Bronfentrinker: Settlement is in the interests of consumers
An extraordinary war of words has broken out between the solicitor and funder involved in Walter Merricks’ landmark collective action against Mastercard over its proposed settlement.
After Innsworth Advisors, which advises third-party funder Innsworth Capital, said the settlement had been reached without its agreement, solicitor Boris Bronfentrinker accused the funder of greed and of trying to “inappropriately pressure” his client.
It emerged on Tuesday that Mr Merricks, the class representative, had agreed a settlement of the £10bn claim, the first collective proceedings started under the 2015 Consumer Rights Act.
Media reports have put it at £200m but this has not been confirmed. Mr Bronfentrinker said it would amount to £40-50 per person who came forward to claim it, which he described as “a very good outcome for UK consumers”.
The settlement has to be approved by the Competition Appeal Tribunal (CAT) and in a statement issued yesterday, Innsworth Advisors said: “We strongly oppose this reported settlement which was struck without our agreement. It is both too low and premature.
“Both Walters Merricks and Boris Bronfentrinker have repeatedly claimed this is a multi-billion pound case, yet they seemed to have rushed to settle for a reported £200m raising some serious questions.
“We will be challenging this agreement and have already written to the CAT. We will have more to say in the coming days.”
Innsworth is set to argue that it is simply trying to uphold the contractual terms and warn also about the potential adverse implications of approving a settlement at this level, not just for this case, but for the other collective actions.
In response, Mr Bronfentrinker, a partner in the London office of US firm Willkie Farr & Gallagher, said that, after nearly nine years of litigation, it was “frankly absurd” to suggest that there has been “any rush to settle”.
“To the contrary, based on the actual evidence that has now come to light and that was not previously publicly available, the realistic value of the claim has now become much clearer.
“This will all be set out in the application and supporting evidence that will be filed with the tribunal to allow it to consider whether to approve the settlement.”
The decision of Innsworth Capital – “which is backed by one the largest and most aggressive US hedge funds” – to oppose the settlement was “both unfortunate but not surprising”, Mr Bronfentrinker continued.
“Whilst the vast majority of litigation funders understand and respect the limits of their role in litigation, that is not the position of Innsworth.
“The decision to oppose the settlement and to go public with that, attacking Mr Merricks, is the latest in a sustained campaign it has engaged in to inappropriately pressure and seek to influence Mr Merricks’ decision making in order to take control of the litigation.
“It is good that this has all come to light and will be considered by the tribunal when it comes to assess the settlement that has been agreed with Mastercard.”
The solicitor argued that the role of litigation funders, and their ability to seek to influence and control litigation “so as to advance their financial position over and above all other considerations”, raised important public policy issues that went to the integrity of the collective action regime.
He labelled Innsworth’s opposition, “and its desire that Mr Merricks continue with risky litigation that could result in UK consumers recovering significantly less, or even nothing”, as “all about funder greed”.
Mohsin Patel, director and co-founder at litigation finance broker Factor Risk Management, commented that it was unclear how the CAT would approach Innsworth’s objection.
“There is an argument that, notwithstanding the funder’s clear financial interest without which proceedings may never have been brought, that a funder is bound to the fortunes of the litigation regardless of the outcome. That is the inherent nature of the beast and a fact that funders generally must contend with.
“Why should opt-out CAT claims be treated any differently? Does the fact that it is such a claim displace the general principle – generally regarded sacrosanct – that litigation funders are passive investors in a case and ultimately it is for the claimant to act in the best interests of the class by acting upon independent legal advice?
“What, if any, standing does a funder have to challenge an agreed settlement that has been made between two opposing but consenting parties acting upon advice?”
Mr Patel said the CAT ruling should provide valuable clarity for others. “Given the current focus on third party funding regulation, one would hope that all parties behave accordingly,” he added.
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