Class actions: building trust and understanding before the book

Class actions: building trust and understanding before the book
  • Law firms and litigation funders are perceived to be the main beneficiaries of class actions in the UK
  • Class actions are not instinctively trusted in the UK
  • The UK has a low awareness and knowledge of class actions
  • Poll conducted by Portland Disputes is the first ever study of UK perceptions of class actions

Do people in the UK trust or understand class actions?

It’s a question that perhaps gets lost in the maelstrom of discovery, litigation funding agreements and correspondence in the run-up to a group action being filed in court.

But participation in class actions, particularly of the opt-in variety, rely on one simple truth: if a potential claimant trusts and understands the process, they are far more likely to join the claim.

To establish whether and – perhaps more importantly, to what extent – class actions are trusted and understood, Portland Disputes conducted the first ever poll of public perceptions of group litigation in the UK.

The poll results, along with Portland’s analysis, revealed that people in the UK do not trust or understand class actions.

Low awareness and knowledge

Nearly half of people in the UK rated their overall awareness and knowledge about class actions as ‘low’, with nearly 30 per cent rating this as ‘very low’.

This is perhaps unsurprising, reflective of the less prominent position of class actions in the UK litigation landscape when compared to the US, Australia and Canada.

Adding to the scepticism about class actions’ potential, poll results showed that only 29.6 per cent of people in the UK believe that the public have the power to hold companies to account for breaking the law.

The question therefore remains: how can law firms and litigation funders overcome this hurdle and equip the general public with a solid understanding of class actions? Establishing what motivates them to join may hold the answers.

Lack of trust

Audiences in the UK find general news to be more trustworthy than news about class actions, and considerably more trustworthy than adverts for class actions.

Of all the available sources, 42.6 per cent of respondents would trust television news (such as BBC News, Channel 4 and ITV News) the most to find out more information about class actions, making it the most trusted source of information for group litigations in the UK.

This is, however, still markedly lower than the national average – analysis by the UK’s communications regulator Ofcom in 2019 found that 71 per cent of the UK has a high level of trust in television news.

Even more stark is the lack of trust in adverts – less than 17 per cent of those polled would trust a class action if it was advertised on television.

Again, for those managing class actions, questions remain: how do you alert people to a legal claim that they instinctively mistrust? Each class action has a unique bank of potential claimants, and understanding what drives them is key. In this climate, book-building is perhaps not as straightforward as it may first seem.

Who benefits from class actions?

Portland’s analysis also revealed that law firms and litigation funders are seen as the main beneficiaries of class actions in the UK.

Winning compensation, holding large companies to account, and helping consumers are considered to be less likely outcomes of class actions in the UK.

As the position of funders in the UK legal landscape crystallises, and funds are increasingly available to claimants, positioning class actions as consumer or shareholder-led may hold the key to increasing public trust in their function.

What next for class actions?

The group litigation landscape, at least in England & Wales, is anecdotally on hold for major decisions in landmark cases.

The boundaries of the class action regime, and how effective it can be to hold companies to account, have been and will be tested in the Court of Appeal and Supreme Court in Lloyd v Google and Merricks v MasterCard respectively.

The future is perhaps best summed up by James Oldnall, Lead Partner on Lloyd v Google:

Group litigation in the UK is undeniably evolving. The time is nigh for law firms and funders to better understand what drives an individual or business to take the leap and join a class action, and advocate for others to do the same.

James Oldnall, Lead Partner on Lloyd v Google

The clue is in the name: class action. Understanding the class – how to build not only awareness, but participation from your potential class members – may hold the key to unlocking the true potential of group litigation in the UK.

Back to thoughts