Hot Legal Topics — Friday

Period: Last 3 days (Tue–Thu)

New Legislation / EU Directives

• California AB 2305 Signed: Governor Newsom has signed legislation regulating litigation funding. The Civil Justice Association has characterised it as a "paper tiger" and ineffective — third-party litigation funding remains largely unregulated despite the new law, which is unlikely to curb market growth in the United States.

Federal Court of Justice / Landmark Rulings

• CJEU Overturns German "Three-Year Solution" (24 Sep 2026): The Court of Justice of the European Union has struck down the three-year limitation period developed by German courts for supplementary claims arising from invalid price adjustment clauses in consumer contracts (including those used by savings banks and other credit institutions). The ruling has the potential to lift existing limitation bars on repayment claims and may open the door to a new wave of consumer actions against financial institutions relying on defective pricing clauses.
• OLG Frankfurt on Order Buttons (23 Sep 2026): According to the Frankfurt Court of Appeal, a mislabelled order button ("Order" instead of "Order with obligation to pay") does not in itself suffice to unwind an online purchase (€60,520 electric vehicle). The decision tempers potential mass-action strategies based on button-labelling violations in e-commerce, signalling a more restrictive judicial approach in this area.

Trends in Litigation Funding & Legal Tech

• Legalist has applied to the Manhattan Federal Court for confirmation of a USD 108,718 arbitral award against a funded claimant — illustrating the growing enforcement of repayment claims by funders against claimants.
• ClaimAngel reports USD 144 million in volume across 30,000 individual financings in the consumer legal funding marketplace since 2023 — a growth signal for the retail segment of litigation finance.
• ILFA Analysis: U.S. federal courts order disclosure of funding agreements in only 12% of cases; no court has yet imposed a blanket disclosure obligation — relevant to the ongoing debate on transparency requirements in litigation funding.
• NatWest Report: 4 in 10 UK law firms are now open to external capital — a marked increase in willingness to accept outside investment in the British legal market.
• India: Despite the absence of centralised regulation, the Indian litigation funding market is attracting growing levels of institutional capital.
• Op-Ed: Positions third-party litigation funding as a driver of rising costs of living and calls for federal transparency requirements — an indication of growing political headwinds facing the industry in the United States.
• AI Accuracy Study (Legal Funding Journal, 24 Sep 2026): 2026 studies identify Gemini 3.1 Pro as the leading model for contract review and extraction (74–82% accuracy), while GPT-5.5 with reasoning identifies the greatest number of errors. Citation recall from memory remains highly unreliable at below 7% accuracy; Westlaw/Lexis AI trails purpose-built tools by 19–25 percentage points — relevant to legal tech investment decisions within law firms.