The number of class actions brought in Europe has risen ‘relentlessly’ over the past five years, with US firms and litigation funders tapping into an increasingly lucrative market, a study has found.
According to a report by City firm CMS, 109 class actions were filed in Europe in 2020, up from 70 in 2019 and 48 in 2018. The UK was Europe’s most active jurisdiction, with over half of class actions brought there between 2016 and 2021. The Netherlands has also seen a sharp increase in cases.
CMS said US-based class action firms are increasingly opening offices in Europe, while litigation funding is becoming more widespread. ‘Claimant firms law and litigation funders both see class actions as attractive opportunities,’ said Guy Pendell, head of disputes at CMS UK. ‘The expansion of claimant law firms and litigation funders service the demand for claims, but they also create demand in and of themselves through proactively building claims of their own volition.’
Opt-out claims – which automatically involve the entire class – are also becoming more popular, the study found. ‘These mechanisms facilitate the truly huge claims, valued in hundreds of millions or billions of pounds exposure. Our report shows that class action risk is becoming mainstream,’ said Kenny Henderson, a litigation and arbitration partner at CMS.
The study cited the Supreme Court’s decision in Merricks v Mastercard of December 2020, which confirmed a low threshold for certifying class actions brought under the Consumer Rights Act 2015. ‘Claimant law firms and litigation funders have welcomed this decision and will be emboldened to file further claims,’ the report concluded.
It added that more claims are likely to be filed in relation to competition and data protection, and that climate change and artificial intelligence will ‘feature heavily’ in litigation in the medium to long term.
‘The most obvious targets will be companies with a significant carbon footprint or that contribute to other emissions or pollutants,’ said Henderson. ‘Banks and financial institutions that arguably facilitated these activities are one step removed but they also need to be aware of the developing legal risks.’