The on-screen retelling of the biggest miscarriage of justice in UK legal history has had dramatic effects off-screen, offering important lessons to anyone who may be thinking about class actions.
Robert Jones, Satinder Soni, and John Hays consider the impact this case is having in England and share observations that may be relevant in the wider global context.
For those unfamiliar with the case, ITV has dramatised certain events which took place between 1999 and 2019, beginning with the deployment of a faulty IT accounting system in branches of the Post Office and ending with events after a key judgement in the Technology & Construction Court, in the High Court, pursued under a Group Litigation Order. During the intervening time, hundreds of sub-postmasters responsible for running the branches were wrongly accused and convicted of theft or false accounting over alleged shortfalls in daily takings, due to problems with the accounting system. The cases against them seemed to ignore the fact that no money was taken.
The drama is incredibly moving, shocking, and somewhat unbelievable. However, it is based on established truth about the lived experiences of the sub-postmasters and the consequences of this debacle are far-reaching.
Justice Secretary Alex Chalk told the Financial Times that he planned “at the first legislative opportunity” to reverse “the damaging effects” of a Supreme Court ruling last summer that critics claim has plunged the industry into jeopardy.[1]
Since Mr. Bates v The Post Office was aired and at the time of writing, the British government has announced plans to pass legislation to exonerate hundreds of wrongful criminal convictions and has pledged to reverse a notable Supreme Court ruling which, it was feared, might have limited the appetite for funding certain types of litigation. Both gestures are controversial and unprecedented. A testament to the power and reach of modern media, it seems for now that a long-running campaign to compensate the victims will be supercharged to deliver quickly and adequately. Understandably, many people will not believe it until they see it in fruition.
As one of the most highly publicised and egregious wrongs to have been dealt with as a class action in the English Courts, the “Post Office scandal” is among 112 Group Litigation Orders (GLOs) issued between 2000 and 2023. Such orders have been issued to deal with wide-ranging complaints arising from issues such as contamination, abuse, nuisance, industrial disease, personal injury, product liability, and data breach, to name a handful. However, GLOs are not the only procedure to deal with mass claims.
Class actions are also heard in the Competition Appeal Tribunal (CAT) under section 47B of the Competition Act 1998. Forty-nine collective proceedings cases have been filed in the CAT since 2007, the vast majority of those having been launched in more recent years, as the procedure has gained traction.
Also, there are several ‘same interest’ cases which are opt-out claims brought by class representatives under Rule 19.8 of the Civil Procedure Rules. Many of these matters have been used to deal with out-of-jurisdiction claims against large organisations, accused of wrongdoing in overseas countries; a trend that is also seen in jurisdictions such as Scotland and the Netherlands.
The causes of action and methods of resolving them are varied and creative. For instance, environmental claims are being developed as abuse of dominance claims as a way of achieving justice. It is also common for certain mass claims to be copied from one jurisdiction to another. Rather like a global rock band, mass claims ‘tour’ around the courts of the world, as victims, the claimant/plaintiff lawyers, and litigation funders recognise original successes elsewhere.
The global growth of class actions emphasises the risk for organisations, particularly those who trade in products and consumer goods; infrastructure that touches the lives of communities; and technology or data. It affects those who rely on substantial numbers of employees or contractors, as mass claims are now commonplace in employment tribunals. Furthermore, the mistakes of subsidiaries can expose their holding entity as a potential target for the pursuit of legal action. The key risk factors companies should consider when thinking about their potential liability are potentially limitless.
Thinking about the complex tactical, reputational, regulatory, and legal aspects of such cases, the Post Office and similar cases might have a profound effect on the way that mass claims are currently managed across all jurisdictions:
- The growth of speak-out culture
People feel empowered to rise against perceived injustice and this will trigger the development of more cases. Technology enables disparate complainants to learn about shared experiences, realise they are not alone, and form action groups. Social media enhances their ability to publicly embarrass alleged wrongdoers and influence mass audiences to build a book of would-be litigants whilst garnering public support for the cause. This cultural shift moves rapidly, setting an unbridled pace for businesses to get on top of the facts and issues.
- Access to justice through funding
Developing and bringing claims on behalf of large numbers of complainants is an industry that promises a multiple return on investment for successful cases. The commercial attractiveness of funding strong claims means that the Davids of the world now have comparable financial firepower to the Goliaths and can fight their cases in a way that is financially sustainable.
- Truth before reputation
Protecting the reputation of a brand is a controversial factor in defending a mass claim. By getting to the truth, fairly resolved disputes can uphold the good standing of a business. However, putting reputation before the truth is a mistake to be avoided. The use of tactical procedures may backfire catastrophically if there is a whiff that the purpose is to obfuscate the true position. When there is no chance of winning a point, it is sometimes better to concede than to put up a huge, costly, distracting, and damaging fight.
- Deeper dive due diligence
Formulating the strategy for bringing and defending claims is dependent on the facts. Claims without reliable data risk failure to secure funding and perhaps the loss of a meritorious case. Likewise, mounting a defence without a proper understanding of the critical evidence can lead to failure in the court and in extreme cases, the collapse of parts of the business.
- Expert evidence is critical
Assessing potential damages in mass claims is complicated for two reasons. It is often difficult to put a financial figure on the alleged harm that needs to be repaired. Also, by their very nature, it is difficult to say with precision how many people are entitled to claim. Setting the tariff of damages for harm such as ‘mental distress’ or forecasting the impact of the displacement of future generations in environmental claims is pioneering valuation work, requiring an economic assessment. Similarly, economic market studies may be necessary to achieve the clearest view of the true number of potentially affected claimants. Even after the settlement of opt-in proceedings, other cases may be filed, which means it is vital to differentiate truth from exaggeration, in either direction.
- Voluntary settlements on the rise?
Playing out a zero-sum game is unlikely to be satisfying for either side in a dispute. Long battles exhaust finances, which means that a win for the claimants can leave disappointing compensation packages. A win for the defendants may still leave them reputationally tarnished.
Companies that embrace the idea of doing the right thing on a level playing field are likely to consider ways that they can ‘own’ the resolution, rather than going to court. This process requires legal, economic, and technical guidance, but can be very effective in delivering own-brand compensation schemes without the distraction and the cost of lengthy drawn-out proceedings.
- Settlement must not be rushed
One warning to consider is that just because a resolution can be deployed quickly, it does not mean it should. A rapid pay-off to make the problem go away may still leave the company open to continued risks.
Compensation schemes attract public criticism when they offer too little in the way of compensation and/or are flawed in their execution. Ultimately those schemes do not achieve their original aims.
Equally, there is risk involved in the administration of offers, settlement agreements, and payments, which carries a variety of risks such as paying incorrect amounts of funds or worse, paying the wrong people.
Great care must be taken in planning a proactive settlement, paying attention to the critical aims of the scheme, engagement, and communication between the parties involved, and enhancements that will offer a high degree of confidence in delivery.
- The creation of victim funds where compensation money is scarce
Cases where there is not enough money to make adequate redress present a different challenge. It is essential that victims receive a fair deal, so novel approaches are developing to find the money to create funds that make a difference.
Asset searches to find and recover missing money, and other constructs, such as charity foundations are being used to ensure that there is a pot of money to address the problem of insufficient funds. How this money is raised will depend on the circumstances of each case.
- Corporate risk assessment
In larger corporate bodies, the effects of local issues within a subsidiary can reverberate widely across a group structure. From a risk perspective, class actions are not just ‘somebody else’s problem’ and could be an indicator of the need for a broader review of governance and controls.
If you would like to find out more about our mass claims solutions, please do reach out to our authors to find out more.
[1] https://www.ft.com/content/3d089314-eb97-4e21-9101-962876c7d480
© Copyright 2024. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
