The American takeover bid for the London Stock Exchange in recent weeks has highlighted the increasingly long arm of US regulators. European companies — even with the most minimal contact with the US — are finding themselves subject to American legislation and the jurisdiction of its courts. Angela Mer-kel, the German Chancellor, wants to harmonise EU and US legislation and encourage more EU businesses to list in the US; and now with Co-hen Milstein Hausfeld, a US firm specialising in class actions, opening its first office in London, it is fair to ask if the US way of litigating has landed on our doorstep?

The evidence that we are a more litigious society or that we are becoming American in our approach to the law is inconclusive. Since Lord Woolf’s sweeping reforms of the framework for civil litigation in 1998, disputes reaching court have fallen dramatically. At the same time, the number of disputes resolved by alternative means, such as mediation, has gone up. While the bare statistics from the courts suggest that we are not, as a nation, becoming more litigious, the underlying trends suggest that disputes are increasing and being resolved in different ways. What is changing also is the way in which disputes are conducted by individuals, companies and their lawyers. It is this change that suggests that the “American way” is starting to find a foothold.

With the growth of global trade and the increasing international reach of American businesses, the differences between US and European dispute resolution procedures are starting to erode. US companies’ way of working and practices are starting both to inform and reform the legal systems of jurisdictions in which they operate.

One of the most notable aspects is the class action. US courts often hit the headlines for company-crippling awards of damages; plaintiff lawyers command media attention for the sums they garner by acting in these cases on contingency fees; and “litigation tax” is viewed by many companies as one of the costs of doing business, with some products failing to reach the market at all for fear of litigation and with claims sinking substantial companies.

Class actions have not yet become a feature in the UK in anything like the same way, although the Companies Bill will simplify the procedures for shareholders to bring derivative claims against directors, potentially opening the door for hedge funds and other activist shareholders to block takeovers. Key procedural and cultural differences make it unlikely that we will see true American-style class actions here in the short to medium term. Having said that, substantial, mass-claimant litigation is starting to take root throughout Europe, albeit in different guises in each jurisdiction. The European Union is starting to make tentative inroads into legislating for class-action types of litigation, with a recent Green Paper on damages actions for breach of European antitrust rules suggesting that collective actions may be an improved and desirable way of protecting consumers.

The prevalence of class actions raise the question of whether they are a good thing. On the downside, they may be said, at least in their American form, to encourage ambulance chasing, to benefit claimants’ lawyers more than the claimants themselves in some cases, to impose an unreasonable burden on defendants, to proliferate weak claims and, above all, to threaten the very existence of sizeable corporations.

On the other hand, there are advantages, even for the defendants. They give consumers collectively a stronger voice and so encourage corporate responsibility. They provide access to justice for the impecunious claimant with a valid claim. Moreover, they can lead to efficiencies of time and cost and enable companies facing mass claims to take in the nature and scale of the problem. For these reasons, class actions should not be dismissed out of hand.

In 2005 about 25 European companies were defendants to US class actions. Shell, for instance, was investigated and fined over misstatements concerning its oil reserves. Deutsche Telecom, Vivendi, Par-malat and Hoffman-La Roche are other examples. Equally, European organisations (most notably pension funds) have been considerable beneficiaries of the compensation pools created by successful claims in the US. The Corporation of London’s pension scheme has been joined recently as a co-claimant in a claim against British Petroleum in the US.

This American influence is not confined to the corporate arena, as the recent extradition of the Nat-West Three highlights. Companies in Europe, and those who manage them, need to be mindful of the increasingly vigilant eye of the US judicial and regulatory machine.

There is no easy answer to the question of whether, as a nation, we are becoming more litigious. Plainly, court-based litigation is less popular today as new methodologies, often of American origin, are developed. We ignore the American approach at our peril, as their way of doing business with us, and its influence on the way in which we resolve the commercial disputes that arise as an inevitable facet of that business, is only likely to grow.

John Heaps is head of litigation and dispute management, and Simon Jackson, an associate, at Eversheds LLP

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