An Interview with the Defense: Q&A with Defense Counsel Paul Karlsgodt of Baker Hostetler
In an interview with Paul Karlsgodt, Chair of Baker Hostetler’s Class Action Practice Group, read more on the benefits of working with Risk Settlements and the value of settlement risk transfer solutions.
- Tell us about your practice and your department.
I lead a nationwide practice of approximately 30 litigators who specialize in consumer class action defense.
- How frequently do you handle class action cases?
95% of my practice is dedicated to defending class actions. I lead between one and two dozen active class actions pending at any given time.
- What types?
These days, most of my work is in the area of data security and privacy, but I also handle class actions involving consumer insurance coverage, pricing, and miscellaneous alleged violations of consumer protection laws.
- Have you had any recent noteworthy victories?
My most noteworthy recent victories have been in the area of data security class actions. In particular, we have been successful in getting an outright defense judgment in several class actions seeking hundreds of millions of dollars in statutory damages.
- What unique challenges do class action cases present that you don’t find in other “traditional” types of litigation? e.g. identifying the class; structuring a settlement that will be accepted by class counsel and approved by the court; implementing a proper notice plan.
Defending against contested class certification and getting class action settlements approved are two unique challenges we face. In terms of settlement approval, there is always the tension between trying to pay the lowest amount to achieve resolution and the fact that the court has to approve the settlement upon a finding that it is fair, reasonable, and adequate.
- What are the unique risks that your clients face when they find themselves in the unenviable position of defending a class litigation? e.g. how to minimize P&L and balance sheet impairment; how to exit the litigation with cost certainty; how to avoid negative tax ramifications.
Typically, the challenge my clients are facing is the fact that the settlement structure that has the lowest potential cost is also one that has the most risk of an unexpected outcome.
- What was your initial impression when you heard about Risk Settlements and its risk transfer solutions, including its class action settlement insurance (CASI)?
Risk Settlements created a novel and innovative solution allowing companies to transfer settlement liability, mitigate GAAP charges adversely impacting their P&Ls, eliminate downside risk and have complete certainty over settlement cost. In certain cases, this solution can make the difference in a company’s ability to reach resolution and manage the outcome risk.
- Which types of class actions and defendants lend themselves to Risk Settlements’ risk transfer solutions?
Cases involving alleged statutory damages, large exposure, publication notice cases with unknown class members and class size are great candidates because they tend to be settled based on some sort of claims program as the class members must identify themselves, provide certain information for validation and/or select a range of benefit options.
- In cases in which your clients engaged with Risk Settlements, what factors drove them to do so?
Risk Settlement provides consulting on both qualitative and quantitive risk factors which clients should consider in evaluation of settlement risk. Using their unique subject matter expertise backed by quantitative data analytics, they provide options to understand and then mitigate financial risk arising out of settlement.
- What challenges were you (as defense counsel) and/or the company facing during the period leading up to engaging Risk Settlements?
My practice changed so that I went from dealing with repeat clients who had done claims-made settlements on a regular basis to clients who did not have enough familiarity with class action settlements at all to be comfortable with the risk.
- Did you have any reservations about recommending Risk Settlements and its risk transfer solutions to your clients?
I would recommend Risk Settlements without reservation. While risk transfer isn’t the right solution in every case, the Risk Settlements team adds value in evaluating financial risk arising out of settlement options at a no-risk proposition.
- Was there anything surprising about the process leading up to your client obtaining CASI? (If they utilized CASI)
The only surprise was the fact that they consulted with my client for free, spending significant time and effort in assisting my client in evaluating settlement structures and options, even though there was no guarantee that my client would ultimately buy their product.
- For other businesses or defense counsel thinking of working with Risk Settlements and leveraging CASI, what advice can you offer?
Before you head to mediation, give them a call to at least hear what they might have to offer.