When The Lawyer broke the story on 16 October that leading US class action litigation firm Cohen Milstein Hausfeld & Toll was launching in London, there were more than a few raised eyebrows creasing the brows of litigation partners on both sides of the Atlantic.
Initially met with scepticism, litigation partners are now standing by with curiosity, anxious for early signs of what effect the firm’s launch might have, and crucially, how best to react.
One US-based litigation partner who specialises in corporate defence said: “It’s one hell of an interesting move and signals a real problem for the UK corporates.
“Those guys are exceptionally good at what they do and I don’t think any general counsel or chief executive in the UK would be pleased by this.”
Cohen Milstein name partner Michael Hausfeld told The Lawyer that the firm would initially target competition-related cases in the UK and EU, but would also look at securities class actions, employment and environmental issues.
He also said part of the planning for the launch was an expected EU reform that would allow class action suits, which are common in the US, to go ahead.
“We see a greater interest on behalf of the executive and judicial branches of Europe, and among the victims from those countries, for some means of redress,” Hausfeld said.
When asked if the UK and Europe was ready for US-style class action litigation, Hausfeld replied: “The pressure is there. Companies do, and should, have that pressure applied by wronged parties to recover monies extracted unlawfully.”
But while the corporates will be keeping a wary eye, Europe’s regulators will be much more welcoming. On 19 December 2005 the European Commission published a green paper on damages actions for breach of the Commission’s antitrust rules. Its purpose is to investigate ways of encouraging private enforcement.
Private enforcement removes the burden for regulators to prove antitrust breaches and effectively signals the introduction of class action suits. A number of City and international firms submitted responses during the Commission’s consultation period. Cohen Milstein submitted a 143-page document in which the firm calls for the introduction of class actions, an easing on the burden of proof for claimants and a harmonisation of Commission regulations.
Edwin Coe litigation head David Greene, though, warned that even if the Commission’s reforms were introduced, many obstacles remained to be overcome for Cohen Milstein to be successful.
“They have the experience, the knowledge and presumably the capital necessary to run cases, but I think they’ll find the English model very different from the US’s and possibly this venture will fall far short of what they are expecting,” Greene said. “What’s got these firms excited is the pressure from the Commission to promote antitrust work and private enforcement. [But] unless those ideas bear fruit, they’ll find the market here very different to the US.”
Current obstacles to successfully mirroring its US practice in Europe are the current cost-shifting rules – put simply, the loser pays. Another key difference is the automatic ‘opt-in’ system of the US. In the UK claimants must apply specifically to be a party to litigation, whereas in the US parties can attach themselves to a claimant suit much later, even after proceedings have started.
The move by Cohen Milstein may be the first of its kind into London, but it is not the first foray into Europe class action that attorneys have made.
Indeed, Cohen Milstein already had a wide-ranging network of referral firms across the UK and Europe, including City outfits Charles Russell and Irwin Mitchell.
As Cohen Milstein was finalising its London plans, it was revealed that rival securities class action practice Schiffrin & Barroway was establishing links in Germany (www.thelawyer.com, 11 October). Schiffrin’s plan is a purposeful bid to attract European investors in US institutions for securities litigation in US courts.
Whether the move will pay off remains to be seen and depends largely on the direction the Commission takes. But with a clear objective of making competition infringements easier to enforce, it can only be a matter of time before class actions become a regular feature of the UK and European legal landscape.