19 May 2022

London-listed companies face rising class action threat, Thomson Reuters study finds

Class action lawsuits for FTSE 100 entities increased 10% last year to 170 cases

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Companies trading on the UK’s main stock exchange saw a 10% rise in class action lawsuits in the 12 months to September last year, according to new research from Thomson Reuters.

FTSE 100 companies faced 170 class action suits, up from 155 in the previous 12-month period, with banks and other financial services companies accounting for 42% of the total. While more than two-thirds of suits (67%) originated in the US, the research shows there is an increasing threat to companies in the UK. Some nine of the class actions were launched in the UK courts, with the expansion of so-called ‘opt-out’ class actions signalling more UK cases could be on the horizon, the report stated.

Warsha Kalé, a senior legal editor at Thomson Reuters’ Practical Law, said: “The uptick in class action cases should be a cause for concern amongst corporates. Involvement in this type of litigation can cost businesses enormous sums of money, not to mention serious reputational damage.”

She added: “The global nature of FTSE 100 companies puts them at an increased risk of becoming embroiled in complex and costly disputes that could drag on for years. Given developments in UK competition law in recent years, many expect to see a greater number of claims being brought before the English courts.”

Roughly 47% of all class actions reported by FTSE 100 companies were in relation to claims for breaches of competition law. Product liability cases accounted for 30% of the class actions. In addition to the US and the UK, FTSE 100 class actions also originated in Brazil, Venezuela and Israel. 

Litigation funders are particularly attracted to the potentially large pay-outs up for grabs in a successful class action, the report noted.

“Whilst this type of litigation has traditionally been most common in the US, recent legal developments mean that it is now easier to bring class actions concerning breaches of competition law in the UK,” Thomson Reuters said.

Outside of the FTSE 100, Quinn Emanuel Urquhart & Sullivan is currently leading a £2.3bn class action against social media giant Facebook over unfair trading terms and prices for 44 million users in the UK.

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