Key takeaways: Quantifying risk to unlock the value of pending antitrust claims

In the last decade, anticompetitive behavior has spurred billions in high-stakes antitrust litigation. In a down economy, with companies facing a need to generate cash, the call to recover capital from outstanding antitrust claims has taken on renewed urgency.

To help companies and their law firms realize the value of pending antitrust matters, Burford Managing Director Kelly Daley hosted a webcast with Boies Schiller Partner Scott Gant. They discussed pending antitrust litigation in several industries and offered expertise on evaluating, quantifying and pursuing pending claims that can generate significant value to the organization.

What follows are the highlights of that webcast, which you can stream using the link in the header above.

The state of the antitrust

Recent antitrust activity has been driven primarily by three sectors: Food, pharmaceuticals and technology.

In the food sector, several actions—which separately allege price fixing among producers of beef, turkey, chicken and pork—are at early stages. Given the overlap among those industries, food companies should anticipate additional proceedings, spurred both by enhanced scrutiny from industry regulators and additional attention from the plaintiffs’ bar.

In the pharmaceutical space, civil and criminal proceedings have continued against both generics manufacturers and patent holders engaged in pay-for-delay tactics (wherein brands pay generics manufacturers not to challenge patents). In both areas, cooperation from drug manufacturers in the criminal context and early success in the civil context signal the viability of additional civil actions.

Similarly, in the technology sector, Federal Trade Commission scrutiny of tech company acquisitions and Department of Justice (DOJ) involvement in the Google antitrust litigation together signal a potential wave of civil claims. With the DOJ having just launched its own antitrust suit against Google, tech companies should be prepared to consider additional civil actions.

Essential considerations for antitrust litigation strategy

Companies that have been harmed by anticompetitive behavior have two options to recoup losses: Participate in a class action or opt out of the class to pursue claims individually. Although the decision is specific to the company, there are several essential factors that claimants must consider.

Using data to evaluate a claim

Before a company decides whether to pursue an opt-out, it must first evaluate or "prove up" the claim. The challenge is that this process often involves analyzing data that companies do not have, and modeling damages using highly specific methodologies in which law firms lack experience. In many instances, companies and firms struggle to gather the requisite data because of issues in the company’s internal record keeping. In those cases, gaps must be filled with defendant data, third-party industry data or inferences made from prior comparable cases.

Assessing claim value

Once the data has been secured, companies and their law firms must then model several distinct case attributes. Watch the webcast below for an in-depth analysis of the modeling process.

Legal finance strategies that maximize claim value and minimize risk

Commercial legal finance providers can help companies and law firms pursue opt-out actions by offering expert guidance, data analysis and capital facilities.

Working with a value-adding partner

Legal finance providers serve as trusted third-party advisors. They can help a company and its counsel assess the strength of its claim, model damages and decide on an optimal recovery strategy. When counsel has not been retained, legal finance providers can connect claimants to top antitrust counsel.

Fees and expenses financing to offload cost and risk

Commercial legal finance providers offer traditional fees and expenses financing to allow meritorious antitrust claims to proceed. Capital is provided on a non-recourse basis, eliminating downside risk for the claimant while preserving significant backend upside. This type of financing allows companies to work with their law firm of choice.

Monetizing pending claims to generate cash

Increasingly, companies with well-founded claims and significant damages are seeking to monetize portions of their claim(s) to generate immediate working capital. In these arrangements, capital is still provided on a non-recourse basis, but it can be used for general business purposes rather than for paying legal fees and expenses.

In any arrangement, legal finance providers such as Burford work with the claimant to offer custom solutions that help maximize claim value and generate cash.