Which cases are worth responding to?

In speaking with prospective clients, we often hear them say “the only people who get any real money from class action lawsuits are the law firms”, incorrectly concluding that there is no “real money” for the average claimant. Unfortunately, they are sometimes right, and at other times they are  way off.

So, how does one know which cases are the best ones to respond to? The answer largely is that you don’t know; the best you can do is make an “educated gamble”.

Here’s why: the “payout” to each eligible investor depends on a number of variables. These include:

  • The size of your investment in the relevant security(s) in the relevant timeframe
  • The size of the settlement pool (i.e., how much was allocated in total to affected investors)
  • The number of other investors who file claims (and the size of their investments)
  • The amount of “recognized loss” that you have in those security(s)

“Can you give me a ‘ballpark’ of what to expect?” is what we often hear in response. The answer: anywhere from a penny to 100 cents on the dollar. And that’s not a flip answer. As the chart below shows, the actual data does range across the entire curve, albeit with more being below 50% than above.

Chart
Source: Financial Recovery Technologies, analysis of historical data.

“So can we just focus on filing the ‘big ones’ and skip the rest?”, you might ask.  The answer is an emphatic “No”. Often, the large, well-publicized cases have many people who file claims and/or the average investment is small in size relative to the total pool. Sometimes, the “big windfalls” come from the most unexpected places. In fact, some recent examples of high payout settlements that have resulted in large recoveries for our clients include:

  • Kinder Morgan, Inc.
  • Refco Finance Holdings, Inc.
  • Brocade Communications Systems, Inc.
  • Petco Animal Supplies, Inc.
  • American Tower Corp.

So what’s the best approach? In the end the conclusion is simple: don’t forego found money by walking away from the table. Instead, make sure you have a seat and can sweep up your winnings every hand (without having to ante), as every once in a while the pot is huge.

How do you do this? First, make sure your overhead cost for filing claims is low. Second, submit your claim for all cases in which you are eligible to file a claim. Then sit back and wait for the checks to come in.

Contact FRT today to find out how we can handle your claims filings with our comprehensive service to help ensure your firm recovers all the settlement funds that you are entitled to receive.

frtAdmin