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. 

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All Results for Class Actions Around the Globe

  1. In the News Today - March 3, 2016

    March 03, 2016 | News and Blog

    Litigation Finance Company Underwriting Lawsuit Against Australian Class Action Plaintiffs' Firm: UK-based Woodsford Litigation Funding is reportedly underwriting a class action against giant Australian class action firm Slater & Gordon on behalf of shareholders impacted by Slater & Gordon's $958 million half-year loss reported Monday. (Global Legal Post)... Read More

  2. In the News Today - November 30, 2015

    November 30, 2015 | News and Blog

    Op-ed Urges Canada's Courts to Stay Out of Donziger's Anti-Chevron Legal Battle: Conrad Black, founder of the National Post, weighs in on the Supreme Court of Canada's ruling that permits a group of Ecuadorian villagers to try to enforce in Canada a fraudulent $9.5 billion judgment issued by an Ecuadorian court against Chevron Corporation. "The acceptance by the Canadian courts of this dubious action where Canada has no possible jurisdiction illustrates above all the self-perpetuating avarice of the international legal cartel," writes Black. (National Post)... Read More

  3. The Magna Carta, 800 Years Later: Rule of Law or Rule of Lawyers?

    October 27, 2015 | Video | Watch

  4. In the News Today - September 14, 2015

    September 14, 2015 | News and Blog

    ILR President Lisa A. Rickard pens a blog post about calls by U.S. Senators Grassley and Cornyn for more transparency in the third-party litigation financing industry. She writes, "Investing in lawsuits puts unconnected third parties in the middle of our legal process, and both lawmakers and the courts have an obligation to examine this industry, whose meteoric growth threatens to distort our system of justice." (ILR Blog)... Read More

  5. In the News Today - August 25, 2015

    August 25, 2015 | News and Blog

    Luke Barrett, head of legal and risk at UniSuper, one of Australia's largest institutional investors, criticized the country's litigation funding industry, asking why they "are able to charge 30 percent to 40 percent of the recovery amount." Those amounts, Barrett said, "can often be a multiple of what the legal fees were." (Sydney Morning Herald)... Read More

  6. In the News Today - August 24, 2015

    August 24, 2015 | News and Blog

    "Investors need to be careful of the 'new kids on the block' launching class actions in Australia because the growing market for class action law firms and litigation funders carries significant risk," warns Monash University law professor Vince Morabito. (Sydney Morning Herald)... Read More

  7. Australia's Billion-Dollar Class Action Boon Being Fueled by Litigation Funders?

    August 20, 2015 | News and Blog

    A warning bell is being sounded as litigation funding is being cited as the reason for a class action boon in Australia, reports the Australian Financial Review.... Read More

  8. U.S. Appeals Court Sides With Chevron in Ecuadorian Dispute

    August 05, 2015 | News and Blog

    In the latest development in the years-long dispute between Chevron Corp. and the Ecuadorian government, a U.S. appeals court on Tuesday rejected Ecuador's challenge to a 2011 international arbitration award in favor of Chevron for $96 million.... Read More

  9. In the News Today - July 30, 2015

    July 30, 2015 | News and Blog

    Rashmi Rangan, executive director of the Delaware Community Reinvestment Action Council Inc., says the sate misused millions of dollars from settlements with Bank of America and Citigroup to pad its budget, and has called on Attorney General Loretta Lynch to investigate. (Delaware News Journal)... Read More

  10. In the News Today - July 16, 2015

    July 16, 2015 | News and Blog

    Justice not Profit, a U.S. Chamber Institute for Legal Reform campaign to curb a the expansion of U.S.-style class actions in UK courts and the litigation funding industry in particular, was highlighted in The Guardian. (The Guardian)... Read More