Key facts
- A surge in third-party funding has led to an increase in shareholder lawsuits against FTSE companies.
- Entain is facing legal action related to a £585m penalty for historic bribery in its former Turkish business.
- British American Tobacco (BAT) is being sued for alleged failure to disclose breaches of US sanctions related to North Korea.
- Boohoo Group faces a claim for up to £245m over the 2020 Leicester factory labour scandal.
- Law firms like McDermott, Morgan Lewis & Bockius, Fox Williams, Hill Dickinson, Stewarts Law, McDermott Will, Schulte, and Peters and Peters are involved in these cases.
A significant increase in the availability of third-party funding has fueled a wave of speculative shareholder lawsuits against major FTSE-listed companies. Investors are leveraging these funds to pursue claims of alleged corporate wrongdoing, with several blue-chip firms, including Entain, British American Tobacco (BAT), and Boohoo Group, recently facing High Court actions.
The trend is driven by a growing focus on originating large-scale, high-value cases, as litigation funding becomes increasingly integral to dispute resolution. London's deep capital markets, sophisticated investors, and developed disputes system contribute to this mature funding ecosystem.
Entain, a gambling giant, is the latest to face new filings, with proceedings initiated by Morgan, Lewis & Bockius and Fox Williams. These actions center on Entain's deferred prosecution agreement with the Crown Prosecution Service, which involved a £585 million penalty for historical bribery and corruption in its former Turkish business. The trial is anticipated to commence in 2029, pending the conclusion of related criminal trials involving former executives.
British American Tobacco (BAT) is confronting multiple group lawsuits from shareholders alleging breaches of North Korean sanctions. Investors claim the company failed to disclose violations of US sanctions connected to its past operations in North Korea. Claims have been filed by firms including Hill Dickinson, Stewarts Law, Fox Williams, McDermott Will, and Schulte.
Fast fashion retailer Boohoo Group is also being sued by institutional investors represented by Fox Williams. The group action seeks up to £245 million in compensation over the 2020 Leicester factory labour scandal, with shareholders alleging misleading statements and omissions regarding poor working conditions and underpayment of workers. This case is expected to go to trial in October 2027.
Legal experts note that while these complex claims take time to develop through the court system, there has been a clear uptick in their frequency. Procedural clarifications arising from the increasing number of cases have also assisted the growing capacity for complex litigation. However, a key question for the courts will be determining what shareholders knew at the time of investment, rather than solely assessing significance with hindsight.