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Posts Tagged ‘settlement claim’

An article published Tuesday by John D’Antona Jr. at Trader’s Magazine Online News entitled Getting a Piece of the Class Action Pie discusses a creative new idea for making a buck on class action settlements.  The article discusses a service offered by a New Jersey financial technology company called LiquidClaims, Inc.  According to the article, LiquidClaims has an algorithm that matches up investors with securities class action settlements, and automatically files a claim for settlement benefits on behalf of any of its clients who are class members, taking 30% of any recovery as its fee.

As far as I know, there is no common label for this type of service, but for lack of a better phrase, I’ll call LiquidClaims a “class action settlement aggregator,” since its service is essentially to aggregate settlement claims in order to create economies of scale for its clients in claiming class action settlement funds.  According to its website, LiquidClaims calls itself “the leader in settlement claims optimization.” 

So far, it appears that class action settlement aggregator phenomenon is limited to the securities area, but given American ingenuity, one would think that the business model will catch on in other areas as well.  We’ll keep our eyes peeled for future developments.

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Thanks to Dan Trudeau of Rust Consulting for recommending a useful article authored by his colleague Tiffaney Allen entitled Anticipating Claims Filing Rates in Class Action Settlements.  The article is dated November 2008, but it was new to me.  The article provides only a basic summary of the many factors that can impact settlement claims rates, but it is a good primer for anyone unfamiliar with the claims process in a class action settlement.

Claims filing rates, or “take” rates, in class action settlements will vary on a variety of factors, as Allen’s article points out.  These factors include the amounts available, the clarity of the notice, the ease of making a claim, the structure of the settlement, the make-up of the class itself, the geographic area covered by the settlement class, and many other variables. 

Insiders sometimes throw around the figure 10% as generic rule of thumb for how many claimants are expected to make a claim for benefits in a typical claims-made or common fund settlement, at least in consumer class actions.  But the reality is that the claims rate can vary significantly depending from case to case.  It is possible in some cases and with appropriate expert guidance to predict claims rates with reasonable accuracy.  However, lawyers and their clients who enter into a class-action settlement with the over-simplified assumption that class members will claim only $.10 on the dollar do so at their peril.

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