Amazon: Both actions certified
People bringing collective actions should always instruct costs specialists to assist them with scrutinising their lawyers’ fees and also make their litigation funding agreements (LFAs) public, the Competition Appeal Tribunal (CAT) has declared.
The CAT gave the guidance as it made instructing independent costs specialists a condition of its approval of two collective actions worth almost £4bn against Amazon.
The three-person panel – chaired by Mr Justice Roth – said it was satisfied by the arrangements put in place by Professor Andreas Stephan to instruct independent lawyers at a costs firm help him assess and, if necessary, challenge his lawyers’ bill.
Robert Hammond similarly committed to having a costs professional review future interim invoices and apply “the level of scrutiny that a corporate client would apply when receiving invoices from a solicitor as to the reasonableness of the rates and time taken to which the interim invoices relate”.
Professor Stephan is bringing an opt-out claim valued at £2.7bn that Amazon has abused its dominant position for the supply of e-commerce marketplace services to third-party sellers. Mr Hammond’s £1bn claim alleges that Amazon manipulated how it presents available products through the ‘Buy Box’ (on the right side of the product detail page) in such a way as to suppress competition.
As the claims overlap, the CAT heard their applications for collective proceedings orders – giving the green light for the cases to proceed – together and approved both.
The CAT assessed the proposed class representatives’ funding arrangements as part of this. In Professor Stephan’s case, it noted that the LFA with Innsworth Capital provided that he would “review” invoices in respect of his solicitors’ fees and that, at the reasonable request of the funder, would seek to have them assessed. The funder is providing backing of up to £33m.
“We recognise that these provisions provide some protection against unreasonable fees,” it said. “However, we think it is important that [Professor Stephan], independently, should be in a position to subject claims for costs to proper scrutiny.
“The funder’s interests are not identical to those of the class because, if the action results in recovery for the class, the funder’s expenditure on costs will be reimbursed out of the sum recovered, potentially at the expense of the class.”
It was a challenge for class representatives to review and challenge bills for legal costs without assistance and not only should Professor Stephan be assisted by a costs specialist, “we consider that should become the standard approach in collective proceedings”.
The CAT said it was similarly “concerned that there should be effective control of costs” in Mr Hammond’s case, where the litigation budget is £20m. His funder is FourWorld Global Opportunities Fund.
The CAT noted that the Stephan LFA was already on the claim’s website and, at the tribunal’s request, Mr Hammond did the same.
“We should make clear that this should be standard practice for all opt-out proceedings,” the CAT said.
In relation to both, the tribunal expressed concern about what could be extremely high returns for the funders but decided that was not an obstacle to certification on the basis that the amount would ultimately be subject to review by the tribunal at the conclusion of the case.
Professor Stephan’s LFA provides for a total multiple of up to 10 times the funder’s investment, Mr Hammond’s for an initial £40m on top of its outlay, plus up to £60m more depending on when success occurs, as well as a ‘commitment fee’ of 15% per annum on the funder’s committed £17m (some £2.5m a year).
“The fact that we do not reject the funder’s remuneration at this stage as excessive should not be taken as in any way an indication that we approve the specified funder’s fee,” the CAT stressed.
David Bailey-Vella, chair of the Association of Costs Lawyers, said: “This decision reflects the increasingly pivotal role of costs professionals – and particularly costs lawyers, as independent and regulated experts – at every stage of the litigation process.
“Class representatives are understandably heavily reliant on their lawyers in cases as big and complex as these, but with so much money on the line, the tribunal recognised the importance of them having independent advice to ensure that their costs – which ultimately come out of the class’s damages in the event of success – are rigorously policed. Costs lawyers are the people to do this.”
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