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Group Litigation Explained

Everyone has heard of the class action, especially as it is portrayed in movies about American and, in particular, New York attorneys. In those settings we see how the attorney has a single client, whose claim appears to apply to many others, he goes to a judge and the judge certifies a class action. The attorney secures a 35% no-win/no fee provision – and away he goes. If successful, the attorney collects millions of dollars for a class of claimants many or most of whom may not be identified until after the damages have been paid into a pot. In the meantime, the attorney collects his 35% fee. The position in England and Wales is not quite so simple.

Here, when there is loss affecting many victims, they will have a common interest, but for them to be able to be classified together in what is, under English law, a group action, they have to join in within a time period stipulated by the court. What will be common to all the members of the group are materially the same facts and legal arguments.

Once the group has been formed, its members, who have suffered similar types of loss by reason of similar wrongs inflicted upon them by umbrella companies, will be able, through their solicitors, to share information, resources and data – and the risks, the rewards and the cost of the proceedings – amongst themselves. Each group will need to achieve critical mass but once that has been achieved, the claims can be started in the courts and the group will enjoy economies of scale. Plainly, many claimants proceeding together against a powerful defendant, or defendants, will have more clout then an individual claimant. To mix our metaphors: by clubbing together, the claimants can increase their clout and level the playing field – or the battleground – in a way that was impossible before the introduction of the GLO.

Umbrella Company Claims

Where an umbrella company has been deducting employer’s National Insurance Contributions, apprenticeship levy and holiday pay, it will have been doing so unlawfully. There will be many others who will have suffered such unlawful deductions from their salary, just like you. After all, umbrella companies do not exist to service a handful of contractors. They need many contractors to be able to justify their set-up costs, cover their overheads and make profits. Once a contractor such as yourself has been grouped together with others using the same umbrella company or any other company using a similar form of employment contract, an application to the High Court for a Group Litigation Order (GLO) may be made. Whilst each of you has a separate umbrella company contract, the fundamental issue will be the same: was the umbrella company entitled to make those deductions?

How far can I go back?

Normally, you can seek to recover losses for the past six years but that applies to all the umbrella companies for which you have worked during that period.

The Group Litigation Order(“GLO”) in the English Courts

A GLO can be used where multiple parties are claimants and it also applies where the multiple parties are defendants.

A GLO is an order granted by the court to allow claims to be grouped together for group action. If the court grants permission to do this then the claims of the group can proceed and others can (indeed must, as we explain below) join into the proceedings and be a part of the action.

Please note that by being a member of a group, you will be seeking not a share or an average amount but the actual losses you have suffered. Accordingly, if other members of your group have lost less (or more) than you, that will be irrelevant to the value of your claim. Once the principle of liability for the umbrella companies has been established, your compensation will be calculated according to your actual losses.

The Lead Test Case

Hundreds or even thousands of similar claims for the members of a group can be classified, or “grouped” together provided they have legal issues in common. Then one claimant’s claim will be chosen to be dealt with by the court as a test case and, being the first, the lead case. The legal issues, arising from the umbrella contracts will be common to the whole group so that, if that claim is successful, it operates as a success for every member of the group. Again, a precedent having been set and – since there would be no point in a multiplicity of actions (which the courts wish to avoid and the GLO procedure is designed to make unnecessary) – the result of the test case is applied to the whole group.

This should open the way for each claimant’s case to be settled according to the quantum (amount) of his/her claim, which is what you will be asking the court to award you, or what we will be seeking to recover for you, by way of a settlement of your claim.

Is my claim suitable for a GLO?

If you are a contractor employed by a umbrella company and it has been deducting employer’s National Insurance Contributions, apprenticeship levy and or holiday pay from your salary when paid to you, you will be in the same boat as other contractors who have suffered in the same way. You will fit into a group when we identify other with the same umbrella company or any other using a similar form of contract.

Am I likely to be a GLO Claimant?

As solicitors acting in a group action, we advertise our clients’ group actions. We also seek to require the defendants to contact those whom they will know from their records to be similarly affected to let them know to contact us. For some people, this is the first information they may receive that they could to join into a group action.

Am I required to join into a Group claim?

Once the court issues a GLO, it sets a time limit for joining into the GLO claim. The court discourages separate, individual actions, as it wishes to preclude a multiplicity of similar claims. You should join early to avoid the risk of missing out and hasten the formation of your group.

Group Litigation – Advantages

    • The three most important advantages are:-
  • The sharing of information, resources and data – and the risks, the rewards and the cost of the proceedings – amongst the group members. (Individual litigants have all the expense on their own shoulders.)
  • The losing party may be ordered to pay the other party’s costs. Group litigation funding including the funding of insurance to cover the costs of the losing party (ATE cover) can be materially less costly than for individual claimants.
  • We will, usually on the advice of specialist counsel (barrister), select a lead or test case representative of the whole group and funded jointly by all members. This makes for the most cost-effective use of resources, yet still enables every member of the group to benefit from favourable decisions.

Next Steps?

Contact any of us at McFaddens LLP.