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November 18, 2009

U.S. Chamber Institute for Legal Reform Cites Dangers of American Lawsuit Abuse in European Collective Action Debate

BRUSSELS, BELGIUM—The U.S. Chamber Institute for Legal Reform (ILR) today reiterated the transatlantic business community’s concern about allowing collective redress in antitrust cases at an event organized by ILR, BUSINESSEUROPE and the U.S. Chamber of Commerce.

“We appreciate that European policymakers considering instituting collective actions do not wish to import a system that has proven in the U.S. to invite abusive lawsuits against businesses,” said ILR President Lisa Rickard. “However, we remain concerned that ongoing discussions include many U.S.-style litigation features, which will increase the dangers of abusive litigation in Europe with little benefit for consumers.”

At a conference on competition policy, ILR called on the European Commission to take into account concerns by EU and U.S. companies that proposals to introduce collective actions for breaches of antitrust rules have the potential to foster a litigious culture in Europe. Panel speakers discussed ways to compensate those who suffer damages without inflicting unnecessary burdens on businesses and others who could fall victim to abusive suits.

ILR also released a new publication on the emerging issue of third party litigation financing.  The paper, written by John Beisner, partner at the U.S. law firm Skadden, Arps, Slate, Meagher & Flom and a veteran litigator of collective actions around the world, is entitled Third Party Financing: Ethical and Legal Ramifications in Collective Actions. It states that allowing outside investors to fund lawsuits in exchange for a share of the award or settlement could pose significant legal and ethical risks, including the prolonging of litigation and the weakening of traditional attorney-client relationships. 

According to the paper, since a third party funder’s primary goal is to profit from the lawsuit, litigation decisions could be made to benefit the investor, rather than to promote justice for the claimant.  Combined with proposals to expand aggregate litigation in Europe, third party funding “would encourage abusive litigation, causing serious economic damage to the EU and its Member States and to the non-EU members of the European Free Trade Association,” the paper argues.

The paper is available in full at this link.
 
ILR seeks to promote civil justice reform through legislative, political, judicial, and educational activities at the national, state, and local levels.

The U.S. Chamber is the world’s largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

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