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Fifty-nine per cent of the potential corporate defendants surveyed in Europe expect collective litigation - also known as class actions - to emerge in the UK within the next three years.

More than 240 company executives and lawyers were surveyed in September to examine the actual - and expected - rise in class actions in Europe, and to discover what steps businesses were taking.

Bryan Cave partner Lawrence Scarborough will present the findings in London on 30 October at the Fifth European General Counsels' Summit.

Significant shift

"We know there is a growing appetite among European consumers for redress," Scarborough said. "What we didn't know is whether corporate Europe is aware of this significant shift and how it might affect their operations. The results of this research paint a sobering picture for European companies, especially in the UK."

In the UK, the Office of Fair Trading has made it clear that class actions should be more broadly available and the National Association of Pension Funds has publicly encouraged its members to pursue class action claims.

Scarborough said that businesses that have not examined their contingency plans for such legal action could be placing themselves at great risk, especially as plaintiffs' lawyers are getting better at deploying evidence across jurisdictions.

Nearly half (49 per cent) of respondents expect courts in their countries to expand access for individuals acting collectively within the next three years, with the main impetus coming from consumer groups. Nearly 59 per cent of respondents expect consumer goods companies to be targeted, followed by the pharmaceuticals (50 per cent) and financial services (42 per cent) industries.

Litigation is expected to arise from product liability (67 per cent), cartel and price-fixing (38 per cent) and shareholder rights disputes (28 per cent).

Potential risk

Europeans are far from eager to adopt US class action procedures, and reject many features of the American system. However, 60 per cent of respondents expect that legal fees will become linked in some way to the outcome of cases in Europe, and 43 per cent expect to see the introduction of contingency fees for lawyers as a percentage of court judgments.

More than 87 per cent of respondents expect court awards in European class-action cases to be lower than those in the US.

To reduce the potential risk of litigation, some European companies are already taking such steps as implementing systems to monitor customer complaints (38 per cent), training employers in changing safety rules and directives (36 per cent), seeking early settlement of cases that could escalate (33 per cent), ensuring that insurance policies cover collective claims (29 per cent), implementing corporate early-warning systems (26 per cent) and keeping detailed records on product development and testing (25 per cent).

Related links

• Bryan Cave
• Office of Fair Trading