United Kingdom: Nearly a Decade After U.S.-Style Collective Actions Emerged, Opt-Out Lawsuits Are on the Rise

Since then, dozens more claims have been filed against big tech platforms, often on issues that are concurrently being investigated by government regulators.

In 2023, however, the UK Supreme Court ruled that litigation funding agreements that allowed funders to recover a percentage of damages—rather than a multiple of the funders’ costs—were unenforceable. Given that most optout collective actions have been funded through such agreements, the decision created significant uncertainty surrounding the future of opt-out cases in the UK.

“Collective actions are still relatively new in the UK, so there are a lot of issues that have yet to be worked out. This just adds one more issue to be resolved,” says Winston, who is co-chair of the firm’s International Dispute Resolution Group. “It could make it much less attractive for litigation funders.”

Establishing a Position on Litigation Funding

In March 2024, the UK’s Ministry of Justice announced plans to legislatively overturn the Supreme Court ruling, to “help people pursuing claims against big businesses secure funding to take their cases to court.” The Litigation Funding Agreement bill appeared to be working its way through the parliamentary process until August, when the justice minister announced that it would shelve the legislation until after a review of litigation funding is published by the Civil Justice Council by summer 2025.

The Civil Justice Council is a government-appointed board “with responsibility for overseeing and coordinating the modernization of the civil justice system.”

“This review will set out the current position on litigation funding, including that of third-party funding, and will consider access to justice, its effectiveness, and regulatory options,” the council said in a statement.

Other lingering questions regarding litigation funding in opt-out class actions could also see some resolution in the coming year, says Winston. For example, at the time of publication, court-watchers were awaiting a verdict in the first full trial of an opt-out collective action, which was held in January 2024.

One development to look for after the verdict: how the court decides to treat undistributed damages, or payments that go unclaimed by unengaged class members. Court rules state that undistributed damages can be transferred to the class representative or be paid to charity. If the court rules that they should go to the class representative, that’s a big boost for class action plaintiffs and their funders.

Winston points out that whatever the court’s ruling, it will very likely be appealed to the Supreme Court. “We are a decade out from the passage of the Consumer Rights Act, and there are still a lot of unknowns,” he says. “But 2025 could be the year some of these key issues will be decided.”