It may not be a surprise to some of you that class actions in Europe are on the rise. CMS released its European Class Action report this year, which analyzes data from class action proceedings across Europe and maps out a picture of growing class action risks.
Key Findings from the CMS Report:
- Europe and the UK continue to see record-high numbers of class actions, with 121 claims filed in 2022, up from 55 in 2018.
- As of 2022, the total claimed value of class actions in the UK – both opt-in and opt-out — is in excess of €120bn ($128,207,400).
- EU countries with the most significant class action growth were Poland, Slovenia, and Portugal.
- The biggest growth of class actions was seen in product liability and in competition claims.
- In 2022, 31% of claims were shareholder/securities class actions, 26% were competition class actions, and 24% were product liability class actions.
- Countries where the most class actions are pursued are the UK, Netherlands, Portugal, and Slovenia.
Factors that Promote the Growth of Class Actions
CMS’ report outlines several factors that are increasing class action risks.
- The unbridled growth of third party litigation funding which allows hedge funds and other financiers to invest in lawsuits in exchange for a percentage of any settlement or judgment. Funders are attracted to cross-jurisdictional cases and their potential for substantial rewards.
- Consumers in Europe are showing an increasing appetite to join class actions.
- Law firms and litigation funders are increasingly cooperating to reinforce the collective positions of claimants. They have established steering committees and organizations to collaborate and share expertise.
- A growing number of legal tech firms and other outsourced legal and paralegal services are being utilized to manage complex cases involving diverse claimant groups, cross-jurisdictional elements, and the communication of complex legal concepts.
The Representative Actions Directive
The Representative Actions Directive (RAD) defines minimum standards across the EU for collective proceedings (otherwise known as class actions). With the ongoing implementation of RAD among EU Member States, it is predicted that this new EU directive will generate more class actions, particularly in countries with fewer safeguards against litigation abuses.
RAD will fundamentally reshape the EU’s civil litigation environment and will accelerate the growth of class actions and litigation funding activity throughout the EU. Policymakers in the EU should consider introducing additional safeguards, like the regulation of third party litigation funding, to prevent U.S.-style litigation excesses from taking hold of Europe and the majority of the EU