Class Actions Around the Globe

The United States is notorious for excessive litigation. A 2013 study by NERA Economic Consulting revealed that the U.S. has the highest liability costs as a percentage of GDP of the countries surveyed, with liability costs at 2.6 times the average level of the Eurozone economies. Unfortunately, many foreign governments are considering adopting one of the most problematic features of the U.S. lawsuit system – class actions. Read More...

Class actions permit multiple claimants with the same claim to file a single lawsuit. Well-intentioned policymakers believed this would increase efficiency and access to justice. Instead, it has become a profit-making business where redress for claimants is no longer the chief concern.  

Class action litigation in the U.S. is a lawyer-driven business in which lawyers seek out reasons to sue and then file on behalf of hundreds or thousands of claimants. In the “opt-out” system, where claimants are in the case unless they take the initiative to remove themselves, most do not even know they are litigants. With so many claimants, the potential for huge damages looms large. Companies often settle meritless claims because taking the case to trial is risky, expensive, time-consuming and damaging to their reputation.

At the same time, class action settlements often provide little or no benefit to claimants. An April 2013 U.S. national opinion survey revealed that only 14% of those who were part of a class action lawsuit reported having received something of value, such as a cashed check or redeemed coupon. Four in five voters involved in a civil lawsuit said that lawyers benefit the most from class actions.  

A study done by the U.S. Consumer Financial Protection Bureau found that even when claimants do receive compensations from a class action, the average payout is $32. Compare this to the average amount plaintiffs’ lawyers take from a settled case - $1 million.

An increasing number of countries are adopting proposals to allow class actions, further burdening businesses in a difficult global economy while creating little, if any, real value for consumers.

ILR’s research found that Member States of the European Union have been accelerating the introduction of policies to facilitate lawsuits, but have failed to implement or maintain important class action safeguards to keep civil justice systems from attracting profit-seekers.   

While civil justice systems around the world differ from the U.S. model, we are seeing the globalization of class action litigation.  Plaintiffs’ law firms based in the United States are funding class actions in the UK and third party litigation funders based in Australia are funding cases in the Netherlands. As these class action systems develop around the world, those looking to take advantage of the courts in order to make a profit will follow.

As a result, ILR is urging policymakers in Europe (both in individual countries and at the EU level), Australia, Asia, and Latin America to think twice before adopting class actions without safeguards against abuse. 

Suggested Resources

Research

All Results for Class Actions Around the Globe

  1. In the News Today - December 14, 2017

    December 14, 2017 | News

    9th Circuit Strikes Constitutional Challenge to the Arbitration Act; Growth in class actions to come under scrutiny... Read More

  2. ILR Research Review - Fall 2017

    November 30, 2017 | Research

    This special double-issue of the ILR Research Review features a wealth of insight and analysis on the world's rapidly changing litigation environment. The research contained in this issue targets exploitative litigation at home and abroad, examining numerous developments ranging from hyper-aggressive trial lawyer advertising in the U.S. to the imminent expansion of class actions in Europe.... Read More

  3. Third Party Litigation Funding's Week Under the Microscope

    November 10, 2017 | Blogs

    Third party litigation funding -- where companies "invest" in lawsuits for a cut of any proceeds -- is spreading like wildfire across the globe, with one of the largest funders boasting billions of dollars in resources just on its own.... Read More

  4. Plaintiffs' Lawyers Seek Review of Rejected Mastercard Class Action

    October 30, 2017 | News and Blog

    Attorneys from Quinn Emanuel Urquhart & Sullivan have filed applications in the U.K.'s English Court of Appeal and the Administrative Court of the High Court seeking judicial review of the £14 billion class action over Mastercard's fees, reports Commercial Dispute Resolution.... Read More

  5. Through the Binoculars: Global Problems, Universal Solutions

    October 25, 2017 | Video | Watch

  6. ILR "Warns of Risks of Dutch Class Action System"

    September 29, 2017 | News and Blog

    The U.S. Chamber Institute for Legal Reform warned the Netherlands "is moving into dangerous territory by rolling out the red carpet" for class action litigation, writes Dutch News.... Read More

  7. 85 Percent of EU Consumers Support Safeguards in Any New Collective Action System

    September 28, 2017 | News and Blog

    An overwhelming majority of EU consumer said they would support building in safeguards against abuse in any new collective action system, according to a new six-nation survey released by the Institute for Legal Reform.... Read More

  8. The ILR Research Review - Spring 2017

    May 08, 2017 | Research

    This edition of the ILR Research Review offers valuable insights from ILR's recent research on the latest trends in litigation and the tactics and strategies entrepreneurial plaintiffs' firms are using to expand their business models and bring more lawsuits in local, state, federal, and international courts.... Read More

  9. The Growth of Collective Redress in the EU: A Survey of Developments in 10 Member States

    March 21, 2017 | Research

    This paper examines the 'state of play' of collective redress in 10 Member States in the EU and suggests minimum necessary safeguards to prevent litigation abuse taking hold in Europe. ... Read More

  10. In the News Today - May 23, 2016

    May 23, 2016 | News and Blog

    The Growth of Class Actions in Australia: "Class actions have unquestionably grown into the fastest-growing species of litigation in Australia in the last decade," said Jason Betts, a commercial litigation partner at Herbert Smith Freehills. ... Read More