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Collective Redress in the UK

There has been much talk in the media about a new era of collective redress in this country.  What is the discussion all about and what does it mean for you and other ordinary consumers?

Historically, it has been very difficult in the United Kingdom for large numbers of individuals to bring a claim in the English Courts. In contrast to the United States, our system has never really been geared up to allow, say, thousands of consumers to bring a claim against a big company, however meritorious the claim might be.  

If, for instance, a pharmaceutical company were to produce a dangerous drug that adversely affected lots of people, it is not easy for the collective group to act as one and bring a claim. This was perfectly exemplified by the Thalidomide scandal of the 1960s.   

Why is it so hard to bring collective claims in the UK?

First, as a general rule, we do not have “class actions” as many other countries do. 

An organisation or say a firm of lawyers cannot simply assert that they act for all affected people and bring a claim for everyone. In general, each individual needs to instruct the lawyers and this is expensive, time-consuming, hard to organise and difficult to manage.  

Second, our legal system works on the basis of “loser pays” the legal costs.

This means that there is a huge risk for any claimant that in the event of losing (for whatever reason), you might end up liable for the legal fees of the company you have sued. This is a deterrent that can be especially off-putting.

Finally, legal aid for civil actions is virtually non-existent so someone has got to pay for the exercise.  If each individual’s claim is relatively modest it is not attractive to start paying for expensive lawyers.

Collective redress: a new era for consumer claims and corporate accountability 

All of this said, the landscape is changing.  We now have the beginnings of a system for collective redress in consumer cases and other factors have come into play.  

Lawyers can act on a contingent basis (eg. “No-win, No-fee”). This means that third-party litigation funders are permitted and prepared to back such claims and the courts are working to accommodate mass claims either by a few sample cases (when each claim is essentially identical) or by making what is called a Group Litigation Order to help manage a situation in which there are vast numbers of claimants. Moreover, it is possible to insure against the risk of adverse costs.  

These processes are in their infancy and it will be interesting to see how they develop over the next few years.

There is a political and judicial fear that cases of this kind will create an American-style compensation culture. But I think that these fears are largely unfounded.  

In the United States, there is no loser-pays regime: the astronomical compensation awards made there are not mirrored here. We also do not have jury trials for civil cases as happens in American cases which can result in bizarre outcomes. Additionally, many of the sorts of claims that can be brought in the United States simply do not exist in this country.

In short, this country is not about to become a litigation version of the Wild West. However, there is increasing pressure for mass claims to be recognised – and wider acknowledgement of that fact that there should be fair access to justice for ordinary people with a justified grievance. 

Watch this space.

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