The problems of success: how you can shield yourself from paying too much after you've won an 'opt out' group action

FinLegal's automated class action solution is a great way for law firms to deal with opt-in claims involving hundreds, and even millions, of claimants. But FinLegal can also be of great use to lawyers involved in opt-out cases. Steve Shinn explains more 

Opt-out claims

Opt-out class actions are growing across the UK and all jurisdictions. The growth of mass litigation is one of the reasons why FinLegal was founded, to improve the economics of these type of claims and allow greater access to justice.  

Opt-out claims are, arguably, the easier to bring as the initial book-build of opt-in claims is not needed. In opt-out an individual, usually a consumer champion, brings a case on behalf of the many people who may be affected. 

An obvious example is Walter Merricks, a British lawyer and former ombudsman who is currently suing Mastercard in the Competition Appeal Tribunal over its merchant transaction fees. His case alleges Mastercard users over a 16-year period paid high prices because retailers passed Mastercard's fees on to them.  

Mr Merricks is the single claimant. That makes fighting the claim much easier for the lawyers, as they don't need to contact the many millions of others due compensation. If Mr Merricks wins, damages will be assessed, and split between everybody who can prove they were affected. If they don't want the money, they can 'opt-out' by not claiming it.  

I am very much in favour of this 'opt-out' mechanism because it reduces the cost of group action litigation. At the moment, it’s restricted to competition cases. I'd like to see it extended to other types of group actions.  

The cost of settlement distribution

While 'opt-out' streamlines class actions considerably, lawyers who win them will end up having to get in contact with the thousands, hundreds of thousands, or even millions of people who are due compensation.  

And so they are met with the same problem as all other types of mass litigations: if not done properly, processing huge numbers of people becomes dangerously expensive. 

The traditional way to do it would be to run an advertising campaign to encourage people who think they are due compensation to contact a call centre. Claims handling staff would assess the claim and, ultimately, arrange payment. The cost of all of this would come out of the total damages, reducing individual pay-outs and lawyers’ fees.  

The cost of processing the disbursement of damages is a wholly reasonable business expense. Even so, doing it the traditional way often costs more than £50 per claim, which can make even successful claims uneconomic.  

In fact, it can make some claims not worth trying to fight, because winning might lead to prohibitive costs.

How FinLegal can help reduce the cost of settlement distribution

FinLegal's automated class action solution can help, potentially reducing costs of disbursement significantly. 

Our solution uses self-service on a mobile device and artificial intelligence to automate the claims process. Claimants access our portal, tailored to the case, via their phones, tablets, or laptops.  

From then onwards, our solution can manage every process, from checking the identity of the claimants, to assessing the validity of their claim using document uploads or 3rd party information, and ultimately paying out.  

If at any stage a claimant's situation is too complicated for the system to process, it is (temporarily) handed over to a real, human, claims handler who makes a judgment call, and then re-engages the  self-service process. 

And when it comes to actually transferring the money to the claimant's bank account, we can handle that too. In any currency in any country in the world.  

We can do all of this for less, per claimant, than some payments providers charge simply to process a transaction.  

So, if you want to shield yourself from paying too much and reduce the expensive labour costs of manually qualifying claimants, when managing a successful opt-out class action, please feel free to get in touch.