UK class actions: What’s new, what’s changing and what’s coming next

Jon:

Hi, everyone. I'm Jon Gale. I'm a partner in the Ashurst's dispute resolution department in London. I specialise in commercial litigation and class actions. And I'm joined by my colleagues Tim West and Sarah-Jane Dobson. We're hosting this podcast off the back of a highly successful class actions conference that we held on Tuesday. We thought it would be a good idea to recap some of the key points that emerged in the conference, for those who were not able to attend. We had a fantastic selection of panellists, from clients, claimant law firms, barristers, funders. And we were lucky enough to be joined by Mr. Justice Robin Knowles, who offered his perspective on class actions, which I'm sure we will touch on. But perhaps I could turn to you, Tim, and just ask what were the key things that emerged for you from the conference? What were the highlights?

Tim:

Well, I would say one of the best things was the variety of perspectives that we got. I think that it's really important whenever you're talking about class actions to have that variety. I thought that one particularly important voice was the voice of the client. And I thought we had some really interesting perspectives from a client representative on what it meant to be day-to-day dealing with one of these and where this ranked in terms of the things that were going to get the CEO's attention and what were the practical ways of dealing with it. So I thought that was really interesting.

We had a class representative on the competition panel. And I should just say, with the three panel sessions we had, we had the first, which was talking about class action risks and trends, generally. The second one dealing with competition claims. And then a third one on funding. So as I say, class representative on the competition one, which is that really helpful different perspective. And on the first panel, yours, Jon, and Sarah-Jane, I thought really helpful again also to have that claimant law firm perspective to be able to stimulate that kind of interesting debate and discussion.

Jon:

Absolutely, Tim. I think it was really interesting to hear how class actions pose some unique challenges that are different from traditional litigation. Very often, traditional litigation can pose reputational problems. But I think the nature of class actions, the scale of them, the nature of the claimants, they can be employees... They can be activists, they can be investors... pose some unique challenges for our clients who are dealing with them. It was really interesting to hear clients talk about that. Sarah-Jane, what was your highlight?

Sarah-Jane:

Jon, I think one thing that keeps coming up in the context of class actions is just how disparate the treatment of them is in different contexts. So in particular, I think because we're lucky enough to have expertise in our team of class action specialists, on both sides of the fence of competition and non-competition claims, it's so interesting to hear how differently the class actions have progressed in that regard. When you go to conferences across Europe, in fact, you hear the UK being mentioned as being incredibly well-developed in terms of its class action regime, and that all of these cases and precedents are really attributable to the UK courts, which of course is true and is very much true in the context of competition cases. But from a different side of the fence and purely from a Commercial Court's perspective, I think we heard it repeatedly said that in fact it's quite a nascent regime.

And for that reason, it's quite interesting to hear that talked about in so much as the system there may be seen as more rudimentary. In fact, many panellists throughout the presentations, Jon, mentioned that there isn't a class actions regime that exists in the UK, which is an interesting concept in and of itself. But I think for that reason, what I find strange is the way in which there is no referral between the courts and between the systems that we've talked about. We seem to be talking quite in a siloed fashion. And I think that the conference was, for that reason, particularly powerful in bringing together all of those different pieces.

And allowing everyone in the context of this broader topic to have the benefit of not only the different perspectives that Tim mentioned, but because of the nature of the different panels we had in respect of different types of class actions, even different types of causes of action that are the basis for the procedural mechanism of a class action. To have those compared and contrasted, I think it really sounded like it developed everyone's knowledge in respect of the regimes, generally, as a whole as well. So that was my biggest takeaway, Jon.

Jon:

Thanks very much. Yeah, it was interesting to hear from Mr. Justice Robin Knowles who emphasised his view that class actions are essential in our legal system, as well as the fact that commercial funding of class actions will find a permanent place. And he very much spoke about the importance of the quality of those arrangements, including fairness, recognising that they're in place. There was an interesting discussion about what clients can do to avoid class actions, which I think was on the first panel. And what I found a really interesting discussion about the importance of clients focusing on what they are saying, for example, on their websites, in policies, in procedures, and how class action risks can arise in terms of the gap between what corporates or financial institutions say they are doing, and what they are actually doing in practise as a risk of class actions. I don't know, Tim, if you had any other takeaways in terms of what clients can do to avoid class actions.

Tim:

Yeah, I think that's the key one. I mean, I quite liked the way that... I think it was you, Jon, that characterised class actions as either being caused by trigger events, external events on the one hand. And on the other, broadly categorised as a business practise, ongoing business practises. And I think that what you're referring to there is sort of a subset of that. And I think really, the clear message there is compliance and investing in compliance and again, that interesting client perspective on all things ESG. The in-house lawyer had to be sort of the doomsayer with all these enthusiastic people wanting to do great things.

And to be able to talk about doing great things in public statements, but actually then having to row those back to say, "Well actually, are we really sure we can say that because that's now a risk area for us?" Because if anything goes wrong and there's a gap between what we've published and actually, the reality of whether we've done those things, then now the reality is that it's... Particularly if there's been a stock drop, the reality is it's fertile ground for investors to be able to launch a claim.

Jon:

Absolutely. Thanks, Tim. SJ, another thing that we discussed in the first panel, that I'm sure our listeners will be interested in, is the predictions for the future. Trends where we might see class actions emerging. I don't know what your take is on that.

Sarah-Jane:

Sure. I mean, we have talked in detail about the fact, Jon, that the class actions as a concept are definitely on the rise. And we had statistics to back that up for those sceptics that thought that perhaps it was us lawyers just fearmongering. And in the context of the group litigation orders in the UK courts, there's a really obvious rise, as we've discussed. I think since 2000, there's been 123 group litigation orders. And about 15 or 20% of those, Jon, are a product liability or consumer protection claims. And in fact, 11 of those were in 2023 and 2024, which related to the diesel emissions issues. And I think that that gives you a flavour of what we might expect to see. I think first and foremost, the diesel emissions case was interesting as a case study for the reason that it shows that there's multiple class actions or groups of claimants coming together in respect of the same type of issues that different companies are facing in the same way.

So if you look as a contrast for a similar issue that arose, for example, in the context of metal and metal hips, in a GLO context, many years ago, there was only three GLOs brought, although there were many more manufacturers that had that issue facing them. So I think first and foremost, Jon, what we can expect in terms of forecasting is that there will be more class actions, and there will probably be more class actions on the same topic, would be the first issue that I would make mention of. The second is, of course, as Tim was saying, and as many panellists were talking about, I think the concept of ESG is really quite prominent in all of the litigation we see. And it's really coming across in lots of different cross-sectors. So for example, in the consumer protection space, it's evident as standalone claims themselves.

In fact, diesel emissions again is in respect of greenwashing. So ESG-focused obligations, which are notoriously difficult for companies to keep a track of and to comply with, as Tim was saying, is another area in which we might expect to see some movement. And then as the third point, Jon, rather, I think the fact is that product liability issues, as I've mentioned, are on the rise and continue to be prominent in the UK context. So I think we can expect to see some copycat actions from... for example, across from the USA in terms of things like talcum powder, in respect of PFAS, which is another environmental issue, anything to do with weight-loss drugs that also have been starting to pick up momentum in the US in respect to group actions. And of course generally, in the life sciences space, which in product liability continues to be the most prominent area that is focused upon in those terms.

Jon:

Fascinating. Yeah, there was a really interesting discussion about the difficulty of achieving finality in class action and the danger that you sort of close down a class action in one jurisdiction and find a similar claim in another jurisdiction. Or you close it down in respect of one issue and you find another class action being launched in a slightly different but related issue. Which goes to the unique challenge that I think these types of claims pose for our clients. There was also an interesting discussion about the opportunities which class actions offer. We've been focused so far in this podcast, and a lot of the discussion in the conference was from the perspective of the defendant, which probably reflects that of our clients. But of course, even for our clients, class actions can offer an opportunity, can't they, Tim?

Tim:

That's right. I think it's something that's quite understandably often overlooked. I think one of the panellists on our competition panel made a point at the outset, just in terms of framing the regime and the rise of the regime, about which sorts of sectors had been targeted, but then also flipped it and looked at the classes in each of those class actions. And actually, quite a number of them are more than you would think are business classes or could be business class members.

So the point being made was that statistically speaking, you're actually more likely to be able to find yourself potentially a class member than you are to be a defendant in one of these things. And the advantage when you do potentially have a claim is that you are able, essentially, to combine forces and, for example, secure funding in a way that makes it proportionate for you to pursue your rights in respect of your claim without having to do it all by yourself and perhaps incur what would be a disproportionate sum for the amount that you've actually suffered as a result of the conduct at issue.

Jon:

Absolutely. As we've moved on to the competition panel that we had, one of the points I found interesting were panellists speaking about how we're increasingly seeing consumer-related issues reframed as competition law issues in order to take advantage of the regime that exists for competition class actions. I don't know, Tim, if you could explain why claimants might want to do that, and perhaps give us some examples of claims that fall within this particular bucket.

Tim:

Yeah, I mean the answer's in a sense quite simple, and that's that the input. And Sarah-Jane's already alluded to this, in that we've got different regimes in different jurisdictions. And at the moment, if you can establish an infringement of competition law, then in principle you can take advantage of the bespoke opt-out regime that operates in the Competition Appeal Tribunal that was brought in by statute in 2015. And the discrepancy between that regime and the various mechanisms that are available in the High Court has led to the rise of consumer claims and... The real boundary, the outer boundary's of competition law being explored at the moment.

And so, that we've seen in what would might traditionally be environmental claims being brought against the water companies. We've seen what might be seen as data claims brought against the likes of Meta, all with a competition law theory of harm pleaded in such a way so as to be able to take advantage of the regime at the Competition Appeal Tribunal. Now, none of those cases have yet made their way through to final judgement. Claims need the permission of the Tribunal to proceed. And all of those claims... We have had one matter that has proceeded to trial, but that was, even though it was a standalone claim, it was a more "traditional" claim. Some of the more ambitious ones have yet to make their way through. So time will tell as to whether that trend will continue after some of those cases make their way to trial and we start to see some judgments.

Jon:

Absolutely. Thanks, Tim. Our final panel was on litigation funding in relation to class actions. We had a really interesting debate. And no conference on class actions that's held in October 2024 would be complete without discussing PACCAR. But just before we delve into the detail of PACCAR, Sarah-Jane, perhaps you can just explain why litigation funding and the role of litigation funders is so integral to a class action.

Sarah-Jane:

Sure, Jon. I mean, we heard all of the panellists talk about how incredibly expensive these proceedings are. We've seen examples of costs, bills in these matters. And in fact, we had some quite public commentary about some of those cost budgets. For example, in the diesel emissions matters recently. And I think at one stage, sitting in a courtroom, you could have estimated the fees for everyone in the room to be half a million pounds potentially per hour, or up to. So the size of the cases that we're dealing with are just so large and have such large claimant cohorts, particularly in the competition space, such that there's a need for external funding or need for backing financially of these cases to ensure that they can proceed.

And that basis, there's been, as you've said, Jon, a lot of controversy around the rules that relate to funding for a number of different reasons. But they are definitely seen, as we heard from all of our panellists... They're seen as fundamental to allowing the claims to proceed to get over that financial hurdle of being able to fund the cases that proceed before the courts, essentially.

Jon:

Brilliant. And Tim, perhaps you can talk us through some of the views that were exchanged regarding the post-PACCAR world.

Tim:

Yeah. I mean, I'll keep the PACCAR bit very brief, but what we're referring to there is the fact that the Supreme Court ruled that returns that were expressed as a percentage of damages were effectively DBAs, and most of these, and therefore unlawful. And it has caused a degree of turbulence in the industry, and a headache of administrative exercise in re-papering all of these litigation funding agreements. But I think one of the things that is perhaps less well understood is the impact that that has had on pricing. And from a defendant's perspective, what the follow-on effect of that might be on the ability to settle.

And I think that was some of the most interesting debate that we had, with the point quite forcefully put by one of our litigation funders that it was sort of be careful what you wish for because the economic realities of these sorts of things is that the way that these agreements work is that you're just reducing... If the cost of funding goes up, you're reducing the gap between the funder and the lawyers getting paid. And the total damages amount, which is just sort of boxing you in in terms of your ability to settle a claim. And I thought, actually, there were some really interesting insights on that. But also from a client perspective, I thought it was very interesting to get the perspectives on what the screening processes were.

I made reference on that panel to the fact that Professor Mulherpn's recent report on litigation funding in this jurisdiction had... She had some research, and it's as little as 3 to 5% of cases that funders are presented with actually get funding. So it's a lot lower than you might think. They're obviously investing in litigation and expecting returns, so you would expect there to be a rigorous screening process. But I thought it was really interesting to have an explanation as to exactly what that looked like and exactly the exercise that funders go through and the different lenses they apply in deciding whether or not to invest in a claim.

Jon:

Absolutely. Thanks, Tim. As you can tell, we had a fascinating discussion about class actions generally, competition-related class actions and litigation funding in relation to class actions. We concluded proceedings by hearing from Sir Robin Knowles who, as I've already said, spoke about the fact that class action procedures were in his view essential in any legal system. And that the commercial litigation funding of class actions will find and keep a permanent place in the system. So once you accept those two propositions, he thought that the focus could be and had to be on the quality of the arrangements, including fairness for all as we build to those ends.

We had a great time. Thank you very much once again to all of our panellists. Thank you to everyone who came along. I hope you've enjoyed this very brief recap of the points that we discussed. And if you would like to know more about class actions, please do get in touch with me, with Tim West, or with Sarah-Jane Dobson. And we look forward to speaking with our listeners in the near future.