“Dieselgate” — English High Court Takes Control of Spiralling Legal Costs in High-Volume Consumer Disputes

At a Glance

• The two judgments demonstrate the High Court’s combative stance towards what it views as “over-lawyering”. The court aims to ensure that costs are reasonable and proportionate, so legal teams must efficiently allocate tasks and resources to avoid instances of duplication and excessive costs. 
• Faegre Drinker partnered with Kendal Advisory to release a study on the class action regime in England, which found that such excessive legal costs in class and collective actions are undermining business investment in the UK and failing to serve consumers. 
• As mass actions become increasingly prevalent, rigorous cost management, transparent budgeting and appropriate use of resources is paramount to ensuring that parties meet court expectations in high-volume consumer disputes in the future.

The series of judgments in Various Claimants v Mercedes-Benz Group AG and Others [2025] EWHC 2307 (KB) in the High Court of Justice of England & Wales provides a crucial insight into the practical realities and challenges of managing costs in mass consumer group litigation. The litigation, which aggregates claims relating to the alleged use of defeat devices in diesel vehicles to avoid emission regulations, will have broader implications for costs management in group consumer claims moving forward. 

Background

The Pan-NOx Emissions Litigation — nicknamed “Dieselgate” — is one of the largest consumer group actions in the United Kingdom, spanning claims against numerous automotive manufacturers over alleged breaches of emissions regulations. With over 1.8 million claimants, total alleged damages in excess of £6 billion, 20 claimant firms and multiple defendant teams, the scale of the proceedings presents challenges in terms of administration, case management and cost-budgeting. The latest costs management judgment provides a clear indication of the High Court’s approach to costs management and its intolerance of excessive legal costs in group litigation. 

This comes at a time of increased regulatory scrutiny into the legal fees associated with class actions, with the Solicitors Regulatory Authority (SRA) carrying out a review of litigation funding arrangements. The SRA’s final report identified a number of concerns in this area, including a failure of claimant firms to consider clients’ best interests regarding litigation funding agreements and a failure to give clients the best possible information about the costs of their matter.

The First Costs Management Judgment — 5 July 2024

At a three-day costs hearing last year, the High Court reduced the claimants’ costs budget for the second trial of issues — concerning the “Prohibited Defeat Devices” — from £208 million to £52 million (a 75% per cent reduction) and the defendants’ from £212 million to £114 million. At the hearing, the judges described the incurred costs to date as “eye-watering” and the approach to future budgeted costs as “inefficient, duplicative and over-lawyered”. The judges warned that parties must make efforts to minimise the number of lawyers and hours required to sensibly progress the matter. 

The Latest Costs Management Judgment — 10 September 2025

After a second costs management hearing in September, the High Court reduced the parties’ costs budgets for the “Quantum Trial” — concerning causation and loss — which is due to take place in late 2026. The High Court commented that the proposed attendance of at least 30 fee earners for the claimants at the case management conferences, pre-trial review and trial was “frankly remarkable” and did not accord with the requirements of reasonableness and proportionality set out in the Civil Procedure Rules. 

Similarly, the presiding judges voiced concerns that the claimants’ fortnightly progress meetings, budgeted at £40,000 per meeting, had become “over-engineered” and unreasonable, reducing the figure to £2,000 per meeting. Overall, the claimants’ claimed costs were cut back from £75 million to £22.5 million (a 70% per cent reduction) and the defendants’ from £79 million to £49 million. 

Key Takeaways

The two judgments demonstrate the High Court’s combative stance towards what it views as “over-lawyering”. The court aims to ensure that costs are reasonable and proportionate, so legal teams must efficiently allocate tasks and resources to avoid instances of duplication and excessive costs. 

Faegre Drinker partnered with Kendal Advisory to release a study on the class action regime in England, which found that such excessive legal costs in class and collective actions are undermining business investment in the UK and failing to serve consumers. As mass actions become increasingly prevalent, rigorous cost management, transparent budgeting and appropriate use of resources is paramount to ensuring that parties meet court expectations in high-volume consumer disputes in the future.