A Legal, Empirical, and Economic Analysis
- New Horizons in Law and Economics series
Edited by Mark Tuil and Louis Visscher
4. Financing and group litigation Sonja Keske, Andrea Renda and Roger Van den Bergh 1. INTRODUCTION Group litigation is considered as having the potential to overcome the inefficiencies of private law enforcement by individual actions for damages, especially in cases where illegal conduct causes scattered damages for numerous victims, where the damage suffered by each individual victim may be small (Renda, Van den Bergh, Keske, Pardolesi et al. 2007, II.2.2). This is particularly true in fields such as antitrust, products liability, pollution, retail financial services, health services, and so on. In these and other fields, individual victims may lack information about law infringements and even about the damage suffered; and even if they do have enough information, they may still decide not to bring suit because of rational apathy, the risk of free-riding and the fear of having to bear huge upfront legal expenses (Renda, Van den Bergh, Keske, Pardolesi et al. 2007, II.2.2. See also Chapter 2 by Visscher and Schepens in this book), which greatly reduces the deterrence effect of actions for damages. In group litigation, either an informed individual party or an association steps forward and initiates a proceeding. In this way, possible information deficiencies may be cured, the problems of rational apathy and free-riding may be mitigated, and costs may be shared by a group of plaintiffs, thus reaching economies of scale in litigation. For this reason, the need to ensure the availability of collective redress for consumers and businesses in some areas of law – most...
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