Royal Bank of Scotland faced Class Action from UK investors in US Courts. The Royal Bank of Scotland, and perhaps numerous members of Scotland’s legal profession (even those such as the current Dean of Faculty, Richard Keen QC), can, as the Herald newspaper reported earlier this week, breathe a sigh of relief as the Class Action case which was raised by UK investors in the American courts, failed after a New York district judge threw out the main claims of the action, which were based around the bank’s semi-nationalisation in 2008. After taking into account a similar ruling in the Supreme Court in June, relating to National Australia Bank, this week’s decision in New York effectively means UK ordinary shareholders cannot pursue claims against RBS in the US courts.
The Class Action suit raised in the US, involved a number of investors who had acquired shares in the bank between 1 March 2007 and 19 January 2009, during which time their value dropped 98% amid fears over the bank’s potential exposure to sub-prime lending losses which crippled many banks across the globe. A number of those involved in bringing the suit participated in RBS’s £12bn rights issue just months before the bank was effectively nationalised. The RBS of course, welcomed the collapse of the case, and said it would defend the remaining claims vigorously” although given the state of the UK’s justice system when it comes to Class Actions (otherwise known as Multi-Party actions) the RBS or indeed any other institution which in any other country might find itself a target of a Class Action wont need to worry too much …
Class Actions, as most readers will be well aware, are largely non existent in UK Courts or the Scottish justice system, the latter where reforms which take place south of the border can take up to 40 years to cross the green hills of the Scottish Borders to reach Scotland’s supreme court, the Court of Session in Edinburgh. Indeed, with the pace of change so slow in Scotland, one may almost be forgiven for thinking big business and vested interests have a greater say, and representation in the justice system and how it is gummed up to prevent access to justice, than ordinary members of the public who mostly fund the courts system through taxes.
It is true the Scottish Government have ‘proposed’ the introduction of Class Actions to Scotland in their response to the Lord Justice Clerk, Lord Gill’s Civil Courts Review. However, as I reported in early November 2010, the Scottish Government’s ‘proposal’ may well take years to implement, and in the current climate of consumers ever eager to take on the banks and other powerful or influential institutions and even, professions, it wouldn't come as much of a surprise for any introduction of Class Actions to come after the old trick of ‘time bar’ would ensure any further litigation against such fine upstanding financial institutions which have crippled the entire country and affected everyone would not be able to proceed.
My earlier coverage on the issue of Class Actions can be viewed here : Class Actions for Scotland ? - The story so far
While the Scottish Government, the legal profession and other vested interests play with the idea of introducing Class Actions to Scotland’s Courts, let us remind ourselves of at least one MSP’s views on the issue, those of Shirley Anne Somerville (SNP), who spoke in the Scottish Parliament’s debate on Lord Gill’s Civil Courts Review in October 2009.
Shirley Anne Somerville speaks on Class Actions & Lord Gill Civil Courts Review (Click image to view video)
Nice to see you back writing.
ReplyDeleteYou can rest assured the SNP will hold off Class actions as long as possible just in case any of their sponsors/donors are affected!
Best of luck for 2011 Peter
wb
ReplyDeleteYes I can see them waiting at least 5 years to get any probs with the RBS out of the way first!
Good video of Shirley - she knows her stuff!
Something else which may interest your readers (also from 2009!)
ReplyDeletehttp://www.out-law.com/page-10452
If you are ever bored in the company of lawyers and fancy starting a scrap there is really only one phrase you need to utter. It is this. I think class actions should be allowed in Britain.
There will be intakes of breath. There will be thoughtful shaking of heads. There may even be spluttering. Class actions as they are practiced in the US you see are either the saviour of beaten down consumers or a long con played on a defensive legal system by shark like profit eating lawyers. It just depends on who you ask.
A class action law suit is one where people band together in their hundreds or even thousands to take a case over something that has affected them all in the same way. It is a suit with one accused but many accusers. It usually involves an issue that is probably too small to go to Court over on an individual basis but becomes a major case when multiplied a thousand fold.
The controversy is this. While it is an efficient way of litigating, the people in whose name the suit was taken often only get a few dollars each once any Court payout is divvied up. Yet this scant compensation costs the company perhaps billions of dollars and the only person who comes away with full pockets, the lawyers.
Lawyers will typically pursue cases on a "no win no fee" basis and take a percentage up to 20% or 30% of the total payout in fees. So while one of the people in whose name the case is taken could get a fraction of a percent of the payout the lawyers can walk away with a third of often huge sums.
Brussels is mulling and consulting and researching the introduction of a kind of class action suit in Europe called consumer collective redress. It could take a while.
So feathers were ruffled last week when Scotland's second most senior judge, Lord Gill, announced in his review of Scotland's civil legal system that Scotland should introduce class action suits.
John Mackenzie is a specialist in Scottish litigation at Pinsent Masons, the law firm behind OUT LAW. He outlined why Gill's proposal might be a good idea.
John Mackenzie: There are many different kinds of claim that could be brought from single disasters for example we have the Braer disaster, Piper Alpha for example are examples of disasters where many, many people had claims against one entity. The advantage of a class action is of course that individual consumers can come together with others perhaps hundreds perhaps thousands to bring a claim that might be worth only £10, £20, £50. They would never contemplate bringing that claim themselves so those are perceived to be a real benefit for consumers in bringing a class action.
The issue is much more complex than just deciding whether to have class actions or not. What form should they take? Should you have to choose to be part of the class or should it automatically include everyone affected by an issue? Should people be able to take actions or only representative bodies such as consumer protection groups? Lord Gill say that direct action should be possible but that who is in a class should depend on the case.
John Mackenzie: Lord Gill's committee discusses in some detail the difference between an opt in and opt out class action. Opt in basically means that those who decide to join the class action will be bound by the outcome and the opt out procedure is the opposite. You need to opt out of it so that you avoid being bound by the result of the action. What Lord Gill has concluded is that it should be left to the Court to decide what is the best form of procedure. That is probably sensible given that each case will be different and each will have their own special circumstances.
Part II
ReplyDeleteThe idea is quite new for Scotland. There are ways to collectively manage cases in Scotland but Lord Gill said they were cumbersome and not cost effective.
John Mackenzie: For Scotland this is a significant innovation. There has been no history of class action law suits in the Scottish legal process. There have been many ad hoc class actions where in essence many pursuers have come together and litigated together, but it is not a distinct procedure that exists for them to take advantage of. It is a very complicated and cumbersome process at the moment. So this is a real step forward.
So will this be a first in the UK? Well not quite. There are lots of ways to take collective legal action. England already has one but says Mackenzie, Lord Gill's proposal goes further than what is currently available anywhere else in the UK.
John Mackenzie: I think that class action is a development on the English model which allows for a group litigation order. What that allows for is the case management of claims which could give rise to similar issues of factor law. Where I think the class action has a distinct advantage, is it comes together in a concept that people on the street will understand. People will understand what a class action is. It is about people coming together. The English procedure perhaps is about trying to manage existing cases rather than starting with a concept of a big group of people.
Mackenzie recognises that class action suits divide opinion pretty strongly, but he says they are likely to bring some benefit to those consumers who are let down by companies.
John Mackenzie: The arguments on this point are polarised. It is either a charter for lawyers to make huge amounts of money or it is the only way in which the aggrieved consumer can get justice and the answer, I think, as we would expect lies somewhere in the middle. Yes, businesses are going to have to get ready to deal with class actions and they are going to deal with many consumers coming together when there are, for example, defective goods being sold. Ordinarily customers might be dealt with at a complaints stage or at a customer service stage but the class action gives rise to the possibility of large scale litigation in relation to defective goods.
It is now up to the Scottish government to accept or reject Lord Gill's recommendations but his view is formed by a consultation in which 75% of respondents backed the change.
What things should companies watch out for? How should they prepare for the coming of class action suits? Well they need to change they way they deal with customers' problems, said Mackenzie.
John Mackenzie: There is a whole range of areas that could be covered by the class action. Medical negligence is one. The pharmaceutical industry is another. Consumer products is yet another. Anywhere where you have legal complaints of a similar nature and potentially a low value is where the new claim is going to come from. There will be occasions when something untoward happens. If that is the case then businesses just need to recognise that the threat of litigation is real. It cannot be discounted as perhaps it would be when you are just picking off individual customers who will quickly realise it is not cost effective for them to raise proceedings. So businesses have to put in place perhaps a policy for recognising and then escalating customer issues that could turn into class actions.
http://latestnews.virginmedia.com/news/uk/2011/01/16/expenses_mp_reports_colleagues
ReplyDelete16 January 2011 12:15am
A serving MP has reported six of his parliamentary colleagues - including two former Cabinet ministers - to police over alleged abuse of expenses, it has been reported.
The Sunday Times claimed that the Labour MP, who represents a northern constituency, passed details of alleged wrongdoing to police because he believes he was unfairly singled out for investigation over his own allowances.
If confirmed, it would be the first time since the expenses scandal erupted in 2009 that an MP has made a complaint to police about fellow members of the Commons.
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Interesting, Imagine a lawyer reporting a colleague for Legal Aid fraud. That would make a good story.
It is wonderful to see so many websites worldwide on crooked lawyers. I believe MacAskill said "Scotland owes a great debt to the legal profession". What mendacity from a Justice Minister. You owe a great debt to your legal profession MacAskill, not us.
ReplyDeleteIf their is no problem with self regulation MacAskill why are dissident websites slowly taking regulation away from the Law Society? One day people will check websites before going to your colleagues, like they check their bank statements. All these people showing dissent. If you really believe their is no problem with self regulation, you are out of touch with the facts. You need evidence to form an arguement, but you lawyers see only what you want to see because ruined clients lives do not affect you. You are the most hated profession I know of and you are losing this battle.
Shut the Law Society.
HE IS AN ESTATE AGENT FOR A FRIEND OF MINE IN SOUTH LANARKSHIRE. MY FRIEND WILL NOT LIKE THIS.
ReplyDeleteYou can also visit Austin Lafferty's own website at http://www.austinlafferty.co.uk/ .. I wonder if he's up for more debate on the merits of lawyer investigating lawyer ? and any more old lady clients with £100,000 ?!!
Well Peter he needs self regulation because as he said any old lady with £100,000.00 would be an easy target for a Scottish Lawyer. Self regulation and the Mr Mills, on James Ness of the Law Society would cover it all up.
It is a form of legal not illegal theft, I am sure you will agree. Trusting a Scottish lawyer with your assets is like putting your money in a safe and advertising in the press the location of the safe and the combination. Madness simply crazy.
I will be passing Austin's comments to my friend he is acting for this evening.
I think litigation is a Christmas present all year for scumbag lawyers.
ReplyDeleteA friend who helps at the citizens advice bureau told me her cousin is a lawyer. He told her never to trust a lawyer because many in his profession are crooks, and the Law Society are much worse than the lawyers.
I think that is the best legal advice I have ever heard of, no doubt he would have his practicing certificate revoked if he said it publicly.
I was involved in a case where the pursuers lawyers dragged a case out and the legal aid board where not interested in looking into the facts regarding this. I spoke to the law society and it appears that no one had done anything wrong. so it seems an innocent person being left with large legal bills and no redress is ok in scotland. IT IS ALSO VERY PROFITABLE FOR THESE LAWYER BASTARDS. I UNDERSTAND YOUR SITUATION I HAVE BEEN THERE.
ReplyDeleteALL YOU NICE PEOPLE OUT THERE I BEG YOU FOR YOUR OWN SANITY AND WELLBEING STAY AWAY FROM LAWYERS. IF IT GOES WRONG YOU WILL ENTER LEGAL HELL.
'It is organization and self regulation which gives birth to the dominion of lawyers over their clients, of the corrupt over the victims, of the legal system over the electorate. Who says organization, says oligarchy.'
ReplyDeletePrivate decisions behind the walls of the Law Society of Scotland has ensured criminals with law degrees protect other criminals on the outside who deal with the public, I am convinced who controls organisation in legal circles creates tyranny.
Adapted from Michels, R. (1962) Political Parties