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. BP: Oil Spill Settlement Administrator 'Misunderstood' Deal, Allowed Questionable Payments to Nonprofits

    October 07, 2014 | News and Blog

    BP told a U.S. Court of Appeals in New Orleans this week that the administrator of the Gulf Oil Spill settlement "misunderstood the deal" and allowed a collection of nonprofit agencies that "didn't suffer any losses from the spill" to be paid hundreds of thousands of dollars, reports Bloomberg.... Read More

  2. In The News Today - October 2, 2014

    October 02, 2014 | News and Blog

    Judge Keith P. Ellison recently ruled that foreign investors who sued BP PLC over alleged stock losses related to the 2010 Deepwater Horizon disaster can continue to seek remedy in U.S. district court "even though they are litigating under English law".... Read More

  3. ILR's Lisa Rickard Pens Article on the "Toxic Cocktail of Class Actions" Brewing in Australia

    September 05, 2014 | News and Blog

    A piece by President of the U.S. Chamber Institute for Legal Reform Lisa A. Rickard is today featured in The Australian.... Read More

  4. Rise of Class Actions in Latin America Threatens Region's Growth

    August 18, 2014 | News and Blog

    Latin America has entered the 21st century with great promise. The region is experiencing a surge of startup companies and initial public offerings. ... Read More

  5. Five Banks Facing Largest Ever Australian Class Action

    August 13, 2014 | News and Blog

    Australian law firm Maurice Blackburn has filed open class actions against five banks over late credit card fees totaling hundreds of millions of dollars.... Read More

  6. New U.S. Chamber Reports Signal Enhanced Risk of Lawsuit Abuse in Latin America

    August 06, 2014 | News and Blog

    Latin American countries are systematically changing their civil justice systems in a manner that threatens a coming wave of civil litigation and negative economic and social consequences, according to key findings in two new ILR reports released yesterday.... Read More

  7. Class Action Evolution: Improving the Litigation Climate in Brazil

    August 05, 2014 | Research

    This paper explores the state of class actions in Brazil as an imbalanced system that undermines safeguards to guarantee unbiased and predictable proceedings and discusses proposed legislative changes before the Brazilian Senate.... Read More

  8. The ILR Research Review - Spring 2014

    July 08, 2014 | Research

    This edition of the ILR Research Review offers valuable insights from the latest of ILR's research on securities class action litigation, unclaimed property, and third party litigation funding in Australia.... Read More

  9. Excessive Shareholder Class Actions Pose 'Real Cost' on Australia

    June 19, 2014 | News and Blog

    Meaningful reforms are needed to curb excessive shareholder class action lawsuits that impose a "real cost" on Australian businesses and society, writes Chris Merritt, legal affairs editor for The Australian.... Read More

  10. In The News Today - June 6, 2014

    June 06, 2014 | News and Blog

    A group of Australian business organizations are backing the government's, "planned crackdown on opportunistic securities class actions and warned that the impact of this form of litigation is far greater than asserted by plaintiff lawyers," reports The Australian's Chris Merritt. ... Read More