What's New and Promising in Class-Action Mediation?

UWWM Founder and Principal John J. Upchurch recently was interviewed by Lawyer Monthly Magazine (link here), and he was asked about current trends and likely innovations for mediators. Some examples came from the class action practice area.

John J. Upchurch

We are being asked to mediate numerous class actions around the United States. They include issues of products, services, rights of privacy and others protected by state and federal statutes.

There are numerous methods a mediator can employ to create a framework for class action discussions. One of them is to facilitate "bridge-building to class action resolution" with an important principle imposed on all, to the effect "nothing is agreed until everything is agreed.” The class action framework can be discussed without prejudice through pre-mediation caucuses. The priority of the "framework" has proven to provide miraculous results for both sides, designing and facilitating the in-person meeting in advance.

Basic goals in any class action include reaching broad relief for the class and finality for the defendant. The relief must be fairly noticed, claim-available and fair in relation to the multiplicity of claimants. One newly created instrument for affordable compensation is the implementation of class action insurance. This has been very effective for our clients, and consists of a post lawsuit settlement insurance product designed to provide protection against the risk and uncertainty of class action settlements in exchange for a negotiated premium. In these matters, cases fail to settle because defendants fear the exposure, risk and uncertainty of a large claims-made settlement. With class action settlement insurance, settling companies can mitigate the financial burden and uncertainty caused by a large settlement with unpredictable claims. Also, settling companies are required to take a GAAP charge against their P&L for the entire amount of the settlement. For highly leveraged companies, publicly traded companies or companies looking to raise capital, financing or enter into an M&A, a large claims-made settlement can negatively impact the companies’ balance sheet. With class action settlement insurance, the company transfers the entire settlement loss and only has to account for the premium. This removes a significant business impediment to resolution.

Part II: How does it work?