Group proceedings – Key considerations for in-house counsel

Group proceedings are generally raised against corporate entities. In this blog we consider some of the key considerations that in-house counsel should be thinking about in the context of group proceedings.

 Identify the risk of group proceedings

In-house counsel are intimately familiar with the activities of their business. Consider whether any of the business's activities have potential to give rise to group claims. Can action be taken now to modify those activities and mitigate the chances of claims being raised? If so, the risks involved in facing group litigation could be used as a driver for change within your organisation.

If the activities of concern are historic, and changes in behaviour now will not now mitigate the risk of claims being made, are there any steps the business should be taking now to ensure it is in the best position to defend any actions that are brought? As well as taking legal advice, are there any witnesses who should be spoken to now in case they are not available, or not cooperative, in the future? Are there any documents – or other forms of evidence – that should be preserved and kept for longer than set out in the business's retention policy? Is there evidence held by third parties that should be obtained for preservation to ensure it is available in the future? Be aware that in certain jurisdictions there is an obligation on parties, as soon as a court action is initiated, to ensure that relevant evidence (including that held by third parties) is preserved.

Act early when group claims are intimated

Whilst this advice holds in respect of any litigation, it is particularly important in group proceedings. Not every claim intended to be brought by a group will actually be suitable for group proceedings procedure. There is likely to be huge tactical benefit in successfully opposing an application for permission for group proceedings to be brought. In Scotland, once the action is actually raised, the procedural timetable is tight, so it is essential to think about this from the moment a claim is intimated in correspondence.

Coordinate multiple claims

Many of the issues that have give rise to litigation have developed in more than one country. Consequently, the issues that are subject to group proceedings may be being litigated in multiple jurisdictions. When a group claim is intimated in one jurisdiction, in-house counsel should consider whether the actions complained of might leave their business at risk of future group proceedings in other jurisdictions. If risk is identified, this will allow the business to be proactive in their preparation for future actions and to coordinate a global approach to the issues, where possible, at an early stage. Collaboration between legal advisers in different jurisdictions as early as possible is likely to be essential where there are multiple claims.

Be aware of cost

In most group litigation, the claimants have the benefit of some form of funding for their legal costs. That might be a formal funding arrangement with a commercial litigation funder or the benefit of lawyers acting on a speculative – "no-win-no-fee" – basis. The claimants' resources as a group are therefore likely to be considerably greater than those brought by a single, privately funded claimant. The claimants are also unlikely to be personally liable for any adverse award of costs in the event the proceedings are unsuccessful. These factors, to a great extent, nullify two of the big litigation risks for claimants. That has to be borne in mind when making tactical and commercial decisions.

Consider reputational issues

Court actions are held in public and, given they are still relatively new, group proceedings in Scotland will tend to attract media attention. A strategy should be developed – ideally in conjunction with those providing external legal advice in the group proceedings – for dealing with enquiries and attention in a manner that best protects the business's reputation. External public relations advice might be required in conjunction with legal advice.

We would be pleased to discuss group proceedings with any in-house counsel concerned about potential or already intimated claims. Please get in touch with the contributors below or your usual Brodies contact.