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Litigation Governance: Taking Accountability Seriously

John C. Coffee Jr.

Columbia Law School; European Corporate Governance Institute (ECGI); American Academy of Arts & Sciences

March 1, 2010

Columbia Law and Economics Working Paper No. 359
ECGI - Law Working Paper No. 145/2010

Both Europe and the United States are rethinking their approach to aggregate litigation. In the United States, class actions have long been organized around an entrepreneurial model that uses economic incentives to align the interest of the class attorney with those of the class. But increasingly, potential class members are preferring exit to voice, suggesting that the advantages of the U.S. model may have been overstated. In contrast, Europe has long resisted the U.S.’s entrepreneurial model, and the contemporary debate in Europe centers on whether certain elements of the U.S. model - namely, opt-out class actions, contingent fees, and the “American rule” on fee shifting - must be adopted in order to assure access to justice. Because legal transplants rarely take, this Essay offers an alternative “non-entrepreneurial model” for aggregate litigation that is consistent with European traditions. Relying less on economic incentives, it seeks to design a representative plaintiff for the class action who would function as a true “gatekeeper,” pledging its reputational capital to assure class members of its loyal performance. Effectively, this model marries aspects of U.S. “public interest” litigation with existing European class action practice. Examining the differences between U.S. and European practice, this Essay argues none of these differences are dispositively prohibitive and that functional substitutes, including an opt-in class action and third party funding, could be engineered so as to yield roughly comparable results. Although the two systems might perform similarly in terms of compensation, the ultimate question, it argues, is the degree to which a jurisdiction wishes to authorize and arm a private attorney general to pursue deterrence for profit.

Number of Pages in PDF File: 90

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Date posted: November 11, 2009 ; Last revised: March 3, 2010

Suggested Citation

Coffee, John C., Litigation Governance: Taking Accountability Seriously (March 1, 2010). Columbia Law and Economics Working Paper No. 359; ECGI - Law Working Paper No. 145/2010. Available at SSRN: https://ssrn.com/abstract=1503513 or http://dx.doi.org/10.2139/ssrn.1503513

Contact Information

John C. Coffee Jr. (Contact Author)
Columbia Law School ( email )
435 West 116th Street
New York, NY 10025
United States
212-854-2833 (Phone)
212-854-7946 (Fax)

European Corporate Governance Institute (ECGI)
B-1050 Brussels
American Academy of Arts & Sciences
136 Irving Street
Cambridge, MA 02138
United States
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