Nuts and Bolts: Preparation and Diligence Are Critical When Implementing Digital Innovations in the Settlement Administration Process

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When 2020 began, class action claims administrators were busy adapting to a host of changes, many of them stemming from the 2018 amendments to Rule 23 – most notably the explicit approval of electronic notice to claimants. Other changes were evolutionary, the result of shifts in the marketplace or system – such as judges’ increased interest in who was administering class action claims and how they were doing it.

And then came COVID-19. Pandemic-driven lockdowns brought the judicial system to a temporary halt in March, forcing everyone to learn how to adapt to litigating cases using remote communications technology.

Like other key players in the class action ecosystem, claims administrators were forced to adjust accordingly. Yet, adversity begets opportunity. Digital innovations already available and deployed for some settlements, but not as widely or readily accepted by litigators defendants and the Courts, suddenly made even more sense. The distribution of settlement funds and reaching class members with class notice are two areas where claims administrators could provide clients valuable consult on how to best achieve optimal goals amidst a new normal. For instance, in a quarantine environment with class members reluctant to make trips to a bank, how can we best ensure that settlement funds reach the right claimants, in the right amounts and in the appropriate time frame.

One leading claims administration group with a front row seat to the pandemic action was Postlethwaite & Netterville (P&N). A nationally known claims administrator, headquartered in Baton Rouge, with multiple offices across Louisiana and in Houston, P&N has processed claims involving hundreds of thousands of claimants and billions of dollars in settlement funds.

I recently spoke to Ryan Aldridge, Tracey Louis and Brandon Schwartz at P&N about how they are consulting with clients regarding implementing digital techniques in claims administration to meet everyday needs, the specific demands in a pandemic world, and challenges that lie ahead.

Francesca: We are hearing more and more about the advantages of notice and distribution by electronic means – in cost, and in conforming to the realities of how we communicate today. We don’t hear as much about the challenges and potential pitfalls, but I know they are there. What are you encountering?

Ryan Aldridge: We’ve been utilizing digital disbursement methods increasingly over the last few years and, unsurprisingly, COVID-19 is accelerating that shift. But, as you note, just because it can be a more effective and efficient way to distribute funds to class members does not mean there aren’t any considerations to weigh. The first consideration is whether digital payments is a fit at all. It remains the case in certain settlements, either because of the underlying facts of the litigation, the award values, or the volume and scale that good old-fashioned checks might still be the best option and even more cost efficient.

If the digital payments make sense, it is important to acknowledge that the digital payments landscape is rapidly evolving and there are a variety of payment platforms and payment methods that exist. Digital payments in the class action settlement disbursement world are still a disruptive product offering with multiple players jockeying for position. To borrow a business phrase, I think digital payments are “crossing the chasm”¹ between the early adopter phase and the early majority phase.

We often find ourselves in a position of educating clients on the different options and why one platform may be superior or certain payment options may be a better fit for a particular settlement. Class members can select payment options such as PayPal, Venmo, Zelle, Amazon, Digital Debit Cards, or Gift Cards; but not always from the same paywall provider. Beyond payment options, we also consider which platforms integrate seamlessly into the claim administration process flow – beginning with which platforms offer integration options as early as when a class member files a claim (e.g. how are the options presented, what information is required to be collected, etc.). These considerations influence things like the design of hard copy and online claim forms and can have material impacts on how likely a class member is to even select a digital payment option, if checks are also offered.

Some administrators take the approach of offering an administrator specific payment platform or white labeled version of someone else’s platform. At P&N we have settled on a model that allows us the flexibility to partner with different digital payment vendors depending on the need. We also feel it motivates us to keep up with developments and innovations in this still disruptive space. For example, better more seamless integration between digital payment platforms and QSF escrow agents like Western Alliance Bank is something we are hoping is a part of the continual innovation!

Ultimately, we always aim to find a solution that integrates seamlessly, gets money in the hands of class members as quickly and painlessly as possible, and cuts down on the overall administration costs for our clients; meaning more money available for class members.

Tracey Louis: As you can tell from Ryan’s insights, digital payments are not simply a push button solution that requires little intervention. As wonderful a solution they can be, the fundamentals of our business are still the most important - making sure we have processes in place to check, double-check, and triple-check our information and activities – there is almost no such thing as too much preparation and diligence. These lessons are as true with digital payments as they have been with checks, which require an incredible amount of diligence to ensure they contain not only the right amounts and correct addresses, but have the right information, expiration and so forth. And on the back end, the process is largely still the same – we have to be perfectly organized and accurate in our databases, or there will be mistakes regardless of the form of the payments.

One of the ways we guard against this is by maintaining a high level of communication among our team – there is no significant update to the claimant experience or change in the disbursement process that our whole team is not aware of. So, even as notice and payment methods are changing, we remain focused on the nuts and bolts, regardless of the innovative solutions we build on top of that foundation. Unfortunately, there are many examples of mistakes made from neglecting the fundamentals or in the rush to be innovative. These are things that can happen when you forget about the details and effort that needs to go into building a solid foundation. And, although mistakes can happen to anyone, we are fortunate at P&N to have a culture across service lines at our firm that espouses a “measure twice, cut once” philosophy.

Francesca: Notice via digital means has been something that notice providers have been implementing for even longer than digital payments. But, like for most things, COVID-19 has added a wrinkle in how you must consider getting notice in front of class members in the digital world. How has COVID-19 and, for that matter, all the other turmoil we’ve experienced in 2020, impacted how you approach digital notice?

Brandon Schwartz: I think the last part of your question is on point more than any specific focus on COVID-19 in this area. There has absolutely been a challenge communicating with class members through what seems like unprecedented “noise” in 2020. We are living in a very divisive time, with civil rights issues boiling over, COVID-19, and a very contentious election that will continue to grab news through to the inauguration. So, many people are either turning their focus inward or tuning out altogether. When you’re talking about media notice programs, that presents a potentially significant problem – we have to determine how we put a notice program together that’s unique enough to catch class members’ interest and entice them to take action.

Today, more than ever, I find myself educating clients on new targeting strategies and media channels that may not have been part of “traditional” digital media channels to which they are accustomed. Due to the lockdowns and social distancing guidance related to COVID-19, streaming service usage has gone up dramatically. A recent study conducted by MediaPost stated that 80% of U.S. connected TV (CTV) viewers watch ad-supported content and Nielsen reported that CTV viewership globally grew from 2.7 billion hours pre pandemic to 3.5 billion hours during the first week of May. So, when I start thinking about how can we can get notice in front of class members during these turbulent times, CTV is just one example of a non-traditional media channel we are more frequently considering. What I love about CTV and other streaming platforms is that we are able to build highly customizable targets from detailed viewer data to segment out the right audience for the settlement, while tracking and reporting on viewership and interaction just like we can in a traditional digital media campaign.

Francesca C. Castagnola is senior managing director of Western Alliance Bank’s Settlement Services National Specialty Banking Group. A 30-year banking veteran, Francesca was a founding officer of the Bank’s San Diego Division. Her portfolio includes law firms, claims administrators and related legal services companies. She has extensive expertise in both simple and complex escrow and fiduciary banking services. Through the Settlement Services Group, she focuses on the entire life cycle of large legal settlements, from escrow through distribution and residual balances for class action, mass-tort and bankruptcy cases. Francesca has managed the banking aspects of hundreds of Qualified Settlement Funds since 2003.

Brandon Schwartz is the Legal Notice Director for P&N’s Consulting Services Group.  He is responsible for developing customized legal notice solutions for clients related to class action notice and claims administration programs. His knowledge of demographic research, reach and frequency methodology, digital and social media strategies, and Fed R. Civ 23(c)(2) compliance keep clients informed of the best practices in legal notice design. He is the author of several articles pertaining to Rule 23 and notice design and implementation.

Ryan Aldridge is a Manager in P&N's Consulting Services Group. Ryan joined the firm in 2014 and is responsible for leading and managing projects in the areas of class action and mass tort claims administration.  He has been involved in high profile matters involving complex claims including In Re: Oil Spill by the Oil Rig “Deepwater Horizon” (MDL 2179) and In Re: E. I. du Pont de Nemours and Company C-8 Personal Injury Litigation (MDL 2433).

Tracey Louis is the Litigation Coordinator for P&N’s Consulting Services Group. She serves as the primary point of contact with key banking partners, manages the establishment and maintenance of Qualified Settlement Funds, oversees claimant disbursements as well as designs and manages the various claimant communications mediums. Tracey has over 20 years of litigation, communications, and project management experience.