Like many transatlantic trends, lawyers have long been predicting that US-style class action litigation is set to migrate to Europe but, until recently, there has been little evidence to support such wild claims.
But when America’s largest law firm, Skadden Arps Slate Meagher & Flom, announced it is launching a practice aimed at defending corporate clients in Europe from such litigation, the predictions appear to have some substance.
And there have been other signs of late. The prominent US class action specialist Cohen Milstein Hausfeld & Toll last month recruited a lawyer from the Office of Fair Trading (OFT) to launch its much-touted London branch.
Even more significant have been a series of developments that suggest policy-makers in Europe are looking to private litigation, backed by some tactics imported from the US litigation model, to support consumer rights and assist resource-strapped regulators.
Notably, European Commissioner of Consumer Affairs Meglena Kueva unveiled proposals on 13 March to allow individuals across the European Union (EU) to group claims as a means of boosting consumer rights. Also in March, the influential National Association of Pension Funds publicly encouraged its members to pursue claims through the US courts.
Other significant moves have seen the OFT in April float plans to encourage private competition claims. The same month saw Royal Dutch Shell reach a $450m (£229m) settlement with a group of European investors related to the energy giant’s restatement of oil reserves. The settlement was hailed in some quarters as a breakthrough for class action litigation in Europe.
But while it is accepted that there is more scope for US-style litigation to migrate to Europe, what form it will take is less certain.
UK lawyers remain skeptical regarding some of the hyperbolic claims, citing the UK’s restrictive litigation funding regime, which bans the US model of contingency fees and punitive damages. As one litigator says: “I do not believe we will have US-style ‘supersize me’ payments here.”
Likewise, the collapse three years ago of Class Law, the high-profile UK boutique set up to pioneer such group claims in the UK, is a reminder that class action has so far delivered little in Europe.
As some of the features of the US litigation model can not be replicated in Europe, attention is focusing on whether there will be a growth in group claims, which are currently difficult to achieve in the UK, or a new willingness from shareholders to pursue litigation in cases where governance failures have caused investors loss.
Development in either respect would be a major step towards the kind of litigation loosely termed under the class action umbrella.
But a further hurdle that such litigation would need to tackle is cultural, with many UK lawyers remaining very uncomfortable with the concept of class action, which is, after all, deeply controversial even in the US.
Clifford Chance partner and London Solicitors Litigation Association president Simon Davis told Legal Week: “I would be concerned at any attempts to export US-style litigation to the UK.”
Clyde & Co dispute resolution partner Julian Connerty comments: “UK firms have the capability and experience to do class actions but there is a cultural difference. UK firms can do it but whether they will want to is a different question.”
Perhaps a key factor will be less around the class action tag but the willingness of US firms to fill a potential gap in Europe’s legal services market: the continued absence of a developed and well-funded civil claimant Bar.
David Greene, head of litigation at UK group action specialist Edwin Coe, says: “US firms have had many years of experience in dealing with competition and securities litigation and they are leveraging off that experience. They can also draw on resources used in the US to generate follow-on actions in Europe.”
So far, Shook Hardy & Bacon’s ill-fated takeover of Arnander Irvine & Zietman (AIZ) in 2002 is the only attempt of a US litigation practice to enter the UK. But there is arguably a niche for US firms to build a practice less around the class action model and more simply a willingness to litigate against major corporates and banks — something that commercial UK firms increasingly avoid.
Manches head of commercial litigation Clive Zietman agrees that US firms will have an impact but says that they will not simply
be able to bring their box of tricks to London.
He comments: “They say everything that happens in America eventually happens here, but the whole US mentality towards litigation is different to ours. Just to say we are going to import wholesale the US system into the UK is misconceived.”
