Lawyers seek ways to raise take-up rates

By Daryl-lynn and Carlson
Financial Post, Wed Dec 07, 2011

When a class-action settlement is reached, few plaintiffs make claims for the money relative to the number the class represents. Lawyers who practise in the area say the average claim for the settlement money - referred to as take-up rates - ranges from 20% to 40%, which is exceptionally low. Ultimately, some lawyers worry this could jeopardize the future of class actions in Canada.

The leftover money, which can be millions of dollars, goes to charities and cy près awards, and some of the money can go to the respective provincial government.

Some lawyers have taken the initiative to ensure more plaintiffs hear about the settlement and make a claim so that class actions will prevail.

Jonathane Ricci and Paul Battaglia, who founded Canada Claims Management, say the take-up rates of class actions are indeed problematic. They founded their company on the premise of enabling an increasing number of plaintiffs in class actions or any type of law suit to be able to make a claim simply and expeditiously and receive their monies owed.

"There are a number of things that can be done during the process of a class action to get these take-up rates higher," said Mr. Ricci. "It's important that class members get notice either by direct mail or by notifications in national newspapers."

He added it's also important to write the notice so the right people can clearly understand how they can qualify for the settlement money.

Otherwise, "if they have a hard time understanding the notice, they won't make a claim. It has to be worded in such a way that the average person can understand it. In our conversations with judges, they are starting to express their frustration with the poor take-up rates."

Canada Claims Management is using social media including Twitter, Facebook, YouTube and blogs to enhance the notification to class members in plain wording.

Ward Branch of Branch MacMaster LLP in Vancouver agrees the low take-up rates are critically problematic. He said lawyers are the primary source to make sure the settlement money does get into the hands of the class members.

He suggested lawyers should be paid a percentage of what the judge determined the plaintiffs will receive, and then each law firm that represented the plaintiffs will have an economic incentive to maximize the number of people who make a claim.

"You see more and more fee approvals tied to the actual amount paid and that's a positive move that should improve take-up rates," said Mr. Branch.

He also mentioned lawyers need to "dumb-down the notices that are given to class members as lawyers tend to give too much legalese."

He said the notices should be both sent to each class member and placed in free newspapers such as Metro and 24 Hours, and any form plaintiffs need to fill out to make a claim should be only one page and very simple and straightforward.

"In a class action a few years ago against Nova Scotia, I made the claim form only one page and we have had up around 40% and it's still ongoing."

In a paper he and colleague Greg McMullen co-wrote, entitled Take-Up Rates: The Real Measure of Access to Justice, the authors noted:

"Take-up rates appear to be a problem no matter the size of the claim or the sophistication of the potential claimants. While a busy class member may have no time to fill out a five-page form to make a $10 claim, it seems that large claims by ruthlessly economically self interested claimants are also going unmade."

They continue: "When considering this question, keep in mind that if you are a lawyer, you will have a difficult time remembering what non-lawyers do and do not know. Asking a non-lawyer if they can understand the language of the notice you propose to send to class members may go a long way to increasing participation in the settlement."

Dimitri Lascaris of Siskinds LLP in London, Ont., practises class action law in the securities area and said the take-up rates are generally higher.

"The take-up rates can be as low as 30% but can be as high as 60%," he said. "Generally the take-up rates in securities class actions are entirely within the reasonable range, and the principal reason is because people make very small investments in shares."

Mr. Lascaris added: "Even if you get a big recovery for the class as a whole, many people don't have an incentive to file a claim, as it takes time because they have to fill out a seven-page form, get their brokerage records, and in most cases, they're just not motivated if they will only get a sum of $10 or so."

As well, he noted there will always be class members who don't get notification, which will decrease the take-up rate in any province.

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