Pursuing opt-out cases with litigation finance

By Priya Pai

US antitrust laws are meant to deter anticompetitive behavior by criminalizing such conduct and applying automatic treble damages in civil cases. In a large antitrust action, the question often arises of whether a possible class member should participate by remaining in the class or pursue its own action and opt out of the class action. There are benefits and costs associated with both approaches. Here, we analyze how companies should consider these issues and how litigation finance can help.

Companies often become aware that they’ve been the victim of anticompetitive price or supply manipulation upon hearing a supplier has pled guilty in a government investigation, or when a series of civil class actions have been filed. Large companies are often far more used to being on the defense side, rather than the plaintiff side, and identifying the best way to proceed as an antitrust victim can be uncharted territory. Rather than remaining class members, larger purchasers often pursue their own private resolutions with antitrust defendants. But to determine whether this approach makes sense requires comparing the relative cost of litigating as an absent class member or as a sole plaintiff, the risk of loss on the merits, and the potential upside of a higher recovery as an individual plaintiff. In addition to possibly achieving a higher recovery as an individual plaintiff, opting out also has the added benefit of providing control over litigation strategy and settlement decisions. A large company may very well have differing opinions about what strategy is in its best interest compared to class counsel, who must weigh the interests of the class as a whole. These decisions include determining discovery strategy, expert and witness presentations, damages methodologies and of course settlement. A common concern is whether a class damages model sufficiently represents a large company’s injuries. 

When to Benefit from Litigation Finance
Pursing an individual claim and taking control of the decision-making process, however, can come at a significant expense. That’s where Bentham’s litigation financing can help. Litigation financing can be used by both companies and antitrust counsel to defray the risk of opting out of these types of lawsuits while maintaining the benefits of a company pursing its own claim and tailored remedies. Not only can financing be used for attorneys’ fees and costs incurred in the case, companies with counsel on a full contingency can also utilize funding to monetize a portion of their expected damages now—rather than waiting the many years it may take to resolve the claim.

And for law firms on contingency, who are similarly stretched thin as the litigation drags on, litigation financing can help alleviate the financial burden by providing an immediate capital infusion to the firm while taking a return from the firm’s contingency stake in a portfolio of claims. 

Litigation financing can help answer the difficult question of whether it makes sense financially for a company or firm to take on time-intensive antitrust opt-out cases by helping to minimize the financial burden of going it alone. 

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