Institutional Protection Services (IPS), an international shareholder class actions specialist, has expanded its reach in the region with the appointment of an Australian representative and the completion of its first roadshow.
Caroline Goodman, London-based IPS founder and managing director, spent last week in Sydney and Melbourne speaking to super funds and fund manager clients and prospective clients with her recently appointed representative, Patrick Liddy of MSI Group.
Liddy has long campaigned for super funds, in particular, to use such class action firms as another way to reduce leakages in funds, thereby improving returns, with no extra risk. MSI Group advises on tax efficiency, cash and foreign exchange management as well as platform implementation. Liddy intends to take the services, including marketing IPS’s offering, to New Zealand as well, he said last week. IPS already has some large client funds in NZ. Worldwide the firm looks after about US$3 trillion.
“With that amount they have to be pretty industrial strength.” Liddy said. “After reviewing the majority of class action offerings in the market, the things I liked about IPS were their ability to work their client claims hard and their collective attitude that ensures the best result for the fund.”
Goodman, who has a background in the securities industry, started her firm in 2004. Senior staff have either legal, technology or securities backgrounds. She said that, back in 2004, they recognised that there was a class action “industry”, mainly in the US, and this was changing in several ways. IPS started off helping European institutional investors recoup money in the US from class actions. It now pursues, monitors and administers class actions in the 20 jurisdictions, including Australia, which have a legal system that recognises such actions.
There are between 300 and 400 shareholder class actions around the world each year, 200-300 of which will be in the US and 70-80 in jurisdictions outside the US, such as the UK, Canada and Australia.
Australia’s National Australia Bank inadvertently changed the landscape in 2010 when an individual tried to bring a class action against it in the US, known as the “Morrison Case”. The court ruled, in an important precedent, that only securities transactions which take place in the US could be heard in US courts. Other transactions had to be heard elsewhere. What this did was greatly accelerate the internationalisation of the class action industry.
The US has an “opt-out” model, whereby all eligible shareholders are assumed to be involved and therefore beneficiaries of a class action unless they decide not to. In most other jurisdictions, including Australia, shareholders have to opt-in to the action. This means that, in the US, lawyers and litigation funders tend to be more aggressive.
IPS says one of the ways it sets itself apart from other class action specialists is through its advanced technology. It has developed what it believes is the most efficient system of identifying, tracking and then administrating class actions around the world. This includes making sure that shareholders receive the money that the courts order them to receive, which is apparently not always the case. At any one time there will be around 1,500 ‘live’ shareholder actions on its radar and this number is increasing as more jurisdictions come online and more legal participants enter the market.
IPS clients can choose between paying a fixed fee or retainer-based payment for the services or pay on a proportion of whatever winnings come back to shareholders. “No matter what, the clients always have a positive outcome – more money coming back and their legal responsibilities covered,” Goodman said.
As previously reported, another UK-based class action administrator, Goal Group, set up in Australia last year, opening an office in Melbourne.
Liddy said he believed that most big super funds in Australia would have signed up to a class action service by the end of this year. “It’s part of their fiduciary duty to maximise returns in all ways,” he said. “And this is the easiest and cheapest way to do it. The class actions will happen anyway. Funds just need to make sure they get their fair share. It’s a free kick.”
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