Although Europe has not seen much class action litigation to date, it is a subject on the agenda. Already allowed in the UK, Netherlands, Germany, Sweden and Portugal, other countries are looking also exploring the possibility. As the likes of US law firm Coughlin Stoig Geller Rudman & Robby hits London intent on recruiting pension funds to support its actions, the major European law firms are not taking the threat lightly.
It is also on the radar of the European Commission which is encouraging more private enforcement of Competition law.
The prospect of US-style class action litigation has seen lawyers in firms such as Lovells and Allen & Overy fighting back with the launch of class action units to handle major litigation and disputes on behalf of their corporate clients.
A survey carried out by a major US law firm Bryan Cave found that about 60 per cent of companies expect class actions in London within the next three years, whilst two in three expect products liability to be a major focus of such litigation.
But whilst many a litigation lawyer may be rubbing their hands in glee at the thought of such lucrative fees, the firm believes that legal fees would be lower than those paid in the US – with one in three believing that some form of US contingency fee will be involved.
The UK has already seen class action litigation with individuals suing corporates over major disasters, with personal injury law firms such as Irwin Mitchell and Pannone & Co representing victims of disasters over many years.
And the recent Northern Rock saga saw small shareholders looking to sue the government after expressing “disgust” at compensation proposals. According to the UK Shareholders’ Association (UKSA), valuation of the shares will not be fair or independent, although this is disputed by the Government.
This group is represented by law firm Edwin Coe, which represents around 7000 of the smaller shareholders of Northern Rock and which is calling on each of these to pay £50 each to raise money to sue.
Corporates and banks are the new target for class action lawyers as the arrival in London of the US class action lawyers proves. Coughlin Stoig, which recently won $700 million dollars for Enron investors since the energy giant collapsed in 2001, has raised the game to a new level and caused corporate and banking lawyers to take note. The firm is looking to recruit pension funds and claims to have 25 clients including Standard Life and Scottish Widows.
Richard Elsen of Byfield Consulting, a legal Public Relations company, predicts that the US class action firms have their eye on the banks in the aftermath of sub-prime, with the banking sector being an especially fertile source of class actions and litigation.
He attributes this to the fact that it is difficult for the major UK law firms to sue banks, which leaves a gap in the market for the US entrants. The battle for Europe is set to begin and the big corporate law firms and lawyers are getting ready to defend against the American class action invaders.