Managing Director Andrew Nugent Smith discusses the modern group action litigation landscape and the newly established firms that thrive in it, in Lawyer Monthly.
Andrew’s article was published in Lawyer Monthly, 30 July 2021, and can be found here.
Collective redress has seen an enormous spike in the last 3-4 years. Group Litigation Orders are on the rise. 2021 promises to be a vintage year in this area. The Merricks decision has unlocked a long queue of potential opt-out collective actions being pursued in the Competition Appeals Tribunal. The legal world eagerly awaits the decision of the Supreme Court in Lloyd v Google, which is as important to the back door opt-out class action regime found within CPR 19.6 as it is to data protection law. Cases cover areas as broad as Dieselgate claims, data beach claims, privacy, foreign exchange rigging, shareholder claims, truck cartels, train ticket overcharging, equal pay and worker rights. The list goes on and is growing.
There is no doubt that the lawyers (and the litigation funders behind them) are set to profit from these claims. Headline values run into the hundreds of millions of pounds, some into the billions. The truck cartel claims and the Merricks claim against Mastercard have headline claim values that exceed £10 billion. A 30% return to a law firm on a damages-based agreement or to a litigation funder represents a healthy return, even when the time cost of money over a typical case lifecycle of 4 years plus (often longer) is taken into account.
But is this wrong? Is it only the lawyers that profit, or is this new breed of litigation also to the benefit of the (often) consumer victims and, maybe, even society as a whole?
Three years or so ago, I was asked what I thought of the group litigation landscape in England and Wales. Was there space in the market for a new breed of firm that would recruit well from traditional defendant firms, embrace technology and really take the fight to the well-resourced corporate defendants and their squadrons of lawyers from Magic and Silver Circle firms? I thought the answer was yes. At that time there were a limited number of focussed claimant-side firms, especially those representing the interests of consumers. There was the opportunity to apply technology to drive efficiency in the generation, aggregation and ongoing management of large groups of claimants. The need to embrace the collective redress mechanisms available and the necessary evil of litigation funding was becoming better appreciated by the Courts. And, most of all, there was no shortage of corporate wrongdoing, and therefore corporates that need to be brought to account. Many of the cases cited above are on behalf of groups of corporates (small, medium and large) or investment funds of different types, but many more are on behalf of consumers. It is the latter group who have historically been under-serviced by the legal profession.
In late 2019, we therefore set about establishing Keller Lenkner UK, a sister firm of Keller Lenkner LLC, a Chicago-based claimant side firm itself set up in early 2018 by the three founders of Gerchen Keller Capital (ironically the litigation fund originally behind the Merricks case). We would apply the same ethos – great people, heavy use of technology and a razor-sharp focus on the four ‘C’s – claimant, consumer, contingent and class. And by class, we meant any situation where individual clients could have their claims brought in a way to benefit from the economies of scale of so doing, be it group litigation, multi-claimant litigation, Competition Appeals Tribunal opt-out claims, CPR 19.6 actions or even a series of individual claims following the same path. We also agreed that a key ingredient to a successful case is helping the judge to see the facts from the claimant’s perspective. He or she has to see that the claimant is on the side of right and has a genuine grievance that needs to be remedied.
In all of this, technology is key. Gone are the days of pack out/pack back where adverts on the backs of buses led to call centre operatives taking claimant details before posting out hard copy sign-up documents and then chasing for responses. Instead, the modern aspiration is as digital a client journey as possible. Clients can be attracted through social media – Facebook, Instagram, Twitter, YouTube, TikTok – and then serviced by technology throughout. The new wave of group litigation firms does not measure client bases in the hundreds; it measures them in the thousands, tens of thousands or even hundreds of thousands.
So, what does our current caseload look like? Over the past 18 months or so, we have built a large roster of cases and represent over a hundred thousand individual clients. We are pursuing VW, Mercedes and Vauxhall on dieselgate claims. We are pursuing Uber for failing to recognise our clients as workers. We are pursuing Tesco for alleged failures to comply with equal pay legislation. British Airways for failing to protect its customers’ data. Numerous high street banks for profiting from secret commissions on the sale of payment protection insurance. We have many more cases in the pipeline.
The common theme is that these are all claims on behalf of individuals against large well-resourced corporate defendants who have (allegedly) committed systemic wrongdoing. And, we say, the litigation that we have, with other firms, progressed has made the difference. Would car manufacturers compensate the consumers they deceived voluntarily? Would Uber have agreed to treat its drivers as workers and issue holiday pay, national minimum wage and other entitlements? Would BA have compensated the victims of the data breach? Would the banks pay back to customers tens of billions of pounds in secret commissions? The answer is clear: absolutely not.
So, to all those who look upon the new wave of group litigation firms with an element of distaste, I say this. Yes, of course, we are here to make a profit. But firstly, that profit will not be as extreme as it might first appear when the risks of bringing these claims and the time cost of money is taken into account. And, more importantly, by flexing our muscles, embracing technology and levelling the playing field, we are providing a route to compensation for wronged consumers that previously didn’t exist. In fact, I would go one step further. This new threat of litigation that cannot be brushed to one side has a wider impact. It gives teeth to the laws that have been created to protect society. It brings corporates to account for their misdeeds. It provides a strong incentive to comply. Firms like mine, therefore, do not just therefore provide access to justice to individual consumers. They play a wider societal role in influencing corporate behaviour.