Companies have valuable class action claims
1 of 5 (19%) report claims worth more than $25 million. Companies that typically opt out are > 3x likelier to have >$50 million in claims than those that remain in the class.
Companies recover pennies on the dollar
56% of companies routinely recover less than 25% of their entitlement when they remain in the class.
Economic constraints—solvable with finance—keep companies in the class
A top reason companies remain in the class is that the cost of pursuing an individual claim exceeds available budget (61%). Legal finance can solve companies’ opt out budget issues when they have high value claims.
Large companies remain in the class due to budget constraints
Large companies’ reasons for remaining in the class are, like small companies’, economic—and solvable with legal finance when claim size merits pursuit.
Companies opt out to maximize return and maintain control
Top reasons for opting out—maintaining strategic control and getting the best return—suggest that GCs view this course as best for business.
Remaining in the class is still the default
Companies are far likelier to mostly or always remain in the class (60%) than they are to mostly or always opt out (8%). The lost value is stark for large companies, which have bigger claims and more upside to be gained by opting out but are currently likelier to remain in the class.
Large company GCs see a fiduciary duty to maximize claim value
Large company GCs cite their fiduciary duty to maximize recoveries as the top reason for opting out. They are also more likely to have a team in place to pursue opt out claims.
Legal finance would change more than half of GCs’ opt out strategies
52% of all GCs surveyed and 56% of GCs with little prior knowledge of legal finance say its availability would positively impact their decision to opt out of a class action.
Companies that opt out are more likely to be legal finance users
Use of legal finance is higher among companies that say they mostly or always opt out. Companies that tend to opt out are almost 2x likelier to have used legal finance compared to all companies and 3x likelier than companies that mostly or always remain in the class.
Companies that opt out are savvier about accelerating pending claims
Companies that tend to opt out are much more knowledgeable about monetization—a key opt out finance tool to accelerate some of the expected entitlement.
Building a better opt out strategy
GCs recognize that by opting out of class actions and pursuing individual claims, they can maximize recoveries for their companies. Legal finance removes economic barriers to pursuing individual claims, enabling companies to build a better opt out strategy.
The role of legal finance in an opt out strategy
- Fund legal fees and expenses associated with pursuing an individual claim
- Accelerate a portion of the expected entitlement from a pending claim
- Capital is non-recourse, with Burford receiving its investment back and a return only if and when clients collect on their claims
- Funding does not impact client control of litigation
- For legal teams lacking robust litigation experience or expertise, Burford can help funded clients identify and prioritize their most valuable opt out claims