The following article is an English translation of a speech delivered by Dr. Malte Stübinger, General Counsel Germany at Deminor, on the future of civil procedure in Germany.
The speech was originally presented as part of a university colloquium, and the German version was subsequently published in a collection of ten lectures from winter 2023/24, available here [1].
1. Introduction
As a former, at least not currently active, litigation lawyer and now litigation funder, I unfortunately do not imagine many aspects of the profession as a civil judge to be particularly attractive at present.
I do not want to go into detail here about the problems with the personnel and material resources of the judiciary, the (anonymous) complaints of civil judges about "penal" transfers into criminal law chambers by the court administration, or the urgent need to increase the salaries of our judiciary. All of these are important points in their own right, which, in my humble opinion, should and must be discussed – especially from the point of view of "the civil proceedings of the future". Because without motivated and high-performing young people, a functioning court organisation with smooth processes at the offices, modern video and procedural technology, functioning e-files, etc., the civil proceedings of the future are in danger of losing touch with precisely this future and becoming a relic of the past.
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In particular, if the decision of high-performing graduates for the civil service and against the free economy continues to mean making a special financial sacrifice for society, we will see – at the latest when the last professionals from the "boomer" generation are retiring – the staffing level on the judges’ seats become extremely thin. There will then be no way around having to take on young lawyers who would not have been seriously considered for the civil service because of their performance in their studies and examinations, if the personnel- and labour-intensive functional unit "ordinary jurisdiction" is not to simply collapse. The latter would be nothing less than a catastrophe under constitutional law.
2. The phenomenon of "mass individual proceedings"
However, this article is not about all these present and future problems around court organization and resources, but I would like to focus on some special phenomena in and around the conduct of the process itself. Since it has engaged me throughout my career on both the defendant's and the plaintiff's side, I will focus in particular on the phenomenon of individually sued and negotiated mass proceedings of very similar to congruent claims (I call them "mass individual proceedings") that has grown steadily in recent years.
The question of how the enforcement of such claims should be structured in the civil proceedings of the future – if one wants to get to grips with the current considerable problems that these proceedings entail, and to do so in a way that is fair and efficient as possible, while at the same time avoiding any questionable compromises in terms of justice in individual cases – has been discussed by the judiciary, party representatives from both “camps”, and academia for several years. This raises the further question: Is such a solution even possible or are we faced with serious conflicts of objectives that cannot be reconciled without considerable losses? This multifaceted issue cannot be measured exhaustively on the scope available here, which is why I will limit myself to addressing a few – completely subjectively selected – problem circles and comments.
3. Justitia: the structurally inferior party
As things stand today, we can see that Justitia is structurally massively inferior to the parties to the dispute in dealing with the so-called mass individual proceedings.
3.1 The plaintiff's representatives
The representatives on the plaintiff's side are often high-tech consumer protection law firms with a precisely defined scope of services limited to certain phenomena. Essentially, they repeatedly file an almost identical lawsuit, supplemented by a few necessary individualizations, at the various local and regional courts of the country. Once the master data sheet has been maintained, the manual processing effort is minimal to non-existent. As soon as the statement of defence is received, software first creates a comparative version of the "usual" defence of this defendant, long before a (legally trained) person even looks at this statement for the first time. Often, modern mass procedure software then creates a draft of the reply from prefabricated text modules, either AI-controlled or by checking for certain keywords and decision path logic. Only then does a human being deal with the file for the first time in efficiently structured processes, and checks whether the prepared reply addresses all the relevant points raised in the statement of defence and whether the specifics of the individual case require individual submission.
This procedure clearly has very little to do with the work of a litigator in an individual "non-mass" dispute. I would like to emphasise two key points here:
First, in my opinion, it is precisely the reliance on a comparison version to the already known and usual submission of the opposing party that results in an enormous increase in efficiency and reduction of the processing effort. This is because what is known is automatically replied to with what is known, new answers to new counter-submissions are typically created only once and then used automatically as a text module in future proceedings. Over time, this creates an ever-growing pool of automated submissions, which, exaggeratedly drawn, algorithms toss back and forth at each other without human input.
Secondly, the qualitative differences between different plaintiffs’ law firms – in terms of the quality of the work processes and in terms of the strength of the litigation lawyer's argumentation – can be seen precisely in the following points: How much does the statement address new counter-arguments? Are rulings and notices from the court addressed or simply ignored? This shows whose proceedings – in a problematic manner when viewed through the lens of professional law – are solely geared towards profit maximisation and minimal use of resources and who is actually trying to achieve the best result for the client in each individual case.
3.2 The defendant's representatives
A similar structure can be found on the side of the defendants' representatives, typically the traditional large national and international law firms that also advise the defendant companies on other matters from M&A to the Annual General Meeting and financing transactions. In fact, the defendant's side is often even technically and strategically superior to the plaintiff's side. On the one hand, there are budget reasons for this: While the plaintiffs' law firms usually bill according to RVG [note: Rechtsanwaltsvergütungsgesetz, the German Lawyer’s Fees Act] standard rates and are incentivized to keep the personnel and cost cover low, the defendants' representatives are usually remunerated on the basis of adequate hourly fees. Their client is not the (cash-strapped) consumer, but the large company with its own litigation budget. This makes it possible to keep more expensive software and more support staff available.
In addition, the defendants’ side typically has more valuable data points due to a structural information asymmetry: For example, in mass individual proceedings, there is usually not just one law firm on the plaintiff's side, but many providers who compete for clients and compete with each other, while on the defendant's side, all information on various plaintiffs' submissions is collated. The large consulting firms have recognized a unique business model in systematically collecting and processing these data points and trying to generate added value for the defence strategy of the litigation lawyers.
3.3 Justitia stands blindly in the middle
So much for the highly automated, data point-aggregating party representatives on both sides, working with special software and plenty of back-office staff. Let us now turn to the court in the middle, which, as a notorious bottleneck, faces the challenge of processing and deciding on the sheer number of proceedings in a case-by-case manner.
Here we first realize that the ZPO [note: Zivilprozessordnung, the German Code of Civil Procedure] in principle only recognises individual proceedings that do not mutually influence each other, regardless of how similar they may be in terms of submission and subject matter. Apart from assignment models or the new remedial action, i.e. in the traditional area of mass individual proceedings, there is no bundling and no settlement version. In addition, especially in consumer matters, the place of jurisdiction is often the plaintiff's place of residence. This is intended as a benevolent measure to protect the structurally weaker party, but in the phenomenon of mass individual proceedings often leads to the fact that hardly any special places of jurisdiction with special expertise in the relevant subject matter can develop in Germany, but lawsuits are filed throughout the entire country.
When processing the file, the judge does not have a redline on the "usual" or an earlier complaint, nor is this the case with the other statements. Instead, there are 45 almost identical files in a row for the working day on the (at least now increasingly digital) file trestle, which need to be processed individually, combed through for undisputed and contentious as well as evidence-relevant submissions, scheduled and decided.
Even though some courts that are particularly affected by this phenomenon, such as those in Frankfurt and Stuttgart, have fortunately by now also begun to experiment with (partially) automation in the preparation of decisions, these efforts are naturally limited by the legal framework. This is because the civil court has the legal mandate to decide the individual case correctly, and the parties have the constitutionally guaranteed right to be heard. The Code of Civil Procedure recognizes isolated proceedings, but simply does not have a satisfactory handle for the phenomenon of mass individual proceedings.
4. An interim finding
So, we can see that mass individual proceedings are expensive, devour enormous resources in court (paid for by all of us tax payers) and in law firms (paid for by clients) and are as a phenomenon highly inefficient from an economic point of view. It is difficult to make non-lawyers understand why thousands of judges repeatedly pore over the same factual and legal arguments in almost identical proceedings and then evaluate and decide on them. This is a point at which the general perception is correct, which raises the follow-up question: Why are there still these masses of parallel individual proceedings in our legal reality and not a few collective proceedings in which panels of judges decide on the fundamental questions of liability and clarify them in a legally binding manner for all those affected?
5. Why is it not moving forward?
In my opinion, the short answer to this is because the existing mechanisms are not yet sufficiently mature. The long answer, which also asks about the reasons for this short finding, begins with the realization: It's complicated!
The importance of lobbying should not be neglected in the legal policy debate: Whenever the possibility of bundled, aggregated assertion of uniform claims is discussed, representatives of the defendants and industry at the German and European level reflexively begin to loudly warn against the danger of so-called “American conditions” in civil procedure. If the legislator allowed the collective enforcement of consumer claims, companies would immediately face waves of lawsuits and risks of restitution on an unprecedented scale; within a very short time, a lawsuit industry would emerge that would set itself the goal of collecting unfounded claims on a large scale and to push the defendant companies – which are of course entirely blameless and apparently unaware of any misconduct – into expensive settlements under the impression of the threatening scenarios that had been built up. Defendants' representatives like to accuse plaintiffs' law firms of dishonest hunting for the RVG fee, which also led to a discussion to significantly reduce the statutory fee for the processing of many essentially similar proceedings. Funders acted, as it were, as the fuse for the conjured wildfire, they ought to be strictly regulated or preferably banned altogether.
Viewed objectively, it has become part of the legal policy discourse to make oneself heard with exaggerated, polarizing arguments and to promote the interests of one's own clientele. However, it is also true that, particularly in the phenomenon of mass individual proceedings, litigation lawyers on both sides, plaintiff and defendant, have more than well accounted for and earned attractive fees in recent years.
Not only for the notorious plaintiffs' law firms, but also on the defendant's side, it cannot be denied that conducting several thousand individual “Dieselverfahren” [note: These so-called “Diesel”-proceedings, originating from the large-scale use of illegal defeat devices in diesel vehicles by several car makers, have both shaped and strained the German civil justice system as its most prominent mass litigation] for one vehicle each means many times more billable hours or RVG fees than conducting a bundled case involving several thousand similar vehicles. It is not least thanks to this phenomenon that the litigation departments of the large law firms have managed to significantly catch up with the transaction teams in terms of the important key figure of "revenue per lawyer". Various large law firms have launched their own "Mass Claim Defence" departments or have even spun off new entities on the market, making the whole thing a highly profitable business. The law firms on the defendant's side also generally do a very good job. Their experts know how to quickly identify trends and risks and are able to respond to new developments quickly, flexibly and in a case-by-case manner and adapt the submissions precisely in order to successfully defend as many proceedings as possible.
6. The business case for funders and legal tech debt collection services
This phenomenon of mass individual proceedings is also a not insignificant part of the business case for offers such as legal tech debt collection and litigation funding for consumer claims: Many issues in which mass scattered damages can arise are not covered by legal protection insurance policies. In addition, although there was a record number of over 27 million legal protection insurance policies in Germany in 2023, there was still a considerable number of uninsured people.
Moreover, in quite a few cases, the individual level of the claim justifies a rational lack of interest on the part of the consumer in taking on a case at their own risk. If I have possibly overpaid EUR 30 in bank account fees or gym membership fees, I will not sue alone and at my own expense (with a total cost risk of EUR 474 for 1st instance). However, if I have the opportunity to have the claim enforced with full third-party funding, without having to worry about anything and to collect 75% of my overpayment in the event of success, or if I can sell my claim directly and receive 5-10 EUR immediately in return without any risk, this can help to overcome the rational lack of interest.
From an idealistic perspective, this method of enforcement is certainly not ideal in terms of substantive justice and one can and may debate which protective mechanisms and duties of care are necessary to ensure that consumers can make an informed decision when, in return for covering the enforcement costs, they must forgo part of their claim.
In this debate, however, one must not lose sight of the relevant benchmark: The factual legal alternative to the sale of claims or the third-party enforcement of the claims – in the absence of a functioning collective mechanism – is not that consumers would file lawsuits alone and fully enforce their claims. No, rather, the alternative is that companies, on a large scale, would not have to satisfy legitimate claims from individuals whom they have harmed through their conduct or products, simply because the claimants do not file lawsuits. Compared to this scenario, the former approach is the more convincing solution from the perspective of special and general prevention as well as substantive justice. The law is enforced, and wrongdoing is compensated for.
7. What should a good solution look like, and where do we stand?
In my opinion, a really good solution must be one that at least solves three core problems: It must ensure that (1) the rational lack of interest of injured parties does not create an excessive deterrent effect against pursuing a claim; (2) courts can decide similar cases quickly and in a case-by-case manner; and (3) the important and scarce economic resource of "judges' working time" is not further wasted doing almost the same thing over and over again. How then do our current mechanisms measure up? The assessment is far from encouraging.
As its name suggests, the “Musterfeststellungsklage” [note: model declaratory action, Germany’s first broad attempt at a collective redress mechanism] does not allow for an enforceable judgment for performance, but only a determination of certain facts relevant to a liability claim. However, each consumer must pursue their individual claim on their own once the model proceedings are concluded. The law was not a success; in the end the number of cases amounted to less than 5% of what the Federal Ministry of Justice] had hoped for in its explanatory memorandum to the draft law.
The recently cosmetically revised and made permanent “Kapitalanlegermusterverfahrensgesetz” [editor’s note: “KapMuG”, Capital Investor Model Proceedings Act] will be mentioned here only briefly and for the sake of completeness. It provides a separate model proceedings mechanism for investor claims, but in practice it is flawed. Proceedings progress slowly and are cumbersome. Additionally, the KapMuG contains only partial provisions. In case law, this often affects cautious, tentative panels, which, as the only fact-finding instance, are directly subject to the Federal Court of Justice do not want to be overturned by it – a factor that does not promote rigorous or courageous conduct of the proceedings. Unfortunately, this mechanism, too, falls short of the needs of practice.
But now, in 2023, the “Verbraucherrechtedurchsetzungsgesetz” [note: Consumer Rights Enforcement Act] and the remedial action have come into force in implementation of the EU Representative Actions Directive. Is this the mechanism that will cut the Gordian knot? Are we now about to see how the judges’ desks clear, asmass individual proceedings rapidly decline, allowing them to refocus on handling and deciding complex individual cases and to actually enjoy the judicial profession again?
I have my doubts. Many questions remain unresolved or have been regulated in ways that miss the realities of practice. To name just a few examples: Standing to bring such actions is extremely restrictive, primarily consumer associations can initiate these proceedings. In addition, there must be at least 50 individuals who have been harmed in the essentially same way. But when are claims "essentially the same "?The approaches proposed so far are rather narrow. Commercial litigation funders are de facto excluded from the mechanism. The permissible success fee is capped at 10% of the recovery, which will make participation economically viable for commercial litigation funders in very few cases– and certainly not in the area of small or very small claims. The resulting legal consequence, by the way, is quite remarkable: An excessive remuneration agreement with the funder renders the lawsuit inadmissible. Participation in a remedial action cannot easily be made conditional either, meaning that consumers have no rational interest in giving 10% of their recovery to a funder when they could instead simply sign up and receive and keep 100%. Moreover, the funder would, in practice, have no reliable means of securing its sucess-based remuneration vis-à-vis the consumers with whom it has contracted. This is because the court-appointed trustee, who distributes the money recovered from the defendant, may not deduct any share of the recovery owed to the funder before making distributions. As a result, the funder would effectively bear the liquidity and solvency risk of all participating consumers.
My prediction is therefore that in practice we will see only a few remedial actions overall – and virtually none supported by commercial litigation funders. This is far from the major breakthrough needed to relieve the courts. The lobbying interests aimed at the "protection" of the industry have clearly prevailed.
8. Conclusion
As we can see, there is still a lot to do for the civil proceedings of the future when it comes to enforcing uniform and highly similar claims. It is also the task of modern civil procedure system and the state's conflict-resolution services to ensure that the economically weaker party is heard and has adequate access to justice. No one should refrain from entering a dispute, or effectively be unable to prevail, simply because they stand no chance against a far more resourceful defendant.
At present, the an individually filed lawsuit against a large company can only partially achieve this– and our collective mechanisms are sluggish and unattractive. Debt collection service providers and B2C litigation funders have stepped into this gap. Thew serve as a kind of stopgap patch on a system that is in urgent need of modernization.
Legislation should therefore not begin by overregulating funders and disruptive legal tech providers. What we need is a functioning digital judiciary, collective mechanisms worthy of the name; courageous experiment such as fast, fully digital small-claims courts and structured party submissions, so that the conflict-resolution mechanisms run by companies like PayPal etc. do not, in effect, replace our courts. The reforms adopted so far fall far short of the task at hand, and this must change. Otherwise, we risk being left with a civil justice system that is intellectually and dogmatically sophisticated and a subject of highly refined academic debate – yet no longer meets the needs of practice and is simply no longer us.
[1] This is a translation of the article “Die Zukunft des Zivilverfahrensrechts – die Perspektive des Prozessfianzierers”, published by Prof. Philipp Reuß in the book “Kolloquien im Wintersemester 2023/2024” with the University Publishing House Göttingen, available for download here: https://doi.org/10.17875/gup2025-2957.
The article is an extended and updated version of the lecture given by the author at the "Göttingen Colloquium on Civil Procedure Law 2024" on 2 February 2024.
The positions represented in this text are to be understood as a contribution to legal policy and selectively pointed contributions to the debate. They reflect the personal opinion of the author only, and those are not necessarily the positions of the Deminor Litigation Funding group.
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