Bowles:
The rise of group litigation in the UK could cost the economy almost £18bn, a free market thinktank based in Brussels has estimated.
The European Centre for International Political Economy (ECIPE) said that, between 2008 and 2023, the UK recorded 156 group or “mass” litigation cases, “far surpassing” any other country in Europe.
It went on: “Whereas previously limited to financial and professional services, mass litigation cases are now rising in UK companies working in life sciences, advanced manufacturing and digital services.
“These are industries where risk taking, long product development cycles and data-driven innovation are the norm. The threat of mass litigation introduces uncertainty and cost at exactly the moment when these businesses need regulatory clarity and investment stability.”
The report was funded by Fair Civil Justice, a campaign group set up in 2022 in a bid to rein in mass litigation and backed, among others, by the British Chambers of Commerce.
It is also thought to be backed by the US Chambers of Commerce, which has been campaigning vigorously for tort reform in the UK for many years.
To get to the figure of £18bn, researchers applied ‘scenario modelling’, based on the assumption that if “the UK system of mass litigation were to resemble that of the US, the impact on the UK economy would be proportional to the effects found in the US studies”.
Under the ‘low growth’ scenario, the economic impact of mass litigation growth in the UK was estimated to be equivalent to 10% of the economic effects observed in studies in the US, under the ‘medium growth’ scenario 20% and under the ‘high growth’ scenario 30%.
The economic impacts on the UK were calculated at £5.9bn, £11.9bn and £17.9bn respectively. Litigation costs as a percentage of claim values could rise to 48%, 50.4%, and 52.7%.
Using the same scenarios, researchers estimated the negative impact on the market capitalisation of the UK’s most innovative companies could reach £3.7 bn, £7.5bn or £11.2bn.
The Impact of Increased Mass Litigation in the UK said the growth in group actions had been “rapid and striking”, from fewer than 10 cases in the late 2010s to 47 in 2024 alone.
“Collective action influences companies’ decisions and incentives, which, in aggregate, can have significant economic implications. This is particularly concerning for the UK, which prides itself on attracting foreign investment as a key driver of its economic model.
“This is because the ease with which mass litigation can be initiated risks undermining the UK’s comparative advantage as a business destination.”
Researchers said there had been “a significant rise” in competition claims targeting major technology companies, with collective claims against the likes of Motorola, Microsoft, Apple, Google and Sony.
“Moreover, cases in the digital space related to data privacy, cybersecurity and artificial intelligence may become more popular with the introduction of Digital Markets, Competition and Consumers Act 2024. The Act allows the court to extend orders to all members of a corporate group.”
In her foreword to the report, Liberal Democrat peer Baroness Bowles – a one-time chartered patent attorney and member of the European Parliament – said the report provided “rigorous evidence that the unchecked rise in mass litigation is not only distorting our legal system but increasingly jeopardising the UK’s economic competitiveness, regulatory clarity, and investment climate”.
She continued: “What is particularly galling is that these economic costs are not matched by proportional gains for claimants.
“In too many cases, legal fees and funder profits consume the majority of settlement sums, with claimants receiving far less than is justifiable. This raises uncomfortable questions about alignment of interest, value for money, and the effectiveness of redress mechanisms.
“Reform of the current system is not about denying access to justice, but about ensuring that justice does not come at the expense of economic integrity.
“Policymakers must ask whether current litigation funding models, certification thresholds, and procedural rules are delivering the right balance, and whether they remain fit for a globally competitive economy.”
Seema Kennedy, former MP and chair of Fair Civil Justice, commented: “This is no longer just a legal issue, it’s a matter of economic resilience.
“If policymakers fail to act, the UK risks becoming a hostile environment for innovation, long-term investment, and fair access to justice. We urgently need to recalibrate our system.”
A spokesman for the International Legal Finance Association, which represents litigation funders, said: “Yet again, the US Chamber of Commerce’s claims are spurious, unfounded and designed to protect its members accused of corporate wrongdoing.
“As the independent Civil Justice Council recently concluded, collective action backed by litigation funding ‘is an essential means to secure effective access to justice’ and ‘does not promote unmeritorious or speculative litigation’.
“The collective action regime supports a competitive business environment, holding a small number of bad actors to account for ripping off consumers and for anti-competitive practices while promoting good corporate governance.
“For businesses, litigation funding allows them to move litigation costs off their books and instead focus on investing in growing their business.”
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