GSW Class Action, page-35

First post, quite, but everyone has to start there. My comments were intended to be of broader application than the Getswift class action(s).

Your misconceptions about how commercial litigation works - let alone funded commercial litigation - are evident in your statement "Only a lawyer would think 60% of any recovery is reasonable (its also highly optimistic).  Even the best money managers in the world struggle to justify taking 20% of profits but here you are arguing that double that rate is something a shareholder should be comfortable with". I'm not a class action lawyer but I've worked in the industry for many years and my comments are based on first-hand knowledge and experience - not conversations with lawyers. Your statement seems to roll-up a number of objections but, to be clear, I was referring to a return of 60% of recoveries, not 60% of the total loss. But I would say that if you were unfortunate enough to become involved in a commercial dispute and it reached the point where you have to sue to recover anything at all and you resolve the dispute for 60% of what you think your claim is worth - I think most competent litigators would consider this to be a reasonable outcome.

But let's assume a class action is settled for an amount which is less than the total loss (being a settlement, this point should be obvious). Let's also assume 60% of that recovered amount is returned to class members. Why would you characterise the other 40% as profit? If $10m is recovered (which, by the way, is $10m more than would have been recovered from the company or, more often, the company's insurers, had the class action not been conducted) and $6m is returned to participating group members - the other $4m is not profit. You've ignored the costs of the litigation: lawyers fees, counsel fees, experts, disbursements etc which are likely to comprise a substantial chunk of that $4m. You've also not factored in the risks to the funder which aren't limited to just losing the case and, therefore, the entirety of their investment. If the case is unsuccessful then, at least in Australia, the loser also pays the respondent's costs which are typically around 65-70% of actual costs incurred - so it's a double whammy. Litigation is not a blue chip investment. It is high risk. What would any rational investor require in return for investing in a high risk asset? I'll let you join the dots.