The Competition Appeal Tribunal provides further guidance on "standard requirements" in CPO Applications

Please note this article is focussed on the "standard requirements" identified by the Tribunal and does not look in depth at the underlying claims, the certification arguments or the legal analysis in either judgment.  For further information, please review the judgments in full, or contact the publisher.

The landscape surrounding the certification by the Competition Appeal Tribunal (the Tribunal) of applications for Collective Proceeding Orders (CPOs) (the necessary first step before a collective action can proceed to trial in the Tribunal) continues to develop as more claims proceed through the certification process and judgments are published. Now the legal principles underlying the certification of a collective action are better established, the Tribunal appears to be turning its mind to more forensic procedural management of this process, and establishing a series of standard requirements it expects proposed class representatives (PCRs) to meet in CPO applications.

 In the recent joint CPO judgment of Robert Hammond v (1) Amazon.com, Inc. & Ors (the Hammond Claim); Professor Andreas Stephan v (1) Amazon.com, Inc. & Ors (the Stephan Claim) (the Amazon Judgment)[1], the Tribunal ruled on a number of procedural points that it said should be standard practice for all opt-out proceedings.  The Tribunal in Professor Barry Rodger v (1) Alphabet Inc. & Ors[2] added to this guidance.

 The "standard requirements" arising from those decisions are:

1. Publication of the Litigation Funding Agreement ("LFA")

The Tribunal has made it clear that it should now be "standard practice" in opt-out proceedings that a (non-confidential) copy of the PCR's LFA should be posted on the claim website. 

This approach was endorsed in the Stephan Claim, where the LFA had already been published, and ordered with respect to the Hammond LFA.  It has been further endorsed in Rodger.[3] In terms of confidentiality, it is acceptable to redact ATE insurance premiums on the basis that they give an indication of the risk allocated to the case.[4]  That being the only redaction addressed by the Tribunal continues the trend towards reducing confidentiality protection for LFAs in collective action proceedings.

This new publication requirement, combined with the recent raft of published CPO judgments in which the Tribunal (and superior courts) have ruled on points of dispute in existing funding agreements, appears likely to lead to an increasingly standardised form of funding agreement in the opt-out collective action space, particularly for those funders backing a number of collective action proceedings and whose LFAs have consequently already been subject to judicial scrutiny. 

2. Evidence on funding terms

Whilst the Tribunal has no intention of going behind privileged communications at the certification stage, it has made it clear that in order to certify a claim the Tribunal must be satisfied that the PCR has made proper efforts to secure favourable funding terms, and that it should be standard practice for the PCR to address in their evidence the steps they took to do so.[5] 

Beyond the baseline question addressed above, challenges to the funder's actual remuneration / return and related provisions of the funding arrangements are increasingly likely to be delayed until settlement or distribution of damages, at which point the Tribunal considers it will be more able to look at the reasonableness of the funder's return in view of the outcome of case, which may include privileged negotiations that underlie it.[6]

3. Engage an independent costs specialist to advise on (and challenge, if necessary) the PCR's legal fees and disbursements

The Tribunal has also shown increasing concern about the PCR being in a position to subject their legal team's fees and disbursements, as submitted to the funder for payment, to "proper scrutiny".[7]  In particular, the Tribunal has held that, given the scale and complexity of collective action proceedings, certain PCRs may not be in a position to effectively review and challenge bills for their own legal costs without assistance.

To allay this concern, the Tribunal indicated that it should be the standard approach in collective proceedings for the PCR to be assisted by an independent costs specialist, who may provide ongoing advice on legal fees as well as providing assistance in approving costs arrangements and fees.[8] 

While the level of assistance each PCR will require will differ, it is therefore likely to be prudent for PCRs to engage costs specialists from the outset of their claims to advise on the initial structure of funding and costs arrangements, as well as to consider retaining costs lawyers to assist in overseeing of the incurred fees and disbursements on an ongoing basis.  This begs the question as to whether the costs potentially saved on behalf of the class in ever closer scrutiny of the PCR's legal fees and disbursements will be eroded by the cost of engaging an additional legal advisor to undertake the task. The need for such support is also likely to depend to some extent on the background and experience of the PCR.

4. Arrange regular meetings of the Advisory Group / Consultative Panel

The role, constitution and responsibility of the PCR's advisory group or consultative panel (the panel) have been subject to increased focus in recent CPO decisions.[9]

In Rodger, the Tribunal expressed concern at the frequency of proposed panel meetings, at only twice per year, and approved the CPO application on the basis that the panel should meet at least on a quarterly basis.[10] The Tribunal also addressed the timing of the constitution of the panel, concluding that the panel, which had been appointed shortly before the CPO hearing[11], had not been appointed "too late" and that it was satisfied the PCR had received sufficient advice in relation to his funding arrangements from leading costs counsel prior to the panel's appointment.[12]

Whilst it is not a formal requirement that a panel be put in place,[13] and the PCR's need for input and guidance from its panel will likely ebb and flow over the course of proceedings, it is clear the Tribunal now expects to see structures in place to ensure proper assistance and support is provided to the PCR, including by way of regular meetings of the panel or at appropriate junctures.