Class action offers hope in the legal battle against Goliath

Group action is one way to take on large companies such as Merck. But it's not easy, warns David Prosser

Several firms of solicitors are collecting recruits for class actions, in a legal trend imported to the UK from the US. If UK customers of Merck choose to pursue the company this way, it will be the latest in a series of high-profile class actions. It isn't only drugs companies feeling the heat - actions over endowment mis-selling and split-capital investment trusts are pending in the financial services industry.

Anna Rowland, a policy adviser at the Law Society, says class actions have benefits for all involved. "They can make the law more accessible," she says. "And if you have 15 very similar cases, say, it makes no sense for claimants, the defendant and the courts to incur the same costs 15 times over."

In the UK, class actions are known as "group" or "multi-party" actions. "The group must have a generic issue that needs considering, with a common interest, even if the case of each individual is different in some way," explains Sapna Malik, a partner at the solicitors Leigh Day. "The main purpose is to take cases forward in a more effective and cost-effective way - for both parties."

Solicitors start out by establishing a group register. Anyone whose case meets certain basic criteria can apply to join. In the Merck case, the qualification might be that a claimant has been taking Vioxx and suffered health problems that could be attributable to the drug.

However, David Body, the head of clinical negligence law at the solicitors Irwin Mitchell, warns that lawyers have to be ruthless in deciding who is allowed to join. "With commercial actions over issues such as pensions mis-selling, say, it is easier to establish a generic complaint, but it can be much tougher with medical claims to establish causation."

In practice, lawyers take on the cases they think they have the best chance of winning. The final definition of the group - who can join and who cannot - must be agreed with the defendant, with or without the intervention of the courts. Once there is a basis for proceeding, the court can issue a group litigation order.

At this stage, both sides will choose test cases to establish principles that govern each category of claim within the group. Only members of the group are bound by court rulings. So the fact that another group or individual wins compensation doesn't necessarily mean you will.

Equally, there are strict deadlines for joining group actions, so that both sides - and the courts - know what they're dealing with. You won't be able to sign up to a particular action after a certain date, though you retain all your legal rights and you may be able to sign up to an alternative case.

Malik believes group action has major benefits for individuals. "It would be very hard for an individual to take on an international company with practically infinite legal resources," she says.

However, this type of legal action is not always straightforward. It can be a lengthy process. There can also be disputes between members of the group over whether to settle a claim.

Above all, never sign up to a group action until you have very clearly understood the potential financial downside. Solicitors fighting group actions often apply for support to the Legal Services Commission, which administers the legal aid budget. Or they may persuade insurers to underwrite the costs of a case, though individual claimants may have to pay a premium.

However, neither of these options is guaranteed. The worst-case scenario is that the group is responsible for meeting the other side's costs if the action is lost. And costs can get complicated - if the group wins on some cases but not others, for example, or if different members have legal aid or insurance funding while others do not.

The other side of the coin is that in the UK, group action solicitors do not act on the purest form of the no win, no fee model pursued in the US. Their costs are met by the other side if they win, or by clients if they lose.

This means that winnings are payable in full, but check how the money is to be shared out. "Typically, there might be different tariffs of award based on the different categories of claim," Malik says. "It is unlikely that awards will be calculated individually."

There is one other issue to consider. Russell Spago of MSB Solicitors, one company active in the Merck case, says that people who feel they have been victims of an injustice often want their day in court. MSB is currently planning on taking cases individually to the US courts, rather than acting on a class basis. One reason for this, Spago says, is that "many of our clients want an opportunity to go on the stand and confront Merck, which most of them would not get in a class action".

Comments