Simon Pearl argues that the UK legal culture and funding issues will scupper the growth of US-style product liability claims

It is an oft-cited myth that if you want to predict the shape of the British compensation scene tomorrow, you have only to look at what is happening in the US today.


There, hundreds of class actions and product liability claims are being pursued, including claims against fast-food companies in respect of obesity, and alcoholic beverage producers for marketing to underage drinkers. But will such actions cross the Atlantic?


Although the European Commission has expressed the desire to adopt many aspects of the US civil justice system, with its favourable consumer interest culture, there are others such as the Trades Union Congress and the Better Regulation Task Force that see no evidence of a growing compensation culture here. Indeed, within the context of product liability litigation, the past decade has seen many high-profile claims - such as those in respect of the MMR vaccine, Gulf War Syndrome, sheep dip, tobacco and Benzodiazepine - collapse before trial. Many other similar cases have hardly got off the ground before grinding to a halt.


The reason for the contrasting outcomes is embedded in differing cultures and civil justice systems rather than the substantive law, which arguably, is more favourable to consumers in the UK, given the strict liability regime introduced by the EU Product Liability Directive. The US regards civil litigation as a form of regulation.


The US has a complex array of potential court venues in which these claims can be brought at both federal and state level. This enables claimant lawyers to forum-shop for the most sympathetic court. Hence the kick-off of the Vioxx litigation in a Texas state court. But had the claimants lost, they would simply have moved to a neighbouring state.


The majority of these cases turn on complex medical and scientific expert evidence. While in the UK the evidence is assessed by a judge who will write detailed reasons for the decision, the US courts leave it to a jury that has no obligation to give reasons and is prone to emotional and subjective influences. Jury decisions have no binding precedent. Furthermore, while compensatory awards are not entirely divergent, the risk of punitive damage awards has a significant impact in the US.


The major restraint on the growth of US-style product liability claims here is undoubtedly funding. A loosely regulated contingency system in the US feeds the speculative nature of many of these claims. Put bluntly, a claimant attorney can make a fortune in a successful class action. Here, the reform of legal aid funding for personal injury claims have not addressed the group-action position successfully.


Although funding continues to be available from the Legal Services Commission through the public interest element, there is a Catch- 22 element to its decision-making. Cases based on speculative science (correctly) do not meet the merits criteria, while stronger cases are regarded as capable of being funded through the after-the-event insurance market.


Such risks and benefits do not make these claims attractive for the claimant's lawyer. This is particularly the case with smaller groups. The loser-pays principle also dampens the enthusiasm to speculate.


Predictions of a slide into US-style compensation culture after the introduction of the strict liability regime have not been borne out, and under the funding regime, it is a most unlikely occurrence. A more appropriate comparator is the position in various European countries, which, despite the introduction of class action or representative claim procedures, continue to maintain a balanced approach where access to justice is not inhibited but the excesses of the US model are avoided.


Simon Pearl is a partner at City law firm Davies Arnold Cooper