Clifford Chance – The growing risk of group litigation and class actions

Clifford Chance –

Class actions have long been a feature of the legal landscape in the US, but there are clear indications that their reach is expanding.

In this extract from a recent webinar, Clifford Chance experts explore the key risks in relation to securities and shareholder litigation, claims arising from data breaches and data misuse, and climate change litigation.

“Class or group actions have become a regular feature of American corporate life, driven by generous class mechanisms, the absence of a “loser pays” rule and contingency fee lawyers,” says Ian Moulding, a Clifford Chance litigation Partner based in London. “Now mass claims are on the rise in many countries, fueled by proactive, entrepreneurial claimant lawyers, a generally more litigious environment and the explosive growth in the availability of third-party funding options and the related costs insurance.”

In the UK, for example, very significant group actions have been filed across a range of sectors, including: the RBS Rights Issue litigation and the Lloyds/HBOS claims following the GFC in the financial sector; the VW diesel emissions action in the consumer sector; the Tesco accounting error shareholder action; the Google iPhone litigation with respect to data privacy; and a raft of competition-related claims, including the Mastercard fees litigation and the FX market group actions. Environmental claims, such as the CO2 emissions litigation brought by a group of NGOs against Shell in the Netherlands, is another fast-developing area.

Crucial to these actions is the backing of litigation funders, which is now a multi-billion dollar international business.

Around three quarters of such claims in the UK are funded, as Moulding explains:
“One area which is attracting funders in particular is shareholder securities claims, or “stock drop” cases as they are known in the US. In the UK, these claims are brought under sections 90 and 90A of the Financial Services and Markets Act (FSMA). They provide, respectively, a cause of action for untrue or misleading statements, or omissions in a prospectus or other listing particulars or in a
company’s annual reports and accounts.”

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