New study claims that UK consumers disagree with proposals to introduce opt-out collective actions.
The U.S. Chamber Institute for Legal Reform (ILR) says 57 percent of British consumers oppose UK Government proposals to adopt US-style legal reforms.
The UK Government announced in last week’s Queen’s Speech the introduction of the draft Consumer Rights Bill, a key piece of legislation that is likely to fundamentally change the face of UK litigation. The ILR survey, fielded by Ipsos MORI, is according to the ILR, “a timely indication of deep public scepticism to the Bill”, which will enable opt-out collective actions where breaches of consumer or competition law are said to have taken place.
“The introduction of opt-out class actions in the UK could open the floodgates to US-style collective action law suits, and the possibility of a burgeoning market in spurious litigation in Britain, driven by a fast-expanding legal sector allied to a litigation funding industry that is reaching maturity,” said Lisa A. Rickard, president of the ILR.
The ILR also suggests that a majority of UK consumers do not believe third party funding of litigation is acceptable. In a statement today the ILR added: “The survey highlighted other consumer concerns about the US litigation system, including the fact that lawyers typically claim half of any damages, that US courts are crowded with frivolous lawsuits, and lawsuits cost small businesses billions of dollars that would otherwise be put toward growth and job creation. UK consumers share US concerns that it is the lawyers that benefit most from this class action system.
Nera Study of Comparative Economic Cost of Litigation
- Cost of litigation to the UK economy is twice the Eurozone average
- Litigation costs the US economy 150 percent more than the Eurozone average
The ILR also published a study by NERA Economic Consulting showing that the U.S. has the world’s costliest legal system as a percentage of its economy, at more than 150% higher than the Eurozone average. The UK economy shoulders the third-highest costs, around twice the Eurozone average.
“As the U.S. experience has shown, excessive litigation creates enormous costs for businesses, workers, consumers and the overall economy,” said ILR’s Rickard. “The UK economy already shoulders a high cost compared to Eurozone neighbours, and so policy-makers should be wary of embracing aspects of an expensive system that undermines UK competitiveness, impedes economic growth and limits job creation.”
The ILR also released a national opinion survey of US citizens that shows an overwhelmingly negative view the US civil legal system, with respondents taking the view that it is more abuse-prone than a decade ago. A key concern expressed is that the US justice system primarily benefits lawyers, rather than consumers.
According to the Penn Schoen Berland, and Public Opinion Strategies poll, 87 percent of voters view the number of lawsuits in the country as a problem, with 69 percent also saying that there has been increased abuse of the legal system over the past decade. Furthermore, the poll revealed that one-in-three voters – and 43 percent of small business owners – have either been threatened with or involved in a civil lawsuit.
Meanwhile, only 14 percent of those who were part of a class action lawsuit report having received something meaningful – such as a cashed check or redeemed coupon – as a result of the lawsuit. In contrast, four in five voters that had been involved in a civil lawsuit said that lawyers benefit the most from class action lawsuits.