Class actions vs group litigation: what you need to know
Class actions and group litigation are hot topics in the legal and business world, with recent actions such as those on behalf of investors in the collapsed Woodford Funds and consumer claims against British Airways, Marriott and many insurers hitting the headlines.
Here, James Hayward, CEO of RGL Management, outlines how group litigation works, the benefits and what to watch out for:
WHAT ARE CLASS ACTIONS AND HOW DO THEY DIFFER FROM ‘GROUP ACTIONS’?
In the English courts, it is possible for large numbers of claimants to pursue a ‘group litigation’ if their cases are identical or similar. Each claimant must opt in and positively choose to be a part of the legal proceedings.
Class actions are an Australian and US legal device, by which plaintiffs need not positively choose to join legal proceedings — you are automatically part of the legal action if you fit within the description of the ‘class’.
WHO PAYS FOR THEM?
Typically, specialist litigation funding will cover all legal and other costs of the case as they are incurred. If this is the case, the funding will not have to be repaid if the case is not successful. After The Event (ATE) insurance will also be in place to ensure claimants
do not have to pay any adverse costs if the case is lost.
We usually structure our group actions in this way as this ensures no cost or payment will be required at any point unless and until the claims succeed.
For example, before legal proceedings are commenced in our action on behalf of Woodford Investors, the RGL Group claimants will be armed with the necessary funding and ATE insurance and be represented by a top legal team, so as to match the defendants’ lawyers and resources.
WHO MAKES MONEY?
Recovering money on behalf of the claimants is the chief consideration. An important thing to point out is that funders and insurers back legal claims with their significant financial resources only if they are confident of winning (because that is the only way they will get paid or not have to pay the insurance claim). If a group action is successful, a proportion will be deducted from the recoveries to reimburse the monies spent on the claims by the funder, pay the insurance premium due to the insurers, pay any deferred and success fees due to the lawyers and litigation specialists such as RGL.
WHY ARE GROUP ACTIONS A GOOD THING?
Pursuing legal action against large businesses and corporations is extremely difficult, time-consuming and expensive. Bringing a claim as one of a large group of claimants is far more efficient and effective. By combining, the group of claimants can access specialist lawyers and litigation support and funding resources, which would otherwise be prohibitively expensive for any single individual claimant, and stand the best chance of recovering money or compensation owed to them.
WHAT ADVICE WOULD YOU GIVE ON JOINING A GROUP ACTION?
Investors need to think carefully about how much money they are likely to get back from the group they join. There may be competing groups who are offering very different returns to one another despite having identical legal cases against the same defendant. Do your research and see who is offering the best, cost-effective deal for you as a claimant.
RGL Management, a litigation specialist, has retained law firm Wallace LLP to launch a major group claim against Hargreaves Lansdown and Link to recover compensation on behalf of investors affected by the Woodford fund collapse. Any investors who believe they might be eligible to join can find out more at https:// woodfordlitigation.com/