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SHIELDPAY LAUNCHES GUIDE TO EFFECTIVE LITIGATION SETTLEMENT DISTRIBUTION FOR LEGAL SECTOR

By John Freund |

In the face of increasing demand for better strategies for litigation compensation payments, Shieldpay, the payments partner for the legal sector, has created the ‘Blueprint to Distribution’; a step-by-step guide that shares best practice on how to scale efficiently and distribute best-in-class payments for claimants. 

The huge growth in litigation in recent years (total value of UK class actions alone rose from £76.6 billion in 2021 to £102.7 billion in 2022) means the legal sector must adopt strategies that will enable it to scale efficiently with the growing demand. In 2019, the average litigation revenue for a firm in the UK Litigation 50 was £82.4m. That figure had reached £110m by 2023 and is widely predicted to follow this upward trajectory.

Settlement payouts can be a complex and lengthy process without the right support and guidance. The process of distributing funds can often be overlooked until the settlement is finalised, leading to sudden complications, risk concerns and a huge administrative burden on a tight deadline.

Litigation cases are by no means finished once a settlement has been agreed. Depending on the size and complexity of the case, the distribution process can take many months, if not years. Most claimants will want the compensation due to them as quickly as possible, so firms need to plan for a successful and seamless distribution of funds well ahead of time to avoid frustration and uncertainty for their clients.

To help lawyers navigate litigation payments and adopt strategies that will reassure and build trust amongst claimants, Shieldpay’s ‘Blueprint to Distribution’ guide goes through the critical steps teams need to take throughout the case to ensure claimants receive their funds quickly and efficiently. The key to success is planning the distribution process as early as the budget-setting phase, where the payout is considered as part of the case management process to optimise for success. This process also includes developing a robust communications strategy, collecting and cleansing claimant data, and choosing the right payments partner to handle the settlement distribution.

In its guidance for legal practitioners on delivering a successful payout, ‘Blueprint to Distribution’ highlights the need for payment considerations to be aligned and collaborative throughout the lifecycle of a case, not left to be worked out at the end. Working with the right partner enables firms to understand how to design and deliver an optimal payout, taking into account the potential long lead times involved from the initial scoping of a case to the actual payout, with refinements and changes likely to occur to the requirements as a case unfolds. 

Claire Van der Zant, Shieldpay’s Director of Strategic Partnerships, and author of the guide, said: “Last year, the conversation amongst the litigation community was understandably focused on how to get cases to trial. Delays to proceedings arising from evolving case management requirements, including the PACCAR decision, caused delays and frustration amongst those actively litigating cases and striving for final judgements. 

“Fundamentally, legal professionals want to deliver justice and good outcomes for claimants. To do that, we need to think bigger than just a blueprint to trial, and consider a ‘Blueprint to Distribution’, because once a final judgement has been delivered, it doesn’t end there. Delivering a successful distribution requires advance planning and consideration to be effective and efficient. This step-by-step guide aims to help law firms, administrators and litigation funders deliver the best payment experience and outcome for claimants.” 

For the full ‘Blueprint to Distribution’ guide visit www.shieldpay.com/blueprint-to-distribution. 

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Case Developments Commercial

Australian Federal Court Approves $24.5M Funder’s Commission for Galactic 

By John Freund |

Reporting by Lawyer’s Weekly covers a major development in two Australian class actions, where litigation funder Galactic obtained a favourable ruling from the full Federal Court to double its commission from its funding of lawsuits brought against 7-Eleven and ANZ Bank. Justices Craig Colvin, Bernard Murphy and Michael Lee, overturned a 2023 judgement by Justice O’Callaghan that refused to make Galactic’s CFO order. As a result, Galactic’s commission from the class actions will drastically rise from $12 million, to a total $24.5 million.

The Federal Court’s ruling on 2 May found that Justice O’Callaghan had been wrong to refuse making the CFO order on the basis that the court did not have the power to do so. The three Justices wrote that Galactic’s $24.5 million commission “is commercially realistic and properly reflects the costs and risks Galactic took on by funding the proceedings.”

The class actions brought against 7-Eleven and ANZ Bank focused on allegations that the fuel and convenience store chain’s standard Franchise Agreement had ‘unfair contractual terms’ that violated consumer law. ANZ Bank were targeted by the second class action over claims that it had failed to meet its obligations under Australia’s Code of Banking Practice, ‘by lending to buy into the franchise system, often up to 100 per cent of the franchise license.’

Case Developments Commercial

London’s Black-Cab Drivers Bring £250M Claim Against Uber

By John Freund |

An article The Financial Times covers legal actions being brought against Uber on behalf of London’s black-cab drivers, centred on allegations that Uber misled Transport for London (TfL) to obtain its license. Specifically, the lawsuit focuses on the claim that Uber misled TfL around its booking model, and that the company allowed its drivers to receive direct bookings from customers rather than through a central system.

The claim is being brought in the High Court by RGL Management and is representing more than 10,500 black-cab drivers, who argue that they were harmed by unfair competition and are seeking up to £25,000 in compensation per driver. The claimants are represented by Mishcon de Reya and Katch Investment group are providing the litigation funding for the claim, with the total value of the group litigation reaching £250 million.

In a statement, Uber continued to deny the allegations and said that the claims “are completely unfounded”, maintaining its position that the ride-hailing company “operates lawfully in London, fully licensed by TfL.”

More information about the group litigation can be found on RGL Management’s ‘Black Cabs v Uber Litigation 2021’ (BULit21) website.

Commercial Regulatory Issues

Legislation to ensure the enforceability of LFAs is progressing smoothly through Parliament

By John Freund |

The following is a contributed piece by Tom Webster, Chief Commercial Officer at Sentry Funding.

So far, the Litigation Funding Agreements (Enforceability) Bill has been passing through Parliament without a hitch.

The government is bringing the legislation in response to the Supreme Court’s decision last summer in PACCAR Inc & Ors v Competition Appeal Tribunal & Ors [2023] UKSC 28, which called into question the enforceability of LFAs.

The Bill was briefly introduced into the House of Lords on 19 March, and was debated at second reading on 15 April. During the debate, while some peers discussed the need for regulation of the litigation funding industry and for careful consideration of whether the retrospective nature of the legislation was justified, no peers opposed the Bill – and many welcomed it.

More recently, during scrutiny at grand committee on 29 April, the relatively small number of peers who attended the session broadly supported the Bill, and several spoke in favour of the need for its provisions to be retrospective.

In terms of the Bill’s drafting, the government proposed some small changes at committee stage, which were waved through by peers. The most significant was to address a potential problem with the original drafting where the LFA relates to the payment of costs rather than funding the provision of advocacy or litigation services.

The problem was that, in the original wording, it could be argued that the Bill only applied to the funding of costs that relate to court proceedings, but not those relating to arbitration, or settlements. This has now been resolved by new wording to make clear that an LFA may relate to the payment of costs following court, tribunal or arbitration proceedings, or as part of a settlement. An LFA may also relate to the provision of advocacy or litigation services.

Meanwhile another government amendment was aimed at avoiding problems for litigants-in-person, by ensuring that the definition of LFAs in the Bill includes agreements to fund the expenses of LiPs, for example where they need to pay for an expert’s report.

During grand committee, peers also expressed their approval of the broad terms of reference that have now been published by the Civil Justice Council for its review of litigation funding, which will include an examination of whether the sector should be regulated; and if so, how. Peers commended the speedy timescale that the CJC has set itself, aiming to produce an interim report by the summer, and a full report by summer 2025.

As the Litigation Funding Agreements (Enforceability) Bill continues its journey through Parliament and the CJC begins work on its review, there are clearly significant changes on the way for the litigation funding sector in the UK.

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