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The landscape
Class action litigation has become increasingly prominent in the English courts in the past decade, with claims increasing in size and value.
Since 2015, it has been possible to bring collective competition
actions on an opt-out basis under a separate regime in the Competition Appeal
Tribunal. There has also been a steady rise in claims brought
on a collective basis in the High Court.
The trend is largely due to the huge growth in the availability of litigation funding for these cases, rather than any legislative change. There is also increased willingness to use funding, including among institutional shareholders, who tend to be the key players in securities class actions.
Many boutique litigation firms were set up to pursue claims against banks around the time of the 2008 global financial crisis, with larger full-service firms often being unwilling to take on such cases. This trend has continued as firms (or UK branches of firms) set up to specialise in claimant work. Class actions are a major part of their business model.
Claimant law firms and litigation funders have increasingly been driving the pursuit of class actions in recent years, recruiting claimants to sign up to the latest claims through sophisticated marketing campaigns while at the same time exploring creative ways to bring cases.
Alan Watts
Global Co-Head of Class Actions
Current developments
Claimant firms and funders have been testing the English courts' representative action procedure.
This allows a claim to be brought on behalf of those who have the
"same interest" in it. Under the opt-out approach, there
is no need for those represented to be joined or even identified in
the action, unless and until the claim succeeds at the initial
stage. That contrasts with the main procedures for bringing class
actions in the English courts, including the Group Litigation Order
(GLO), which requires individual claimants to issue claims that are
then managed together by the court.
Overall, the upward trend in class actions seems set to continue, though the precise dynamics will depend on various factors including developments relating to procedure and funding. A key question will be whether the courts will allow damages to be awarded on a collective basis and amounts to be deducted for legal and funding costs in 'opt-out' representative actions – a question that was due to be tested in the High Court but now will have to await another opportunity as the relevant case has settled.
Rachel Lidgate
Partner
The opt-out approach removes much upfront cost, as there is no need to spend money on advertising and persuading claimants to sign up. It also leads to much larger claims, since all those affected are included automatically. But the ability to get these cases off the ground depends on funding – in particular, whether those who fund the initial stage can be confident of obtaining a share of any class recoveries.
The key questions of whether compensation can be awarded on a collective basis and whether amounts can be deducted to pay claimant law firms and funders were due to be considered at a hearing set for early 2025 in the Commission Recovery v Marks & Clerk case. However, that case settled, and so these questions will have to wait – though, given their importance, they are likely to be tested in another case before very long.
If the courts take a liberal approach on these issues, we can expect claimant firms and litigation funders to bring claims on this basis in many more cases. However, if the courts make it clear that sums cannot be deducted from class members' damages without their consent, funders' enthusiasm may be dampened.
A Civil Justice Council report on the litigation funding sector in June 2025 recommended a new system of "light-touch" statutory regulation, including for example capital adequacy requirements. Additional requirements would apply to funding for consumers and class actions, including a requirement for independent legal advice, court approval of funding agreements, and restrictions on funders approaching potential claimants in respect of a claim. These changes could be significant for funders if implemented.
Future trends
There has been significant growth in securities class actions brought against listed companies in recent years.
This is particularly under section 90A of the Financial Services
and Markets Act 2000, which allows shareholders to sue issuers for
losses arising from false or misleading statements, or dishonest
omissions, in information published to the market.
These claims tend to follow where there has been an adverse finding by a regulator, or action taken by a law enforcement agency, which has led to a drop in company share price. Claimant law firms and funders will then review the company's published information to identify statements that may be seen as false or misleading in the light of subsequent events. This trend seems set to continue, including for ESG-related claims where "greenwashing" may be alleged based on overly optimistic statements about a company's environmental credentials.
We continue to see claims brought in the English courts against UK-based parent companies, based on alleged environmental or human rights failings by their subsidiary companies abroad, or companies in their overseas supply chains. Cases in recent years have demonstrated how difficult it is to strike these claims out early on the basis that the UK company didn't owe a duty of care to the claimants.
Product liability is also an important area, given the potential for a defect in a major pharmaceutical or other consumer product to affect large numbers of individuals. The so-called pan-NOx litigation, brought against around a dozen global car manufacturers involves over a million claimants and more than 1,500 defendants. The court's willingness to proactively manage the various GLOs together and set ambitious deadlines to trial, may set a precedent for large class actions in future.
We continue to see claims in the English courts against UK-based parent companies based on alleged environmental or human rights failings by their subsidiary companies abroad, or companies in their overseas supply chains.
Next steps for business
Have robust systems: This can prevent the basis for a claim arriving in the first place. Examples include careful verification of information published to the market, oversight of policymaking and implementation for multinational businesses, and quality controls on manufactured products.
Insurance: Ensure adequate insurance is in place, where possible, and notify claims promptly.
Obtain sufficient information: When claims are brought, claimants will typically want to focus on generic issues to put maximum pressure on the defendant at minimum cost. Defendants will want to ensure that claimants are required to provide sufficient information to enable the individual claims to be investigated and challenged where appropriate.
Stay informed: Businesses should keep an eye on developments, including the anticipated decision on opt-out representative actions and outcome of the Civil Justice Council's review of funding, and consider how they may affect class action risk.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.