point Source [15] Source [16]. Article L. 127-8, on the other hand, governs sums obtained as reimbursement of the costs and fees of the dispute Source [15]. They go first to the insured for the expenses it still bears, then to the insurer, up to what it has paid out Source [15].

What a funding agreement covers.

In France, no rule specific to third‑party funding allocates the other side’s costs, the study published by the European Commission notes Source [7]. The funding agreement decides. People interviewed in France for that study had seen three arrangements: the funder bears none of these costs, a limited share or a share subject to conditions Source [7]. The first two are the most common Source [7].

On 13 September 2022, the European Parliament adopted recommendations to the Commission on responsible private funding of litigation Source [17]. Its proposed directive would empower courts to make cost orders against funders, “whether jointly or severally with claimants”, where the claimant has insufficient resources (article 18) Source [17]. Our overview of Europe traces what followed.

In an individual case, the tripartite agreement, signed by the client, their lawyer and the funder, sets the scope of the funding. For an investor, the risks page describes what happens to a lost case.

The other side’s costs in Hello Justice cases.

Hello Justice is the first French company dedicated to mid‑market litigation funding, from €100,000 at stake.

The online eligibility test and submitting a case are free of charge. Outside the Swiss franc loan programme, the case analysis that precedes any funding costs €1,500 excluding VAT (€1,800 including VAT), whatever the opinion. For an accepted case, Hello Justice pays the lawyer’s fees and receives a commission of 30% of the sums recovered (including VAT for an individual, excluding VAT for a business), only on success. Its rate is set before any commitment. If the case is lost, the client repays nothing to Hello Justice, and the agreement settles how the procedural indemnity under article 700 is handled.

In the Swiss franc loan programme, having the case checked is free. If the case is accepted, the client pays €300 incl. VAT when the summons is issued against the bank, for the procedural costs (stamp duty, judicial officer, local counsel). Hello Justice covers 100% of the lawyer’s fees, whatever the amount borrowed, at first instance as on appeal, local counsel before the court of appeal included. If there is an appeal, the client pays the €225 appeal duty. Only if the case succeeds, a success fee of 14% incl. VAT is due on the sums recovered and on the saving obtained on the outstanding capital. The sums awarded under article 700 and the costs then go to the lawyer.

If the case is lost, the client repays nothing to Hello Justice, which bears the lawyer’s fees. The €300 incl. VAT is not returned, nor is the appeal duty if there was an appeal. As in any lawsuit, the court may order the losing party to pay the bank a procedural indemnity under article 700, and the costs of the proceedings. Those sums remain the client’s to pay. Our article on the cost of a claim sets out the price.

Frequently asked questions.

Who pays the other side’s lawyer if I lose my case in France?

The judge in principle orders the losing party to pay the court costs, which do not include lawyers’ fees Source [3]. Under article 700, the court may also order the loser to pay the other side a sum it determines, taking into account fairness or the loser’s financial situation Source [3]. Such an order is not automatic Source [3] Source [14].

What is after‑the‑event insurance?

It is insurance taken out after the dispute has arisen, which mainly covers the other side’s costs if the case is lost. In England and Wales, its premium cannot be recovered from the losing party, save for exceptions set by statute Source [8]. A funder can take it out itself Source [10].

Can a funder be ordered to pay the other side’s costs?

In England, yes: the court can order a third party to pay costs, without having to cap that order at the amount of funding Source [5] Source [9]. In France, no rule specific to funding provides for it, and the funding agreement allocates that burden Source [7].