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How will the rise in litigation Crowdfunding impact employers?

12 July 2022

Crowdfunding is a system of raising funds through a ‘crowd’ of people, which may include friends, family and acquaintances, who offer support to fund the legal expenses of litigation.  This innovative way to fund Employment Tribunal claims has seen exponential growth in recent years, including sites such as Crowd Justice, a crowdfunding platform for legal action aimed at private fundraising and linked to employment issues. While this may sound like a breakthrough for employees in accessing justice, how will this expanding area impact employers?

Crowdfunding has already seen success in funding high profile cases such as the challenge by a group of junior doctors to proposed changes in their employment terms and Gina Miller’s dispute with the government over Brexit however, it is now becoming increasingly common for employee litigation. Crowdfunding can help employees raise funds, assemble support and increase public awareness of their claims. We expect this will result in an increase the number of Tribunal claims.

Traditionally, an employee considering bringing a Tribunal claim could either represent themselves as a litigant in person or instruct a solicitor. In the majority of cases, instructing a solicitor involves funding the cost of legal fees and in the Employment Tribunal, it is usually the case that each party is responsible for their own costs regardless of who wins. For employees, crowdfunding may remove the barrier of paying for legal fees. Crowdfunding sites do not consider the legal merits of a case which may mean that legal fees are raised, and the details of the potential action are shared, before it is established if there is a genuine case for the employer to defend. It is also possible that fraudulent claims may seek funding with fabricated facts or even against innocent employers.

For employers there are certain circumstances in which a Deposit Order can be obtained for the employee to pay some (or all) of its legal fees if they go ahead with a claim with little merit. However, where a claim is crowdfunded, there may be limited value in securing a Costs Order if the individual has limited means to pay the costs.

Crowdfunding requires a successful marketing strategy which involves bringing the details of the dispute into the public domain. To receive funding, the aggrieved employee will need to describe the claim, potentially sharing the name of the employer and the employee’s view on the treatment they received to encourage funding. A research study by Raghupathi et al in 2021 found that cases with professionally written descriptions were more likely to be funded by donors. The descriptions can be very emotive and there are concerns that particularly inflammatory descriptions could bully employers into settling claims to avoid further negative publicity.

For employers, if details of the claim are shared it may reduce the appetite for settlements as settlements usually include an obligation on the parties to keep a dispute confidential. If the details of the claim have already been brought into the public domain, it may reduce the attractiveness of settlement. In addition, if the claims have been publicised, employers may want the Tribunal to consider the crowdfunding to disprove baseless allegations.

Typically successful crowdfunding cases are likely to be those that are in the interest of the public or attract media attention and public outcry. For example, discrimination or whistleblowing claims usually attract more interest and consequently higher funding. Employees seeking funding are also encouraged to give supporters updates on their case and provide an outcome of the case to keep the momentum of fundraising, which could continue to have a detrimental impact on the reputation of the employee (or the employer).

In a recent case a Christian nurse, Ms Gallagher, is intending to sue the Portman Clinic part of the Tavistock and Portman NHS Trust as she felt some of its courses contained religious and racial discrimination. Ms Gallagher has created an online campaign, which has been shared on Twitter and in numerus newspapers, and is seeking to raise £50,000 to meet the legal costs of the litigation.

Before the claim has been considered by a Tribunal to establish if it has sufficient evidence and merit to support the allegations, the reputation of the employer could be severely damaged by the media campaign seeking funding. While employers cannot prevent claims being crowdfunded, publicising details of their employment and ‘bad mouthing’ employers may well breach the employment contract.

Employees therefore need to be careful their decision to disclose information leaves them exposed to claims by their employer. For employers, it’s important to ensure they have well drafted contracts and policies in place to act as a deterrent against employees opting for crowdfunding to minimise the damage to their operation and the business.

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