CMS European Class Actions Report 2021

European class action exposure continues to rise starkly

A record number of class actions has been filed across Europe in recent years with a rise of over 120% between 2018 and 2020. Class actions against the technology sector increased dramatically, with 15 times the number of claims filed in 2020 as in 2017, equivalent to a growth of 1400%. Data protection claims grew 11 times, or 1000%, between 2016 and 2020.

These statistics are part of the findings from a study by our CMS Dispute Resolution Group of class action activity in the UK and across Europe over the five year period from 2016 to 2020. CMS’s European Class Action Report 2021 is believed to be unique and the first of its kind to analyse data from collective proceedings across Europe over the five years and map a true picture of class action risk.

The rise of opt-outs

The study revealed a significant trend towards opt-out class actions in Europe with the UK, the Netherlands and Slovenia introducing far-reaching mechanisms in recent years. While the number of opt-out class actions in the UK held steady from 2016 to 2019 at an average of 7.5 claims, the number almost doubled from 2019 to 2020 (8 claims rising to 15 respectively). The Netherlands saw a sharp increase in 2020 (from zero to 15 claims in one year) following the introduction of their new class action device that year.

Claimant law firms and litigation funders

Another significant driver of the rise of class actions is the growth of claimant law firms, mainly comprising foreign (often US-based) claimant law firms setting up offices in Europe and new boutique claimant law firms typically launched by partners who have left their larger firms to focus purely on disputes.

The ever-expanding role of third party litigation funding has also contributed to the increase in class action claims. It is estimated that the assets under management from funders active in the UK grew from £180 million to £1.5 billion – an astounding 743%.

Sectors under attack

CMS’s study revealed that the financial products and professional services sector was most active in Europe in the five-year period, accounting for more than one-third (36%) of all class action claims. Mining, energy and transport came second with 17% and the public sector was third with 13%.

>Interestingly, the study found that different sectors were increasingly being targeted compared to those that were most active. Class actions against the tech sector had 15 times the number of claims filed in 2020 as in 2017, a growth of 1400%. This was fuelled by the rise in data protection class actions (growing 11 times or 1000% between 2016 and 2020), and a rise in consumer and competition class actions (increasing by 275% in the number of claims filed from 2018 to 2020).

Class action risks on the horizon

There are two areas of developing risk where changes to the substantive law could lead to extremely significant exposure for companies and feature heavily in litigation in the medium to long term: product liability/artificial intelligence and climate change.

In 2020, the European Parliament passed a resolution recommending the creation of a civil liability regime for artificial intelligence and that the current product liability regime across most of Europe should be revised to ensure that it is fit for purpose in today’s digital and automated environment.

Litigation stemming from climate change is an increasing concern for businesses; as at May 2020, climate change claims had been filed in over 40 countries. While climate change class actions seeking damages have yet to take hold in Europe, suitable procedural mechanisms and further developments to the substantive law could facilitate a broad range of claims.

Download the CMS European Class Action Report 2021 here.