This was the principal finding of a survey sponsored by
In advance of the survey, I think it is fair to say that even those of us who provide exclusively defence-side advice were viewed as among those fuelling the ‘hype’ fomented by plaintiffs’ firms concerning the possibility of class action-type practice in Europe. The sceptics consider that the absence of US-style jury trials, punitive damages, contingency fees and opt-out procedures, are enough evidence that collective litigation is unlikely to emerge to any meaningful extent. However, the European business executives and lawyers who responded to the survey were confident that collective and representative litigation is on the rise.
One clear conclusion that emerged is that of the steady increase in group litigation in
Issues affecting consumers directly, such
as product liability, price-fixing and shareholders’ rights, are expected to generate the most group litigation. More than two-thirds of all respondents say group litigation is most likely to deal with consumer product liability, followed by cartel and price-fixing cases and shareholder rights.
While Europeans reject many features of the
For example, a majority expects legal fees to become linked to the outcome of cases, while many anticipate the introduction of contingency fees for lawyers as a percentage of court judgments. About the same number expect to see the introduction of some form of enhanced or punitive damages in civil cases.
Other features of the
Because European companies are aware of the rising risk of being targeted by consumers or shareholders acting collectively, they are taking steps to prepare for that eventuality. Some measures are already in use, while others are still in the planning stage. These preparations tend to occur mainly internally, rather than as a lobbying activity with other companies, and generally are not geared to dealing with the risk of collective litigation across several European Union (EU) states simultaneously. At least a quarter of companies surveyed say they have taken steps which include implementing systems to monitor customer complaints and corporate early-warning systems, training employees in changing safety rules and directives and seeking early settlement in cases that could escalate. They are also ensuring that insurance policies cover collective claims and they keep detailed records on product development and testing.
The list of risk management measures expands when the time horizon is extended by three years. In addition to the measures above, companies expect to implement crisis
management systems to deal with product defects, establish teams to oversee safety aspects of all products, lobby at the national level concerning enabling legislation for collective litigation and even lobby at the EU level concerning the same issues.
Right now, the European authorities and the Office of Fair Trading are debating and selecting from among various aspects of US-style, multi-party litigation tools to provide greater access to courts in the areas of consumer protection, competition and shareholder rights. In my opinion, corporate
Lawrence Scarborough is a partner at