What is strategic litigation and how can charities use it to drive impact? Leticia Jennings and Katy Sawyer from Bates Wells take a look at the opportunities, risks and issues.
Strategic litigation (otherwise known as purposeful litigation) can have a big impact, but understanding the risks and opportunities is key.
How can your charity use strategic litigation to create impact and what financial and regulatory considerations you should bear in mind?
What is strategic litigation?
There is no single definition of strategic litigation. It could be described as litigation with a social or environmental purpose beyond the outcome of most litigation (which is simply to move money from party A to party B). Bates Wells’ clients are predominantly charities and for-profit businesses seeking to drive purpose and change.
Charities in particular are at the forefront of strategic litigation. They are governed and managed by people driven to make social change and charities are increasingly turning to litigation as an additional tool to pursue their charitable purposes, raise awareness and increase their impact on society.
How is strategic litigation used by charities?
Given that the aim is to use strategic claims to make a positive impact, there is an opportunity to be creative. The starting point is to consider the desired impact. Is the goal to change the law or public policy or is the goal simply to gain traction from a PR perspective? A claim might be unsuccessful, but it might nevertheless have the ability to shine a light on a particular issue. The power of the law courts – and the court of public opinion - should not be underestimated.
Some of the types of claims that could be brought are as follows:
- Charities have brought claims against public authorities in relation to their decisions (otherwise known as judicial review). We have written about the charities that brought claims relating to the Rwanda policy here;
- A claim for declaratory relief. This type of action would request a statement from the court as to a party’s rights or a principle of law. Bates Wells represented charities who were successful in obtaining a declaration that charity trustees are able to align their charities’ investments with climate change goals. Further information about this case is here;
- There is a whole host of climate litigation, including the recent success of Verein KlimaSeniorinnen Schweizan (we have written about this decision here), plus the recent shareholder action brought by ClientEarth (see more about this here);
- We are also seeing an increase in supply chain or value chain claims (i.e. holding companies to account in relation to social, environmental and business dealings);
- There can also be a claim between private parties – the cause of action does not have to be sophisticated or complicated, but the outcome of the case is that it has a positive impact.
What are the financial, regulatory and other considerations?
Charities should also consider whether it is necessary to bring formal court action in the first place. Some action might not involve court action, there are various ‘soft law’ mechanisms, for example a complaint to a regulator.
It is also possible that you could achieve the change you seek before any court proceedings are issued. A well drafted letter before action can make organisations sit up and listen and consider change to negate the need for potentially lengthy and costly litigation.
Charities should be mindful that there is no guarantee that a court case will be reported in the way in which you envisage. It might not be picked up by mainstream media, or a claim could damage a charities reputation.
There can also be bad test cases which could set a campaign back years, therefore there is an art to picking the correct issue, cause of action and opponent.
Another consideration is costs. Of course, if the claim is settled and you achieve the change in pre-action then costs will be minimal.
However, bringing formal court proceedings can be a lengthy feat with potential significant costs implications. In England and Wales, the general rule in litigation is that the loser pays the winner's costs. This means that the loser can expect to pay 60% or two thirds of the winner costs.
So, if you are considering bringing a claim it is important to remember that even if you are successful some of your legal spend will be irrecoverable. Charities will also need to be mindful of their opponent’s assets.
If your opponent has limited funds, then pursuing a claim all the way to trial could mean that there are no funds to recover if successful. However, for most charities, claims are about something other than money, but this is a factor for a charity's budget.
Charities generally self-fund these claims, however if you have concerns about costs there are various funding options. Charities could decide to fund a case with other charities or organisations (i.e. not being a specific claimant themselves but contributing to costs and or the claim strategy). Numerous charities also seek crowdfunding to assist with their legal costs.
Charities should also consider their regulatory obligations to the Charity Commission. A charity’s trustees are ultimately responsible for ensuring that the activities a charity carries out are in furtherance of the charity’s purposes.
The activities available to charities are wide ranging. Charity Commission guidance indicates that campaigning and political activity can be legitimate and valuable activities for charities to undertake, provided such activity is undertaken by the charity only in the context of supporting the delivery of its charitable purposes.
Similarly, Charity Commission guidance confirms the charities are free to bring litigation against a public body where there is a particular legal issue which requires determination or if it will further the purposes of the charity for the issue to be determined by the court.
In addition, charities can and do bring claims against private companies. When doing so, charities must ensure that such litigation is activity that furthers their purposes – which can be a very unrestrictive condition as many charities’ purposes include a catch-all 'general charitable purposes'.
All charities considering bringing strategic litigation ought to carry out a risk assessment, including the following questions:
- Does the case involve a particular legal issue which requires determination;
- Will the litigation further the charity’s purposes;
- Has the charity taken legal advice and satisfied itself that the claim has at least a reasonable prospect of success; and
- Have the trustees weighed the prospects of success against the consequences of failure – this is not just financial in terms of legal costs and management time, but also the potential impact upon the charity and its charitable purposes.
Charities are increasingly utilising litigation in order to make change and achieve its aims. With the general election looming, many charities will be taking the opportunity to shine a light on particular issues. Bringing a claim that has strategic aims is another tactic that all charities should consider adding to their toolkit.
This article was authored by:
Leticia Jennings, Partner, Bates Wells
Katy Sawyer, Solicitor, Bates Wells