Unfortunately, class action settlements tend to be another step down the road of financial uncertainty and unpredictability. In the class action context, when resolving a case using a claims-made settlement, the financial payout varies significantly, which can adversely impact liquidity, enterprise value, cash flow and assets. Additionally, when settlements go viral, companies face extreme losses which could exceed reserves and available cash on hand.
So what causes cases to go viral and create unmitigated financial risk for settling companies? The answer is simple and also multifaceted: the internet. Digital communications and the thirst for relevant news content have completely changed how consumers gain awareness of class actions and how they file claims for settlement benefits. As a result of these changes, the ability to reach potential class members as well as those intent on abusing the system to receive free cash has created a fundamentally different risk paradigm for those looking... Continue reading