Class action settlement administration is far more complicated than most realize, and can become both costly and problematic if the appropriate strategy is not mapped out by the parties well in advance of settlement. Anticipating court requirements and timelines, identifying and reaching class members, managing claims data and determining disbursement methodologies for class members are just a few of the fundamental issues that may seem deceptively simple on the surface, but can have a significant impact upon the timing and costs associated with class action administration.
The following tips offer insight into the recommended practices for counsel and identifies avoidable pitfalls:
- Anticipate Court Requirements and Timelines: Courts are paying more attention now than ever before to settlement administration efforts. In fact, some courts require the claims filing data to be presented before granting final approval or authorizing payment of attorneys’ fees. Consult with an administrator before proposing timelines for notice, opt outs, and objections to avoid the risk of setting unachievable deadlines.
- Don’t Underestimate the Complexity of Noticing: There are a variety of notice methodologies available to attorneys these days and it’s important that the notice plan is tailored to the case and the class. Before submitting the settlement papers to the Court, it is beneficial to talk with the administrator who will be charged with effectuating indirect notice through publication and social media channels as well as sending direct notice via U.S. Mail and/or email. To avoid any questions down the road, the parties should also agree upon handling of undeliverable mail. Furthermore, counsel needs to be aware that when they announce a settlement, claimant inquiries may be intense. Finding an administrator to handle potential phone calls and web traffic alleviates any burden on the law firm, which may not be staffed to handle the inquiries.
- Avoid Claims Data Management Snafus: Many settlement agreements contain complex allocation formulas that should be reviewed in advance by the administrator who will be charged with programming these formulas and understanding how available data supports them. Data security also is a huge issue. What kinds of information can be collected these days and how will it be managed? This is particularly important when working on a case where the class member data was at issue, such as a data breach case. An administrator can also help counsel appreciate the interplay between ease of online or paper claim filing and fraud prevention and detection.
- Plan Ahead for Distribution: It’s never too early to start thinking about distribution. A variety of methods are available to issue benefits and an administrator can discuss alternatives so counsel can determine which one is best suited for the class. If tax consequences for the claimants arise out of the settlement, then SSNs/TINs will need to be provided by the defendant or obtained as part of the claims process. An experienced administrator can also highlight any other information needed to make the distribution easier. Finally, the parties can avoid unnecessarily protracted post distribution administration periods by including an agreed upon plan for handing uncashed checks in the Settlement Agreement.
While class action settlement administration doesn’t have to be complicated, it can bring some unwelcome surprises if appropriate steps aren’t taken to ensure that key milestones are anticipated and plans made for effectively managing them. With careful consideration and by enlisting the support of knowledgeable settlement administration experts, the process can run smoothly and predictably, yielding an efficient outcome for all involved parties.
Amanda Horn is SVP of Client Services at JND Legal Administration, a legal management and administration firm. Over the course of her career, Amanda has partnered with clients on numerous high-profile administrations in multiple industries. Amanda earned her JD from Willamette University College of Law and her bachelor’s degree from UCLA.