A blueprint to settlement

For the 11th Edition of the TL4 Disputes Magazine, Claire Van der Zant reflected on a key takeaway from this year'sTL4 Group Litigation and Class Actions conference: the need for a "Blueprint to Settlement".

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Blue print to settlement: Setting the standards and plotting a path across the entire delivery of litigation cases

On an Indian Summer’s morning in mid-October, global experts gathered in London for ThoughtLeaders4 Dispute’s 3rd Annual Forum for Group Litigation and Class Actions. I was honoured to join the panellists to share Shieldpay’s experience and perspectives, shining a light on what good looks like post trial as we inch ever closer to the first settlements from the Competition Appeal Tribunal (CAT).

With new rulings on litigation funding agreements[1], and an evolving position on the role of the CAT as gatekeeper at certification and case management stages[2], many panellists touched on and debated these topics.

Understandably, everyone was focused on how to overcome the latest hurdles to keep cases moving forward, and a common theme appeared on the need for a Blueprint to Trial. Whilst it’s hard to think beyond the current delays, unless we start to think beyond trial now, we run the risk of under-delivering on the very thing that this is all about - payments to claimants.

My proposal, therefore, is that we consider not just a Blueprint to Trial, but a Blueprint to Settlement, where we give time and focus to supporting effective and efficient payments to claimants.

A Blueprint to Settlement

Coming back to the purpose of Collective Redress, in all the different forms that it can take, it’s a mechanism to provide justice. It’s about righting the wrongs for millions of people who otherwise might not have the resources to do so on their own.

If we align on the objective of delivering compensation, we then need to focus on how. What considerations do we need to make, what are some of the challenges to overcome, and what defines best practice? What is the Blueprint to Settlement?

1. There is no single inflexion point between settlement and payout

Perhaps the biggest myth to bust in writing the Blueprint to Settlement is that there is no single inflexion point where litigation ends and the process of settling begins. It’s helpful to start discussing this as early as discussions on quantum, for the following reasons:

• The value of the payout can often dictate the most appropriate payment method, but there are different costs, requirements and processes associated with every payment method, that should be factored into quantum modelling
• The location of claimants can also impact the payment method, where different markets have very different financial systems and preferences, which may not be apparent without engaging with payment experts
• Who pays the settlement fee and how will billing work are also a critical questions to address at this stage
• Consideration for cross-border requirements, as there are likely to be additional costs and processes to include in the modelling
• Finally, the value of the payment[3] and associated payment methods will dictate due diligence requirements, prior to a payment, of which need to be factored into the claimant journey

The details and structure of a case can shift over time, so we must come back to the table regularly to iterate the payout plan and process, which leads me nicely on to the next point.

2. Collaborate early, collaborate often, collaborate continuously

Keeping key partners abreast of key details and changing requirements (and timelines!) means that plans can be more easily adjusted ahead of a settlement. Having regular touchpoints is what makes the difference between a fast, smooth payout process, and a challenging payout process that can overwhelm customer support functions and flood review sites with complaints.

It’s also important to impress that settlements take time. The need for continuous collaboration once a payout has been initiated is key, as a typical project might take 6 – 12 months to complete.

Done well, the vast majority of claimants will receive their money in the first month of settlement. There will naturally be a tail end to achieving full[4] payout, as we send reminders, address changes of personal information, work through exceptions, and deal with concerns from claimants.

We have the power to truly delight claimants. Whether it’s a free coffee or thousands of pounds, let’s use this as an opportunity to make claimants feel like they’ve been fully compensated and make this a truly meaningful moment. Which again leads me on nicely to my final point.

3. Beyond book building to brand building

Compensation from litigation is relatively new to the UK and Europe. Add to this the growing threat of financial scams, and we have a challenge of trust to overcome; trust that a claim is real, trusting previously unknown law firms, trusting delivery partners are legitimate.

What we need to do is brand build across the entire litigation ecosystem. Chris Ford of Blackhawk Network talked about this last week, and it deserves airtime. How do we move from the very academic and complex language of litigation into something that is accessible to consumers? And have we done ourselves a disservice in labelling cases ‘something-gate’ or ‘something-claim’?

Consumers need to know this is real, legitimate and safe. Review sites are important, but it’s bigger than that. We need the financial and regulatory infrastructure of the UK and Europe to understand this ecosystem and be able to uphold and support us if we’re going to give confidence to compensation. To quote Chris, it’s all about trust. And we’ve got work to do.

Practical Next Steps

We need to work together to get cases moving through to trial and beyond, and lean in to drive awareness and education with consumers. How we bridge these gaps is something that a Blueprint to Settlement should address. If we get this right, we can create an ecosystem that is acknowledged and celebrated for delivering justice to those who need it most.

[1] “A ruling from the Supreme Court on PACCAR that litigation funding agreements (“LFAs”) which entitle funders to payment based on the amount of damages recovered are Damages-Based Agreements (“DBAs”). Consequently, such LFAs are unenforceable unless they comply with the relevant regulatory regime for DBAs – and cannot be used at all to fund opt-out collective proceedings before the CAT. While the LFAs at issue in PACCAR were entered into to support collective proceedings before the CAT, the decision stands to affect all LFAs entitling funders to payment based on the level of damages recovered.”

Footnotes:

https://www.linklaters.com/en/insights/blogs/linkingcollectiveredress/2023/july/paccar-and-litigation-funding

[2] https://www.linklaters.com/en-us/insights/blogs/linkingcollectiveredress/2023/june/an-evolution-of-the-cats-gatekeeper-function

[3] Jurisdictions, source of funds, nature of transaction, preferred payment process will also influence the level of verification required, but in respect of the decisions being made on quantum, the value of the payment is why engaging at this stage is relevant to the payment.

[4] For a case that has a single settlement, a defined and ready claimant cohort, and the intention to fully settle, it’s sensible to consider a 6-month payout process. If your case has multiple defendants, an evolving claimant cohort or a requirement to settle in batches, this will add time and complexity to your payout, and could be up to or indeed more than 12 months to settle. It’s highly unlikely that cases will ever fully settle, but the intention is always to achieve the highest completion possible. Shieldpay has achieved 95 - 98% completion of payouts for cases to date.

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