target-revenue/history/260729-TREN-MechanismDesign.md

TREN Mechanism Design: Litigation Funder / Local Counsel Split

Document status: Research artifact, Stage 0 (workplans/TREV-WP-0005-enforcement-network-research.md T09) Not legal advice. Design synthesis drawn from history/260729-TREN-Jurisdiction-Germany-EU.md, history/260729-TREN-Jurisdiction-US.md, and history/260729-TREN-Jurisdiction-UK.md.

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1. The core finding driving this design

Three jurisdictions researched so far split cleanly into two groups:

• Single-role viable (US, UK): a lawyer can be paid a direct percentage of Recovery, at or near the Licensor's proposed 50% figure, without a separate funding entity.
• Single-role not viable as originally framed (Germany, and likely France and other continental civil-law jurisdictions by the same pattern): a lawyer generally cannot be paid a direct percentage; the available structures are either narrowly gated (Germany's §4a) or require a genuine fixed-fee component alongside an uncapped result fee (France).

A mechanism designed only around the US/UK pattern would simply not be usable in Germany — the jurisdiction the Licensor specifically named first. A mechanism designed only around the German pattern would be needlessly complex for jurisdictions where it isn't required. The design below is a single Enforcement Partner Agreement (EPA) template with jurisdiction-conditional role structure, not two separate products.

2. Roles

Role	Function	Required in
Licensor	Holds the underlying right being enforced (License §3); vets and authorizes each Enforcement Action (concept §3.2, §10); is the ultimate recipient of the Platform Share.	All jurisdictions
Local Counsel	Locally-licensed lawyer/firm who actually conducts the Enforcement Action under local procedure and professional-conduct rules.	All jurisdictions
Litigation Funder (conditional role)	A non-lawyer party that bears the economic risk of the Enforcement Action and is contractually entitled to some or all of the Contingency Share, paying Local Counsel under a locally-compliant fee structure.	Required where Local Counsel cannot lawfully receive a direct percentage of Recovery (e.g. Germany); optional/absent where Local Counsel can (US, UK)

The Enforcement Partner term from the concept doc (§5.2) now resolves, per jurisdiction, to either:

• (a) Single-role: Local Counsel is the Enforcement Partner and receives the Contingency Share directly (US default; UK default via DBA), or
• (b) Split-role: the Litigation Funder is the Enforcement Partner of record for contracting/payment purposes, and separately retains Local Counsel under a compliant local fee arrangement (Germany default; likely much of continental Europe).

3. Payment flow

Single-role (e.g. US, UK):
  Recovery --> [Contingency Share to Local Counsel] + [Platform Share to Licensor]

Split-role (e.g. Germany):
  Recovery --> [Contingency Share to Litigation Funder] --> [compliant local fee to Local Counsel,
                                                              retained profit to Funder]
           --> [Platform Share to Licensor]

In both structures, the Platform Share is unaffected — it is always Recovery minus the Contingency Share, regardless of who receives the Contingency Share or how they in turn compensate Local Counsel. This keeps specs/EnforcementNetworkConcept.md §6's Development Credit allocation rule identical across jurisdictions; only the Contingency Share's internal routing varies.

4. Jurisdiction-conditional structure selection (feasibility matrix, partial — T04–T08 still pending)

Jurisdiction	Structure	Contingency Share ceiling found
Germany	Split-role (Litigation Funder + Local Counsel under a §4a-compliant fixed-fee-plus-uplift arrangement, or Local Counsel directly if a §4a gate genuinely applies)	No general percentage cap found; §4a gates are narrow, not percentage-limited
France	Likely single-role viable via fixed-fee-plus-uncapped-result-fee, provided the fixed component is genuine (not token)	No statutory cap found
United States	Single-role	State-bar reasonableness, no fixed cap found
United Kingdom	Single-role via DBA	50% (statutory cap, "all other cases" category)
Argentina, India, China, Africa, Asia-Pacific	Not yet researched (WP-0005 T04–T08)	—

This table is necessarily incomplete — five jurisdiction/family tasks remain todo. Do not treat "single-role" as the default assumption for any jurisdiction not listed above.

5. Enforcement Partner Agreement (EPA) outline

Building on specs/EnforcementNetworkConcept.md §9's requirement list, with roles now concrete:

1. Parties. Licensor; Local Counsel; Litigation Funder (if the split-role structure applies in this jurisdiction).
2. Scope. The specific Alleged Violation(s), jurisdiction, and Phase(s) covered.
3. Authorization. A power of attorney or equivalent local instrument from the Licensor to Local Counsel (and, in the split-role structure, confirmation of the Funder's standing to fund without itself practicing law — this is exactly the boundary German and similar rules police, so this clause needs the most jurisdiction-specific care).
4. Fee/Contingency structure. Selected per §4's jurisdiction table: single-role percentage, or split-role Funder-percentage-plus-Local-Counsel-compliant-fee.
5. Conduct standards. Local Counsel's obligation to pursue the Enforcement Action diligently and report status to the Licensor.
6. Settlement authority. Whether Local Counsel/Funder can settle without the Licensor's consent, and how the Contingency Share is calculated if the Licensor settles directly over Local Counsel's objection (flagged as unresolved in concept §11 question 4).
7. Registry reporting. What gets reported to the Enforcement Registry (concept §5.7) and when — status changes, not case strategy or privileged material.
8. Termination. Either party's ability to withdraw, and treatment of work-in-progress compensation on withdrawal.

Full legal text is out of scope for this design synthesis — this outline feeds T10's synthesis task, which will produce (but not itself finalize) a fuller draft.

6. What remains open

• Five jurisdiction/family tasks (Argentina, India, China, Africa, Asia-Pacific — WP-0005 T04–T08) are needed before the feasibility matrix in §4 is complete enough for a real V1.0 recommendation.
• Concept doc open question 5 (foreign-Licensor standing) is directly relevant to clause 3 above and needs jurisdiction-specific answers, not a general one.
• Whether a single global entity can act as "the" Litigation Funder across all split-role jurisdictions, or whether local funding-market presence is required per jurisdiction, was not researched in this pass.