It cannot be denied that as acceptance of Litigation Finance increases, class actions increase in number. This is viewed by most as a positive, as it demonstrates that the practice is affording access to the legal system. Increasingly, class actions involving pension fund-related investment losses are cropping up across the US and Europe.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
It cannot be denied that as acceptance of Litigation Finance increases, class actions increase in number. This is viewed by most as a positive, as it demonstrates that the practice is affording access to the legal system. Increasingly, class actions involving pension fund-related investment losses are cropping up across the US and Europe.
IPE Magazine explains that as institutional investors become more active, they’ve also become more litigious when big losses occur. As European investors are seeing more sizable losses for a number of reasons, they are seen as the driving force behind this new wave of litigation.
Jeroen can Kwawegen, a partner in New York firm BLBG, explains that European pension funds are markedly different from those in the US. In Europe, pension funds focus on sustainability, environmental concerns, and investing in social programs. In a sense, these class actions are a kind of corporate governance tool to enforce responsible behavior and to recover losses.
Some say that litigation is an effective way to engage with a company when informal options are exhausted. But this ‘punishment litigation’ is not always appropriate or effective. After all, investors may not want to break off their relationships with a company—yet it is essential that the misconduct not become repetitive.
The recent REST settlement illustrates that litigation can have a positive impact beyond the claimants involved. When the Retail Employees Superannuation Trust settled, they agreed to a net-zero carbon footprint by 2050, along with increased transparency and a more careful assessment of climate change risks as they pertain to investment.
Neil Purslow, CIO at Australia’s Therium Capital, states that the REST settlement is unlikely to unleash a flurry of similar cases in other countries. While the Litigation Finance community is well-funded and poised to invest in meritorious cases, it’s unlikely that Australia will see the same type of investor cases.
