Who decides on a settlement when a case is funded?

In France, the client decides whether to accept or refuse a settlement, with their lawyer’s advice, even when a third party funds the case. Under a resolution of the Paris Bar of 21 February 2017, the lawyer takes instructions only from the funded party Source [1]. The funder pays the fees without taking part in that choice. Hello Justice funds the case and plays no part in the firm’s strategy.

The client’s decision and the lawyer’s advice.

A settlement is an agreement by which the parties end their dispute without waiting for a judgment. It can come at any stage of the proceedings, which it shortens. The client keeps ownership of their claim and remains a party to the case, so the client is the one who settles, if they choose to.

No statute in France organises the agreement that funds an individual case. It rests on freedom of contract (article 1102 of the Civil Code) Source [2], and the Versailles Court of Appeal recognised its validity on 1 June 2006 Source [3]. The lawyer’s professional rules then set out each person’s role.

The National Bar Council considered the practice favourable to access to justice, in its resolution of 20 and 21 November 2015 Source [4]. It set two conditions: the lawyer keeps their independence, and the litigant remains their only client. In 2017, the Paris Bar added that the lawyer takes instructions only from the party they represent, and refrains from passing any information about the case to the funder Source [1].

This third party pays the lawyer’s fees, and the litigant remains free to choose that lawyer Source [5]. An offer from the other side is therefore discussed between the client and their counsel. Our overview of litigation funding in France describes the whole mechanism.

What the funding agreement provides.

For an individual case, a tripartite agreement binds the client, their lawyer and the third party that pays the fees. It sets the scope of the funding, the funder’s share if the case succeeds and the payment schedule. It also sets out the independence of the lawyer, who alone decides the procedural strategy.

At Hello Justice, the fee agreement leaves it to the client to accept or refuse an offer from the other side, with their lawyer’s advice. The lawyer alone conducts the proceedings, and the funder gives them no instructions.

The same rule applies to information: professional secrecy covers the exchanges between the lawyer and the person they represent Source [5], and the funder takes no part in them. Hello Justice receives nothing covered by that secrecy without the client’s written consent.

The amount of a settlement follows the same route as damages awarded by a court. In the cases that Hello Justice funds, the other side pays what is due into the lawyer’s CARPA account, a client‑money account. Any sum a lawyer receives on a client’s behalf is paid into it before being passed on, under the supervision of the bar Source [6]. The money is then shared out under the signed agreement, and the funder is paid out of what is recovered, by judgment or by settlement, only if the case succeeds.

In the Swiss franc loan programme, the fee agreement states when the client is paid: if the claim succeeds, the funds are paid to them once the decision is final. Our article on the cost of a claim gives the programme’s price in full.

Group actions in France and in Europe.

In France, article 16 of Act no. 2025-391 of 30 April 2025 is the first statute to refer expressly to third‑party funding, for group actions Source [7]. In these proceedings, a qualified claimant acts for people in a similar situation. The funding must give the funder no influence against their interests, either over bringing the action or over conducting it. Decree no. 2025-1191 of 10 December 2025 sets out the related disclosure rules Source [8]. Neither text governs an individual case.

For consumer representative actions, Directive (EU) 2020/1828 of 25 November 2020 provides that the funder must not unduly influence the decisions of the entity bringing the action Source [9]. In Germany, the collective actions act (VDuG) has been in force since 13 October 2023 Source [10]. An association’s action is inadmissible there if the funder has been promised more than 10% of the performance owed. It is also inadmissible if the funder can be expected to influence the conduct of the proceedings, settlement decisions included, to the detriment of consumers.

In a resolution of 13 September 2022, the European Parliament asked the Commission for a directive on the private funding of litigation Source [11]. It recommends that the funder have no decision‑making power and be unable to terminate the agreement on its own. The resolution also proposes that the claimant receive at least 60% of the amount awarded Source [11]. This text has no binding force. The study the European Commission published on 21 March 2025 sets out three approaches without choosing one Source [12].

The offer and the rest of the proceedings.

Faced with an offer, the client and their lawyer compare a known sum with what the rest of the case might bring. A case can be lost, last several years, or end in an award the other side does not pay. A favourable judgment brings in nothing against an insolvent debtor. Its enforcement, entrusted to a commissaire de justice (judicial officer), can take time and can fail. An appeal lengthens the proceedings further. Between two companies, a lawsuit often damages the business relationship.

Without funding, each side’s cash position also enters into that choice. Many claimants with a well‑founded claim give up, or settle at a loss, against an opponent who can afford to wait. When a third party pays the lawyer’s fees, the client does not have to advance them to pursue the case. The decision remains the client’s, and the funder bears the risk of the proceedings: they can be lost, or settled for less than expected.

Hello Justice reviews civil and commercial disputes with at least €100,000 at stake, against an opposing party able to pay a judgment. The eligibility test gives a first indication in a few questions. Once you submit the case, a specialised partner lawyer analyses its eligibility. They review the features of the dispute, the limitation period (the time limit for bringing a claim), the completeness of the documents and reasonable prospects of success. Not every case is accepted.

Frequently asked questions.

Can the funder impose or refuse a settlement?

Not at Hello Justice: the fee agreement leaves that choice to the client, advised by their lawyer. The lawyer takes instructions only from the party they represent Source [1]. The European Parliament also recommends that no funder have decision‑making power, in a resolution with no binding force Source [11].

Is the funder told about discussions with the other side?

Professional secrecy covers the exchanges between the client and their lawyer Source [5]. According to the Paris Bar, the lawyer refrains from passing any information about the case to the funder, and avoids meeting the funder without their client Source [1].

What happens to the money from a settlement?

In the cases that Hello Justice funds, the other side pays it into the lawyer’s CARPA account, as it would pay damages, under the supervision of the bar Source [6]. It is then shared out under the signed agreement, which sets the funder’s share.

Can a Swiss franc loan claim be settled?

Yes: an agreement with the bank remains possible at every stage, and the borrower reviews it with their lawyer. ACTIVE AVOCATS, a firm of the COGEP AVOCATS group, conducts the programme’s proceedings independently. Our guide to the stages of a claim places each moment of the claim.