A text transcription follows.
This transcript is for anyone with a hearing impairment or who for any other reason cannot listen to the MP3 audio file.
The following is the text spoken by OUT-LAW journalist Matthew Magee.
Hello and welcome to OUT LAW Radio where we hope to keep you up to date with the latest news and the most fascinating features on the world of technology law.
My name is Matthew Magee, and this week we investigate the implications of the introduction to Scotland of class action law suits as recommended by an official review of the Scottish legal system.
But first, here are some of the top stories from OUT LAW.COM where you can read breaking technology law news throughout the week:
Twitter beats super injunction
and
Call centres breach credit card protection rules
A litigation expert has said that the widespread passing on of information by Twitter and Facebook users when it was the subject of a reporting ban could undermine the effectiveness of Court imposed reporting restrictions. The Court's decision to ban the Guardian newspaper from reporting who had asked a particular question in parliament, whom it was about and who might answer it caused shock in media and civil liberty circles this week. It was seen by many as unusual to block reporting from the place where the public's representatives conduct the business of government. The question was about a report on the alleged dumping of toxic waste. Twitter users spread the news of the question and the name of the oil trading company involved, Trafigura. Litigation specialist John Mackenzie of Pinsent Masons, the law firm behind OUT LAW, said that the issue raises interesting questions about injunctions in the age of social networking. He said if there is a reporting ban from Court but the information concerned is being published in tweets and status updates by thousands of people, the Court and the person whose information was the subject of the injunction have a problem. It may be that if enough of a public groundswell support builds up behind an issue injunctions lose their power.
More than 95% of call centres were found to store customers' credit card details and recordings of phone conversations in breach of industry rules according to a survey conducted by a call recording technology company. Veritape said that when it talked to 133 call centre managers only 39% of them knew about industry rules against the storing of the information and just 3% of them wiped credit card numbers from recordings of phone calls. Veritape provides call recording services to the call centre industry. A Veritape statement say that the routine practice of storing unedited audio recordings of calls is creating a vast reservoir of sensitive data on the servers of call centres across the UK. The industry guidelines are contained in the payment card industry data service standard which governs how companies should treat data whether they be physical shops, websites or call centre operations.
Those were some of the top stories from this week's OUT-LAW News.
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.
The 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.
That's all we have time for this week, thanks for listening. Why not get in touch with OUT LAW Radio? Do you know of a technology law story? We would love to hear from you on radio@out-law.com. Make sure you tune in next week; but for now, goodbye.