Navigating the challenges of huge growth in the UK litigation market: how does the industry scale successfully?

Claire Van Der Zant highlights the need for technology and collaboration in handling UK's flourishing litigation market for an article in Solicitors Journal.

The mass action space in the litigation market is maturing at a rapid pace in the UK. With tenfold growth in cases, claimants, settlement values and funding widely predicted in the coming 24 months, what challenges does the industry need to overcome in order to be future proofed? 

Introduction 

Across the collective redress market, unprecedented growth is being seen across the number of cases, cohorts of claimants, the value of settlements and the funding that underpins this era of the mega-group action.  

In 2022, CMS’s Class Action Report stated that 110 new claims were filed in the UK and Europe with 171m claimants were actively involved in cases, in 2023 121 new claims were filed and 340m claimants were actively involved in cases. Claims against the tech giants are amassing millions in potential class sizes, alongside a plethora of more targeted, smaller claims that are deftly navigating the claims process and reaching swift conclusions.  

Any business or industry handling this sort of growth with these potential figures has work to do to prime operating models to be ready to scale. So where are the pain points and what can be done to ease them?  

What current practices need to change? 

 Technology-led solutions for class and group actions need to be championed and adopted widely, there is too much reliance on excel spreadsheets and emails to manage claims and they are just not fit for purpose. Managing claimants and cases that are exponentially growing in size requires dedicated software that is designed to navigate the twists and turns of litigation. 

Law firms anticipating and preparing for the challenges of future growth are moving to technology that provides better security, data protection and a robust way of managing information. Any firm managing large claims needs a ‘central source of truth’ that can be relied upon. Teams of paralegals working on disconnected and not-fit-for-purpose tools won’t be able to cope with the onslaught of high volume cases expected in the coming years, leading to reconciliation nightmares and frustrated, disengaged claimants.   

There is also too little focus on payment distribution at the start of a litigation process. Despite the main aim of a litigation case being to secure compensation for the claimants, sometimes very little time and effort is spent working out how those claimants will receive their money when the case is won. This process should be clearly defined and agreed from the start so that no delays and frustrations are caused at the end of the case. 

Funding the growth in litigation 

Bigger cases will also naturally mean bigger funding requirements. The size of the investments required to meet these bigger budgets provides challenges as does the administration of larger investor pools and funds.  

Litigation funders have called for the next government to recognise the urgency of legislating to address the damaging effects of the Supreme Court’s PACCAR ruling. This was in response to a significant blow to the funding industry, when the Litigation Funding Agreements (Enforceability) Bill brought forward to deal with PACCAR fell by the wayside due to the general election timetable. 

Funders believe that the uncertainty created by the Supreme Court’s PACCAR judgement undermines the sector’s ability to support deserving cases in the future particularly for individuals or small businesses who rely on litigation funding to secure justice and hold wrongdoers to account. This issue clearly needs to be addressed. 

Technology for the fast moving future of the industry 

Part of the rich challenge of technology is the pace of change, many businesses are already looking at the opportunities presented by AI for future needs. Whilst some may have reservations, automation and LLMs are already streamlining data collection and analysis, and supporting customer journeys, performing a key role in mass litigation. 

In fact, in a mass claims environment background automation can help to provide a consistent, accurate service that feels individual to huge numbers of claimants. Efficient and seamless processes need to become standard otherwise it will be impossible to stay ahead as the industry balloons. 

Innovation and technology are key to overcoming the challenges ahead. We often think of technology being able to deliver 80% of the solution needed, however the real innovation is how you solve the final 20%. This can have a bigger impact than just automating the straightforward processes as these are the challenges that take the most human brain power to solve.  

Looking at verification as an example, automation can alleviate the management of referrals, which is crucial as verification referrals can compromise the speed and accuracy of an entire case. International or more sophisticated claimants bring a whole new level of complexity for verification. For these types of claimant cohorts, innovation efforts have to aim to achieve more than just the automation of a simple process but consider complex verification as the industry scales.  

Efficiency will be essential  

It’s key for the courts to consider how they scale operations to handle joint claims better by taking a much more hands on approach and also taking good practice into the commercial space. It’s essential for case management to become as efficient as possible - the UK has historically led the way, but Europe is catching up. If London is to remain a key hub of large scale litigation the industry must evolve at pace making good use of any marginal gains at all times. 

Collaboration between law firms bringing cases also has to be a key part of tackling the challenges of a fast growing litigation market ahead. There may be competition between firms in the book building stage of litigation but at the latter stages it makes much more sense to collaborate. This will become more common, firms will learn from it and it will move the industry forward. And fundamentally, collaboration is always beneficial for claimants. 

Horizon scanning and risk mitigation 

The litigation market is often at the pointy end of technology and security failures and breaches – the Horizon scandal, data-breaches and broader privacy actions to name a few. It’s therefore critical that practices are leading the way in advanced security when those in the industry are handling data and distributing settlements for millions of claimants.  

We are living in big data times and the use of digital tools creates ever more electronic information. It’s therefore crucial that those working in the industry are acutely aware of the risks, that training is always up to date with fraud prevention software updated to stay ahead of the increasing cyber security threats.   

Another way to minimise risk is to always work with robust partners who are SRA and GDPR compliant and FCA regulated, with robust security certification and processes. Rigorous standards need to be expected and demanded of anyone that firms work with on cases in order to protect them and their clients.   

It can be seen as an issue that litigation funding is currently a self-regulated sector. However increased guidance for litigation funders is coming and will be a positive move to help maintain high standards across the industry.  

The SRA recently announced a thematic review of client money in the wake of growing incidents concerning the handling of client funds. Axiom Ince was the final catalyst to launch the Consumer Protection Review which is being closely followed.  

Of course firms that are well run are not as vulnerable to increased regulation or fines but it does raise the issues around handling client money. In addition to the risks endemic in client accounts, it can simply be an incredibly time consuming and inefficient process to handle in-house for law firms, hence a move to alternatives such as third party managed accounts (TPMAs) is gathering momentum. These cases and their settlement values are often very public, and the risks firms face at the time of receiving funds is something we should all be eyes-wide open to. 

With the only certainty being more change to come in the UK litigation market, it is clear that law firms, administrators, technology providers and funders all need to keep focused on evolving and implementing good practices and innovative solutions that will positively advance the industry and help navigate the huge growth to come. 

This article was first published in Solicitors Journal - read online here. 

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