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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Research

All Results for Class Actions Around the Globe

  1. In the News Today - May 21, 2014

    May 21, 2014 | News and Blog

    More than 500 former National Football League (NFL) players have filed a lawsuit against the NFL, alleging the League supplied the former players, "with powerful painkillers and other drugs that kept them in the game but led to serious complications later in life."... Read More

  2. Ripe for Reform: Improving the Australian Class Action Regime

    May 13, 2014 | Research

    This paper explores the Australian federal class action regime model and addresses areas for improvement, such as a class certification procedure; application of the commonality certification standard; and regulation of TPLF.... Read More

  3. The Litigation Pandemic: The Rapid Spread of US-Style Litigation Around the Globe

    October 24, 2013 | Video | Watch

  4. In the News

    September 25, 2013 | News and Blog

    A week after six lawyers left a Plaintiffs Steering Committee, a lawyer has voluntarily dropped a bellweather transvaginal mesh case against CR Bard Inc. ... Read More

  5. In the News

    September 24, 2013 | News and Blog

    On Monday, BP asked a court to halt payments from the gulf oil spill settlement fund until the administrator implements recommendations to improve efficiency and accounting controls.... Read More

  6. In the News

    September 20, 2013 | News and Blog

    As part of its $920 million settlement with US and UK regulators, JP Morgan has agreed to an admission of wrongdoing in the "London Whale" case. ... Read More

  7. Recent Cases Underscore Problems With TPLF

    September 16, 2013 | News and Blog

    "Investing in high-stakes lawsuits isn't for the faint of heart," writes Jennifer Smith in the Wall Street Journal.... Read More

  8. Australian Press Highlights New ILR Proposal for Reforming Oversight of Third Party Litigation Financing

    September 12, 2013 | News and Blog

    In recent years, the use of third party litigation financing ("TPLF") in Australia has resulted in a notable proliferation of class actions and other funded lawsuits.... Read More

  9. International Comparisons of Litigation Costs: Canada, Europe, Japan, and the United States

    June 14, 2013 | Research

    The costs of liability systems can vary significantly from country to country with potential consequences for international competitiveness and productivity. Simply put, litigation costs affect the ability of companies to compete and prosper. But higher direct costs of doing business are just the tip of the iceberg: litigation also imposes indirect costs. These indirect costs stem from the uncertainty created by litigation, which may deter investment in high-cost jurisdictions. They also may affect companies' borrowing costs and hence their ability to invest, grow, and create jobs. Concerns surrounding litigation can also occupy management time, which may distort or hinder effective business decision making. ... Read More

  10. U.S. Legal System Is World's Most Costly According to a New Study

    May 14, 2013 | Press Release

    WASHINGTON, D.C. - The U.S. Chamber Institute for Legal Reform (ILR) today released a study by NERA Economic Consulting showing that the U.S. has the world's most costly legal system as a share of its economy. The study compared liability costs as a percentage of GDP using general liability insurance sold to companies in Canada, Eurozone countries, and the U.S. because it covers similar types of costs in each country. Data shows that as a percentage of its economy, the U.S. legal system costs over 150 percent more than the Eurozone average, and over 50 percent more than the United Kingdom.... Read More