Class action lawsuits

 

Class action cases are cases in which a group of people collectively bring a claim to court. They are historically very much an American phenomenon, but there are great advantages to this type of action. It saves costs and increases the efficiency of the legal system, reducing the cost of litigation.

As a result of the reduction in costs, more people are able to take part in the class action, including people who would otherwise be unable to bring actions because it would not be financially viable.

What is class action litigation?

Class action litigation, often referred to as ‘group action’ litigation, is when a group of people file a court claim. In class action litigation, the group bringing the claim are all complaining about the same matter. Class action litigation can arise in many different scenarios. Action can be taken on behalf of:

  • Shareholders
  • Trade associations
  • Private individuals
  • Professional bodies

Shareholder action

Class action litigation can be brought by a group of aggrieved shareholders of a company. For example, if the actions of the directors have caused the company a loss then a group of shareholders may attempt to bring action against them.

Product liability - consumer action

Assume a manufacturer produces a product which is defective and causes injuries to consumers who have purchased the product. The group of consumers can bring class action litigation against the manufacturer. This is likely to be under the Consumer Protection Act. They may also be able to bring action against the seller of the product (if different from the manufacturer) under the Sale of Goods Act.

Are there disadvantages to class actions?

There are also disadvantages to taking part in such an action, largely down to the awards of compensation which can be swallowed by class action lawyers.

  • Depending on how large the class is, it can mean that awards for individual claimants often do not amount to much
  • Having said this, recent awards of compensation have topped the billion dollar mark in America for some class action cases

Specialist lawyers can assist with class action claims and in America class action lawyers are reasonably prolific. European legal systems are only relatively new to class actions and as a result they are not yet as commonplace as in the US.

As a result of this niche area some American lawyers have set up firms in the UK and Europe in the expectation that they will be able to gain much of the business when either legislation is passed or when class actions become a more popular means of litigating.

It is possible to take out insurance policies to guard against the threat of class action litigation. However, the premiums of such policies can be expensive. The cost of the premium must be considered against the possible cost of litigation.

Compensation pay-outs in class action lawsuits tend to be quite generous, but litigation costs can also be quite high. Whichever side of the action you are on the advice of a specialist solicitor is invaluable.

Do you and a group of others have the same legal issue and are considering bringing a class action? Class actions can be strong cases since strength is in numbers. Contact Law can put you in touch with a specialist litigation solicitor who can aid you in bringing the action as a group. Please call us on 0800 1777 162 or complete the web-form above.

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