Why would a class member share with a class action claims management consultant as much as 33% of its recovery when that class member may file its own claim and thus keep 100% of its recovery? Class counsel often asks this question when trying to convince class members not to retain a claims management consultant. At least one federal district court judge has raised the issue in an effort to demonstrate that class action claims management consultants “are charlatans who prey on the unsuspecting and unsophisticated.” Truth be told, when I first entered the class action plaintiffs’ bar I often asked the same question, and posed it to my clients, some of the largest and most sophisticated enterprises in the world. I couldn’t understand why sophisticated institutions were willing to relinquish to claims management consultants portions of their recoveries when all that was necessary for them to retain all of the money was to complete what I thought were simple proofs of claim and then submit them together with some rudimentary documents. As I learned during a professional career devoted to the prosecution of class actions and, in particular, to designing and effecting class action settlements, the answer to that very reasonable inquiry is that clients of class action claims management consultants, as compared to claimants who go it alone, will devote to the endeavor substantially less time and resources. Claimants likely will participate in more settlements and recover more from them. In short, the answer rests in a simple value maximizing proposition:
67% of SOMETHING
is better than
100% of NOTHING.
A lot has been said about class actions and whether or not they benefit the victims of wrongdoing. The point of this column is not to join that debate, but, instead, to provide putative class members with the information they should have concerning their rights to recover from class action settlements. While some information is available publicly, either on case-specific settlement websites or in class action settlement notices, most of that information is not designed to enhance claim filing or to maximize recoveries. And nowhere else is it all in one place. The link below addresses the various participants – the “players” – in the claims process. In subsequent installments, I’ll address such matters as the advantages of claims management, claim stimulation, the settlement process itself, and, finally, the value that highly competent and ethical class action claims management consultants, like FRS, provide to their clients. Then, armed with this information, it’s up to each claimant to determine whether or not it is better off retaining FRS to avoid missing or substantially undervaluing its opportunities to participate in the hundreds of millions of dollars of settlements recovered each year.
All of the information provided in this column is based on the experience I’ve gained over the better part of the last twenty plus years during which I was (and I continue to be) devoted to all aspects of class action settlements. My journey began in 1996, when I started prosecuting complex class actions at one of the nation’s leading class action law firms. Over the next 11 years, I specialized in, and became a leading authority on, class action settlement-related legal issues, having been responsible for negotiating the terms of, documenting and administering over $13.5 billion in class action recoveries, including 5 of the 10 largest securities class actions in U.S. history. I next spent 6 years as the Vice President of Class Action Services at one of the nation’s leading class action settlement and claims administrators, where I advised executives and clients on complex class action settlement issues, and developed and presented to lawyers across the U.S. continuing legal education programs concerning class action settlements. Since June 2014, I have been General Counsel at FRS, one of the nation’s leading class action claims management consulting firms, and became FRS’s Chief Operating Officer in March 2017. Each installment of this column will describe views based entirely on my own experience. I hope that you find it helpful.
– Jeffrey Leibell, FRS Chief Operating Officer & General Counsel
CLICK TO DOWNLOAD OUR DETAILED VIEW OF ALL THE PLAYERS IN THE CLASS ACTION SPACE
The next installment will address whether there is a difference between claims filing, on the one hand, and claims management, on the other. As will be explained, there are significant differences that any class member should consider before retaining a consultant.