ByMENI NEEMAN, MICHAL LIPEL, IN COLLABORATION WITH PHOENIX FINANCIAL

JULY 7, 2026 15:34

After twenty years since Israel's Class Actions Law took effect, a key insight stands out: class actions continue as a vital tool for shielding the public. Still, due to their strength as a legal device, they require more accuracy, caution, and accountability in application.

The law's initial idea was straightforward yet strong. It allowed individuals to contest broad but minor harms that would not support solo suits, yet together amount to notable public injury. Thus class actions granted access to justice for those who might otherwise lack it.

Any tool meant to equalize power can tilt the scales if it grows unchecked. Today the issue is not if class actions are needed, as they clearly are. Instead it centers on whether courts properly separate actions that truly aid the public from those that add to its load.

This goes beyond theory. In current commerce every legal exposure has a cost. Wide litigation risks raise business expenses that may pass to consumers via higher prices for goods and services.

Mature systems call for refined guidelines

Right after the law passed, focus fell on boosting its use by easing access and offering real rewards for revealing common misconduct.

That stage proved essential. Yet after two decades the class action scene in Israel has grown into an expert domain. Comparing it to sports, it has moved from casual play to pro ranks.

Here courts must do more than admit cases. They need to oversee proceedings fairly.

For instance when a class action lacks proper pre-suit notice, when a defendant offers a solid reply yet the case moves ahead, or when a claimant presses on despite court signals of weak arguments, judges should respond clearly: weak claims bring results such as realistic fee shifts to losing plaintiffs.

Israeli rulings have started this path, yet steadier application could help.

This method would not harm the class action process. Rather it would build trust by focusing resources on real public harms instead of marginal claims.

When protection turns into pressure

Talks on class actions often stress legal rights while overlooking wider economic effects or whether a suit's public gain exceeds its total societal price.

Costs from suits, deals, lawyer payments, system changes, added reserves and defense do not occur alone. Often they make sense when fixing real faults.

At other times with slim public gain and heavy system costs the query arises: might a device built to aid consumers end up raising what they spend?

The right check thus looks past mere legal grounds to ask if the case yields overall public value.

The United States shows outcomes when balance slips. US Supreme Court moves backing arbitration clauses that drop class rights have cut collective suits in many areas.

Israel need not copy that route. Yet it should note the warning: an unbalanced tool may trigger over-correction that leaves the public less protected.

Extended reach of liability

A major issue hits bodies like banks, insurers and pension funds with long customer ties spanning many years.

When claims count as ongoing, old choices and pacts face review under current rules rather than those in place at the time.

The point is not to shield institutions from accountability for public harm, as they must face it. The worry is judging past acts that fit then-current norms and regulator views.

Over time piecing together records, settings and choices grows harder even as exposure widens.

This needs both law and court adjustments: guarding consumers from real injury while giving institutions fair certainty for actions that met law, market habits and regulator expectations then in force.

The financial effects matter. Past legal doubts shape risk costs, fund use, product plans and long-term strategy at financial firms.

Smarter safeguards ahead

The coming phase for Israel's class action setup should focus on better management rather than reduced strength.

Courts should back suits that reveal broad misconduct and deliver real public gain, while curbing those that mainly create fees, strain and deals lacking value by applying realistic cost rules.

Lawmakers too must set clearer lines on ongoing claims, pre-suit alerts, financial motives and overall litigation costs to society.

A developed legal order shows strength not just by admitting cases but by knowing when to screen, narrow and guide them.

Class actions should stay a precise tool for the public. Yet a sharp tool works best with careful handling. To keep trust, validity and impact for the next twenty years, adjustment may now be due.

Meni Neeman is Deputy CEO and Chief Legal Counsel at The Phoenix Group, and Michal Lipel is an attorney in the company's Legal Advisory Department.