How does a class action differ from Group Litigation?
Taking legal action and seeking redress through the court system can be an intimidating process for clients, but there are occasions where they may not be the only party to an action. In these cases, it has become increasingly common for the affected parties to pursue a common claim against the defendant. These legal proceedings are known by various terms, including group actions, class actions, group litigation, and multi-party actions.
Group actions often arise where a group of claimants have suffered harm or a loss after being exposed to the same event or actions of the defendant. Alternatively, a group action could also arise where the claimants have been mis-sold the same product or where a product has caused the claimants harm.
What is the difference between class actions and group litigation?
The term “class action” is often associated with the United States. A class action lawsuit is a type of legal proceeding where one or more claimants bring a legal action on behalf of themselves or other individuals who may have been affected by the same issue. Any individuals who have been affected by the defendant’s actions or product automatically become part of the class action. If they wish not to be part of the class action, they must ‘opt out’.
In the UK this group of cases is known as a group action. In these legal actions, the claimants must decide whether they wish to form part of the group of claims and ‘opt in’.
How do the courts manage group litigation proceedings?
There are a number of ways in which the courts can manage group litigation proceedings.
Group Litigation Orders (‘GLO’)
Under the court rules, the court can order a number of related claims to be managed as part of the same group. Claims subject to a GLO must give rise to “common or related issue of fact or law”. It is also sometimes known as ‘opt in’ litigation, as the claimants in the group must opt into the litigation and be named on the claim form.
Bespoke case management directions
Instead of a GLO, the parties may alternatively agree to a number of case management directions made by the court. In these cases, it is common for a few claims to be selected as test cases which are used to decide certain key issues, which will inform the parties how the remaining claims in the class are dealt with. However, it is important to note that any judgment made in respect of the test cases may not be binding on the remaining claims.
The phone hacking litigations against News Group Newspapers and Mirror Group Newspapers are examples of legal proceedings, which are managed under bespoke case management directions. Taylor Hampton Solicitors have been involved in these group litigations from the outset. In the highly publicised case of Duke of Sussex v MGN [2023] EWHC 3217 (Ch), Mr Justice Fancourt heard four sample claims, which covered a wide range of issues which also arose in the large number of remaining claims in the litigation.
Representative actions
A representative action allows a single claimant to bring a representative claim on behalf of a larger group of claims. There is a requirement for the representative claimant to show that they have the “same interest” in the claim as the remaining claimants. In representative actions, the court’s judgment binds the group which the claimant represents.
How are group actions funded?
There are three ways in which group actions are commonly funded:
Conditional Fee Agreement (‘CFA’)
A CFA is an agreement between the client and the lawyer acting on their behalf, which usually provides that the client will only be charged upon a successful resolution of their claim. These agreements are also known as “no win no fee” agreements.
Damages Based Agreement (‘DBA’)
A DBA is a form of “no win no fee” agreement under which a client pays a percentage of the damages recovered, regardless of the costs which have been incurred.
Litigation funding agreements or third-party funding
These litigation funding agreements occur where a third party, unconnected with the claim, finances all or some of the costs associated with the claim in return for an agreed fee from the recovery made by the party to the claim.
Furthermore, clients will also often obtain After the Event (‘ATE’) Insurance at the outset of their claim, which will protect them against the potential liability for adverse costs and their own disbursements.
For more information:
Taylor Hampton Solicitors is an expert in pursuing group actions, with many years of experience in acting for claimants in the phone hacking litigation since its inception. For more information please visit our website at Taylor Hampton Solicitors or contact us via email on [email protected] or call us at +44207 427 5970.