10 July 2020
In recent years, a number of high-profile claims have focussed minds on the availability of collective redress in England & Wales and across the European Union. Two major shareholder actions have been brought in the English courts under the (seldom-used) Group Litigation Order (“GLO”) regime: against the UK banking giants RBS (in the RBS rights issue litigation) and against Lloyds/HBOS. In addition, a GLO has also been granted in the claims made by motorists in the UK in the VW diesel emissions litigation. These actions have been followed by a number of claims before the Competition Appeal Tribunal (“CAT”) in London in relation to cartel activity by various truck manufacturers. Woodsford has also recently funded the first ‘stand-alone’ competition claim to be brought in the CAT, which is set to be a landmark decision in competition law in England. Finally, a representative action, the “Google You Owe Us” claim, was launched in the English Courts on behalf of a group of claimants relating to privacy breaches through the use of the “Safari workaround”.
The general consensus in both the legal and funding communities is that the number of group actions being brought looks set to grow. Woodsford agrees, and will certainly continue to invest in group actions globally. The heightened focus on data protection issues and the recent implementation of the General Data Protection Regulation (with there being a number of ‘hacks’ of household names in the recent past, such as of the airline British Airways and of Tesco Bank (an online bank run by UK supermarket giant Tesco)) have highlighted possible growth areas for future collective redress actions in England.
Further, institutional investors (traditionally reluctant to participate in litigation) are developing an increasing appetite to participate in securities group actions, having recognised that, in appropriate circumstances, participation in group actions is in the best interests of their stakeholders in that it can lead to both financial recovery and can act as an effective way to keep corporate behaviour in check.
If, as in most cases, those claims are grouped together and supported by third party litigation finance, the proposition becomes an enviable one for claimants: if the claim succeeds, the claimant recovers the majority of its losses. In this way, an investor’s claim which, taken individually might otherwise have been uneconomic to litigate, is unlocked, realising value for the investor. If the claim does not succeed, the investor bears no liability for the legal costs incurred in bringing the claim (and, more often than not, the adverse cost risk is also borne by the funder or an insurer). Litigation funding plays a key role in enabling these claims to be brought and for access to justice to be achieved. All of the cases mentioned above were supported by third-party funding. Without such support, these claimants would be left without the opportunity for redress, since it would simply not be economically viable for such claims to be progressed. Bringing these defendants to account also serves a wider purpose, as it deters future misconduct. Thus, such claims form an important part of the regulatory framework.
There are further benefits to funded actions Litigation finance providers generally undertake significant due diligence before agreeing to provide funds in respect of a particular case (given that their investment is generally non-recourse). When carried out by a sophisticated and experienced team, such as that at Woodsford which is made up of an expert team of litigation and finance professionals, claimants have the benefit of an objective analysis of the claim, which is carried out before substantial resources have been expended. A litigation finance provider’s decision to proceed with investment is a good indication that the claim is meritorious and worth pursuing. Woodsford’s team of expert litigation lawyers and finance professionals have years of experience undertaking financial and legal structuring of group actions, providing a critically valuable resource at the outset of a claim.
Additionally, claimants who are supported in such group actions by a leading litigation funder like Woodsford (a founder member of the Association of Litigation Funders in London), with a transparent onshore structure, supported by deep-pocketed shareholders and having a track record of success, will ensure that the courts have confidence in the claimants’ claim (for example when claimants are seeking certification of a class representative before the CAT). Equally, institutional shareholders will gain comfort that the kind of high stakes litigation in which they become involved is backed by a funder which has extensive financial resources and experience of handling such actions.
While class action regimes are already well developed in certain other jurisdictions, the group action regime in England is relatively young. As it begins to mature, and its use grows, so too does a concern that England will adopt a more litigious ‘class action culture’ like that (said by many to be) seen in the United States. The following whitepaper will outline the key features of the regime in England & Wales and identify some key features that differentiate the avenues for redress available to claimants in England from the approach taken in the United States and Australia.
You can read our whitepaper, The Future of Group Actions and Third Party Funding here.
For further information, please contact:
Steven Savage, WoodsFord Litigation Funding
ssavage@woodsfordlf.com