A guest post by Caroline Harbord, senior associate, and Benedict Walton, head of dispute resolution, at London firm Forsters
While the US and Australia have historically been the trailblazers when it comes to group litigation, this has undeniably been a growth area in England over the last five years – a trend which is likely to increase rather than decrease as a result of the pandemic.
Depending on the circumstances of their case, English lawyers now have various group litigation tools at their disposal, including group litigation orders under CPR 19.11, representative proceedings under CPR 19.6, collective proceedings orders under the competition regime, claims under section 90 of the Financial Services and Markets Act 2000, in addition to the option of commencing proceedings in the usual way with an extended list of claimants.
While most of these procedural tools are relatively new (and there are those who are sceptical about the desirability of some of them, particularly given the associated costs), the courts are nevertheless handing down a steady stream of judgments demonstrating that these tools are being put to use.
However, looking at the procedural landscape in isolation gives less than half the picture. There is little doubt that the real game changer for group actions in England has been the rapid expansion of the litigation funding market.
Where previously many prospective claimants could not afford to fund expensive and lengthy civil actions, or bear the adverse costs risk, litigation funders have now stepped in with increasing enthusiasm to shoulder the burden of funding group claims (including the cost of after-the-event (ATE) insurance) in return for a healthy premium if the case succeeds.
Given that group claims usually have many of the same classic ingredients, predicting which industries will be most exposed to them against the backdrop of the pandemic does not require too much crystal ball gazing.
For a group claim to get off the ground, there generally needs to be (i) a group of claimants with losses sufficient to make litigation funding attractive/financially viable, (ii) losses derived from a sufficiently similar source, (iii) sufficiently meritorious claims (including from a limitation perspective) to satisfy litigation funders and ATE insurers, and (iv) a defendant or defendants with sufficiently deep pockets (or insurance coverage) to satisfy any judgment.
Applying this formula to the post-pandemic landscape, one can well see that it could be an environment ripe for group claims.
For example, as the economic impact of the pandemic becomes more stark, trustees (including pension trustees) and individual claimants may feel even more motivated/obligated to participate in group actions to recover pensions and investment losses.
Pensions trustees and financial institutions can also make attractive defendants given their healthy balance sheets and insurance policies, and can be particularly exposed to group claims given that their investor clients often follow identical investment processes, and suffer losses with similar causes when systemic failures arise.
There is little doubt that insurers will be similarly targeted, as substantial claimant groups come together to pursue claims under their identical insurance policies for Covid-related losses.
The recent Financial Conduct Authority test case (and the result of the recently announced leapfrog appeal to the Supreme Court) may serve to streamline certain of these claims.
However, the fact the High Court felt compelled to consider 21 different sample insurance policies demonstrates that this is an area with huge scope for future group litigation, particularly when one considers the sheer volume of insured business/activity in the UK.
The pandemic could also very plausibly lead to increase in product liability group claims, following in the path of the Volkswagen litigation, with the rapid and widespread introduction of new medical equipment (like personal protective equipment) and medical supplies (such as vaccines).
If these products and/or the processes via which they were tested and approved subsequently turn out to be flawed (and it is obviously hoped by everyone that this is not the case), and sufficiently large classes of people are affected, it seems likely that group litigation will follow. It will be interesting to see how the ‘state of the art’ defence might be applied in such circumstances.
Like the pandemic, the litigation funding market is global, creating scope for coordinated international group actions, including in the fields of data protection and employee rights claims.
This is not to say, however, that getting group actions off the ground will be any quicker or easier in the post-pandemic world. This has never been straightforward and requires tenacious lawyers to build the book and undertake the extensive due diligence processes set by funders and ATE insurers.
Indeed, senior members of the judiciary have urged claimants to give companies breathing space to adapt to their new circumstances before issuing group proceedings, and it remains to be seen whether ATE insurers will be hesitant to underwrite claims which could have catastrophic consequences for their wider industry.