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. ILR Says There's "Room For Serious Improvements" In EU Collective Action Proposal

    December 11, 2018 | News

    U.S. Chamber Institute for Legal Reform Senior Vice President for International Initiatives Scevole de Cazotte told Corporate Counsel that "there's room for serious improvements," in a bill working its way through the European Parliament that would bring class action litigation to the Continent.... Read More

  2. ILR President Lisa A. Rickard: EU About to "Import the Abuses of the U.S. Class Action System"

    December 07, 2018 | News

    The European Parliament Legal Affairs Committee approved an amended version of the European Commission's directive on collective redress yesterday, Law360 reports.... Read More

  3. EU Committee Advances Collective Redress Proposal

    December 06, 2018 | News

    The European Parliament Legal Affairs Committee advanced a proposal that would allow U.S.-style class action lawsuits across the European Union.... Read More

  4. Statement from Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform, on passage of a collective redress proposal out of the European Parliament Legal Affairs Committee (JURI)

    December 06, 2018 | Blogs

    "A new collective action directive will create a whole new world of litigation in Europe and it is crucial that EU lawmakers get it right the first time."... Read More

  5. New U.S. Tort Costs Study May Show What's Coming for Europe

    December 04, 2018 | Blogs

    The U.S. tort system can be extremely inefficient, and now a new report shows just how expensive that system is-something the EU institutions should note as they consider the proposed directive on representative actions. ... Read More

  6. Australian Litigation Funder Announces New $500 Million U.S. Fund

    December 03, 2018 | News

    The U.S. branch of Australian litigation funder IMF Bentham announced a new U.S.-focused fund that is expected to hit $500 million by the end of the year and potentially grow as high as $1 billion, Law360 reports.... Read More

  7. ILR Research Review - Fall 2018

    November 20, 2018 | Research

    ILR's Fall 2018 research cycle was about two things: spotting new, destructive legal trends before they become unstoppable, and highlighting concrete progress in addressing long-standing litigation challenges. The 2018 Fall Research Review reveals the exploding costs of the U.S. tort system, and examines developments in securities litigation, forum shopping, False Claims Act policy reform, and the European Commission's project to implement class actions.... Read More

  8. Insurance Lawyer: Litigation Funding and Class Actions Creating "Perfect Storm" in New Zealand

    November 19, 2018 | News

    An insurance lawyer from New Zealand told the Lawfuel blog that third party litigation funding and class action lawsuits can generate "a perfect storm for the insurance market in New Zealand."... Read More

  9. In the News Today - October 30, 2018

    October 30, 2018 | News

    Florida's Insurance Rates Continue to Grow as AOB Challenges Fester; "The Challenging Securities Litigation Landscape in Australia"... Read More

  10. In the News Today - October 17, 2018

    October 17, 2018 | News

    London-Based Attorney Breaks Down Recent High Court Class Action Decision... Read More