Joshua H. Grabar, Esq. is an ELGL member based in Philadelphia, Pennsylvania who specializes in local government legal issues as they pertain to antitrust and securities law. You can find him on his firm’s website at www.grabarlaw.com; by email at [email protected]; or on LinkedIn or Twitter.
Municipal Revenue and Social Justice Generator: Class Action Litigation and Settlement Fund Monitoring and Recovery
In an increasingly demanding financial environment, it is paramount that municipal and educational institutional entities have an affirmative platform that proactively identifies and monitors class action litigation and settlement fund recovery opportunities. While the financial and time constraints incumbent upon most legal departments invariably force those departments to focus on their core functions – managing risk, defending against litigation, and putting out the daily fires that come with departmental responsibilities, a proactive monitoring and recovery platform can turn legal departments from costs centers to revenue generators – revenue that is often tax-free.
Some larger municipal entities are now recognizing these opportunities and have developed internal affirmative monitoring and recovery programs with dedicated in-house resources to recoup the value of class action litigation and settlement fund recovery opportunities. Yet, as in-house legal departments are often viewed as costs centers and face internal pressure to reduce legal spend, comprehensive outsourced contingent-fee based litigation and settlement fund monitoring and recovery programs can generate multiple commodity and financial product-based recoveries annually and add significant value to municipalities. Outsourcing these recovery functionalities not only tends to provide broader and deeper recovery coverage by the most cost-effective means, and insures that notices for would-be recoveries don’t slip through the cracks, or land on the wrong desk – if they land at all, but also reduces confusion and missed opportunities that often result from the lack of dedicated internal task-specific personnel or inevitable internal employee turnover.
Outsourced Class Action Litigation and Settlement Fund Recovery Platforms Can Recover Hundreds of Thousands of Dollars for Impacted Local Government Entities – With No Out-of-Pocket Up-Front Cost.
When properly implemented, an outsourced litigation monitoring and settlement fund recovery platform can recover hundreds of thousands of dollars, or more, in overcharges that impacted entities have paid due to unlawful anticompetitive or fraudulent conduct by suppliers or financial trading or services providers. And all with no out-of-pocket up-front cost. Often these funds would be overlooked and allocated to other claimants were it not for proactive monitoring and recovery services. There are numerous litigation and settlement fund recovery opportunities arising from price-fixing of commodity products in the chemical, electronic equipment and parts, medical products and financial products spaces. There is even a multi-billion-dollar fund available for merchants who used the Visa Mastercard payment platform.
Meeting Social Justice Objectives
An outsourced litigation monitoring platform can also help municipal entities achieve important social justice goals. For example, municipal entities may not only seek recovery of overcharges due to price-fixing or losses due to securities fraud, but can also propel social objectives via shareholder derivative matters in which a municipal entity who holds relevant securities within a fund can investigate a company and its board, and even bring litigation, for potential wrongdoing, mismanagement, and breaches of fiduciary duties for activities ranging from environmental wrongdoing, to money laundering, to systemic gender inequality and more. Again, all at no cost to the municipal entity.
What Does A Proper Monitoring Platform Look Like?
A proper outsourced platform should consist of a team of attorneys and financial professionals who monitor all potential class litigation matters from which an entity may be ultimately due recovery and a cost-effective (i.e. contingent fee based) means to identify and capture all funds that are owed to them. Such a platform should maximize recovery opportunities based on an approach that balances municipal client recovery interests with minimal client time and resources and without the fear of reprisal from key suppliers or other important commercial relationships, where such fear may exist. Such a team should have the experience and bona fides to suggest a proper course of action that may be best suited under each circumstance – whether that means joining a class action as a named plaintiff, staying an absent member of a settlement class – or even opting out of class settlements in preference of individual negotiation or litigation where appropriate. A proper recovery practice also provides its clients, municipal and otherwise, with a means to maximize recoveries by ensuring that all current and past subsidiaries, divisions and related entities of a client that may have been impacted are accounted for as well as recognizing the existence secondary markets in which said prospective settlement fund claims can be monetized via sale and assignment of the claims to provide more immediate cash recoveries. Considering sale or privatization of a business or business unit? A key, but often overlooked, metric in business valuation should include an evaluation of likely anticipated settlement fund recovery value. In fact, generally speaking, when an entity is privatized or a business, or subsidiary or division of a business, is sold, the rights to collect overcharges that impacted the sold entity often remain with the seller. Entities should make sure to recognize the existence and maximize the value of these potential claims.
A full-service litigation and settlement fund recovery practice specializes in supporting in-house municipal legal departments as an alternative to the traditional legal service practice model, keeping the best interests of resource allocation, time, budget, and business relations at the forefront of every engagement. Such a practice should not only monitor for opportunities to participate as a class or opt-out litigant, but should also monitor class action settlements, alert clients to potential fund recovery entitlement and provide clients with the services of legal and financial professionals and data specialists to shepherd client data preservation, collection (where needed), analysis, and face claims administrators and lead counsel during the claims filing process through to distribution and financial recovery. Properly implemented, these platforms provide substantial and often tax-free recoveries with almost no risk – just meaningful reward.
A primer on antitrust and securities litigation basics as well as standard form monitoring agreements can be viewed at: https://grabarlaw.com/documents-and-resources/ (or specifically the primer at https://grabarlaw.com/wp-content/uploads/2020/05/Antitrust-Securities-Class-Action-Primer.pdf; the antitrust claims monitoring agreement at https://grabarlaw.com/wp-content/uploads/2020/05/Example-Claim-Filing-Agreement.pdf; and the securities monitoring agreement at https://grabarlaw.com/wp-content/uploads/2020/05/Example-Pension-Monitoring-Agreement.pdf).
A recent report by the American Antitrust Institute which indicates that the cumulative total recovered for victims in antitrust class actions from 2013 to 2018 was over $19 billion or, on average, about $3 billion per year can be viewed here: https://www.antitrustinstitute.org/wp-content/uploads/2019/05/AAI_USF-Commentary_2018-Antitrust-Class-Action-Report_Final_5.14.19.pdf
A recent report detailing 74 securities settlements totaling over $2 billion in 2019 alone can be found here: http://securities.stanford.edu/research-reports/1996-2019/Securities-Class-Action-Settlements-2019-Review-and-Analysis.pdf.