Here's another post about class action procedure, as part of my ongoing comments explaining how class actions work. This time I'm explaining one way that this Misuse of market power / beer tap contracts Class Action case could be financed without brewers having to write cheques.

So the first thing to know is that we’re working on the option where the brewers mightn't have to pay up front for a case.

This might be possible by having the costs of the case might ONLY be accounted for at the end, from the benefit achieved in the case, from the value achieved for brewers. The amount of costs or any percentage success fee isn't set yet, because it would depend on how many brewers participate and may also depend on how much work needs to be done for the case. Actually, the Court may even have to approve the percentage or costs, and that obviously means complete transparency and an independent oversight.

If, for example, the success fee equates to 30%, that means brewers will keep 70% of what the case achieves. I usually tell group members that they should think of a success fee as the cost of someone else paying for your case: of course Brewers can avoid that 30% deduction - but then they have to pay for the case themselves, for example by each brewer contributing a set amount. That seems unlikely, so at this stage so we’re focussing on using external financial backing.

It also worthwhile to contemplate what happens if things don't go as well as hoped, for example if the amount recovered is less than we predict and doesn’t cover our legal fees and related costs such as independent experts (which are very expensive). Obviously, we don't think that will happen, otherwise we would not be motivated to proceed, but it is still professional and sensible to think about what happens if things go badly. Brewers should know that even if the recovery or other benefit brought by the case is less than costs/legal fees, brewers will still NOT have to pay the difference. That outcome is just bad luck for the lawyers or financial backers of the case - that is the risk they take (and an incentive to keep costs reasonable)

In these ways and others the system motivates reasonableness and discipline in generating legal costs, so they don't become disproportionate. A Brewers’ Class Action could be an expensive case, simply because of the high stakes involved and also because of the complexity of competition law and economic evidence which might be prepared. But at the same time neither the lawyers nor any financial backers would be pleased to have unnecessary fees generated because their pay day is 18 months or more away from case commencement in court, and there’s always a degree of risk that every court case has.

Lastly, in a typical court case the losing party is ordered to pay the legal costs of the winner. But it is different for a class action because the rules generally protect a class action group member from having to pay the costs of the other side. So that means it is unnecessary for passive group members who have registered but otherwise sit in the sidelines to worry about any exposure to “loser pays” legal fees.

As always with these procedural explanations (or anything to do with the Brewers’ Class Action), Adley Burstyner is happy for you to contact us if you'd like further explanation. And as previously said, no commitment to run the case has been made by Adley Burstyner – at this stage we consider the situation cries out for legal intervention and one which is worthwhile investigating further with a view to potentially preparing and commencing a case in subsequent months.

David Burstyner
Adley Burstyner
T +61 3 9611 0137l M +61 411 072 743
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: dburstyner@adleyburstyner.com.au