By corralling everybody together, by building a cohort of people who suffered similar issues you are able to bring forward a viable litigation, which on an individual basis is just not going to work
Director Tom Davey comments on the unseen players in UK class actions in Law.com
With the recent surge in UK class actions, Director Tom Davey explores how funders, brokers and distributors are helping to level the litigation playing field.
Tom’s comments were published in Law.com, 19 April 2023, and can be found here.
In November last year, it was announced that Factor Risk Management had brokered funding and ATE insurance for Leigh Day’s case against U.K. water and sewerage companies, which secured a “significant” funding package from legal finance experts Bench Walk Advisors.
This is expected to be the first environmental class action before the CAT.
Factor Risk’s co-founder and director Tom Davey says the company exists “to help people manage dispute risk”, alleviating the biggest financial concern in cases for which law firms will bill over £1 billion in legal fees in the coming years.
Though Davey happily concedes that there is a profit motive for funders, he is insistent that some are equally geared towards acting in the public interest.
“What they are saying to consumers and their representatives is if you are going to take a group action against a well-financed, large corporation you could be bled dry,” he says. “They are saying, ‘Here we are – happy to help’.
“That motivation is twofold: one the profit motive and two providing a service that levels up the litigation playing field, which enables ordinary people to have redress through the courts against larger enterprises.”
The loudest critics of the class action legislation changes claim that lawyers and third party litigation funders are the main beneficiaries, rather than the consumers they represent.
Davey, however, disagrees, insisting that his role in setting up funding for class actions is enabling justice for the masses in a form that was hitherto not viable.
He explains that his brokerage company maintains close ties with around 30 funders, and 20 insurers.
“Large corporations benefit from the fact that litigation in the U.K. is not only prohibitively expensive but also exposes unsuccessful claimants to adverse costs under the loser-pays principle,” he said.
“This acts as a major barrier to access for justice for those individuals, and allows large corporations to act with impunity because they know that the likelihood of exposure to individual redress is remote. In other words, if you’re an ordinary person and you’ve got an issue with a company that has provided you with a service you’re not going to be able to go after them on your own because it’s just too expensive. You don’t have the resources to be able to do that.
“By corralling everybody together, by building a cohort of people who suffered similar issues you are able to bring forward a viable litigation, which on an individual basis is just not going to work.
“Most of these cases are against large corporations—vehicle manufacturers and big tech companies, for example. They are providing services for lots and lots of people, so if something goes wrong it will affect many people. We see no sign of collective actions slowing down.”