The Rise of Class Actions in Europe: Will London Remain The Preferred Choice?
The last five years have seen a significant increase in the number of class actions in Europe, with the U.K. and the Netherlands considered as the key class action jurisdictions.
The upward trend is set to continue, given the EU Directive on “representative actions for the protection of the collective interests of consumers”, which EU member states must implement by the end of 2022.
This is the first pan-European legislation in this field, setting out minimum procedural standards for class actions for all Member States. While each country will implement it in different ways, the Directive mandates that all Member States must establish, at a minimum, an opt-in mechanism. It is expected that this will bring a surge in consumer class actions, as collective proceedings will now be much easier to pursue throughout all Member States of the European Union.
Within the U.K., the latest Government consultation on competition and consumer policy was issued in July 2021 and closed on 1 October, with the Competition Markets Authority expected to deliver its advice in early 2022. One of the main issues of the consultation is whether the scope of collective proceedings should expand beyond antitrust claims. Other much-awaited developments in the UK include the Supreme Court’s final judgment in Lloyd v. Google, expected in the coming months.
Historically, there has been a strong international preference to choose the law and courts of England and Wales for the resolution of commercial disputes. In recent times, however, a more decentralised dispute resolution landscape has developed, with the prominence of English law and London no longer unrivalled. In the context of the booming class actions’ market, how can the UK remain the key dispute resolution hub?
The Government’s consultation, and the imminent Supreme Court ruling, come at a time when public awareness about class actions is low, with much still to be done to inform the public in general, and potential claimants in particular, on what class actions are and how they can benefit them and the wider community.
Research conducted in the UK by C|T Group focused on (i) public awareness of what a class action is, (ii) likelihood of participating in a class action, and (iii) the reasons to participate in a class action. The results show that more needs to be done by law firms and litigation funders to raise awareness of this means of collective redress.
C|T Group’s research found that whilst 40% of respondents were aware of what class actions are, 53% were either unaware or did not know. Class action awareness was highest amongst males and people aged 55 to 64, with awareness lowest among people aged 18 to 24.
As for the likelihood of participating in a class action, only 35% of people said they would take part if eligible, with a significant 40% responding they did not know if they would participate even if they could.
The research further showed that income, education and geographical location are all relevant factors: those earning higher incomes were significantly more likely to participate in a class action, as were those with a university education. As for geographical differences within the UK, the research showed that those based in London were more likely to participate, with those living in the Northeast least likely to participate.
The main reason to take part in a class action is to make sure companies are held accountable. Main secondary reasons are to ensure that the same does not happen to others and receiving financial compensation.
The weight of these reasons shows important differences across age groups: while the main drivers for people aged 65 to 74 are to make sure companies are held accountable and to ensure the same doesn’t happen to others, the dominant reason for people aged 18 to 24 is financial compensation.
Public engagement is essential for the success of a class action. Law firms must have robust bookbuilding strategies in place to ensure potential claimants are aware of pending actions, their rights under those actions and their options under them. As shown by the variances across age groups, gender, geographical locations, and levels of education and income, this requires a targeted approach in order to make sure that the messaging is relevant and persuasive to each part of the audience. Once a class action is underway, public engagement remains fundamental to avoid the perils of “dormant claimants”.
There is currently a significant opportunity for law firms and litigation funders to shape the perception of class actions of the public in general, and potential claimants in particular. Those law firms and litigation funders that identify this opportunity and seize it will be better placed to succeed in the burgeoning and increasingly competitive field of class actions in the UK and Europe.
Leonor Diaz-Cordova is Group Director of Legal Services and Gary Neal is Director of Digital Campaigns at C|T Partners, part of the C|T Group.
This article first appeared in the international edition of LAW.COM on 3 November 2021