Class Actions Damages: Five-Part Series

Explaining the Complexities and Exploring the Solutions

Forensic & Litigation Consulting

October 15, 2019

Shareholder class actions are among the most complex issues dealt with by companies, their legal advisors and their experts – and they aren’t going away any time soon. What is the best strategy to solve complex problems? Take a step back and get the big picture, but then break it down into manageable parts. In this series of bite-size articles and videos, we explain the complexities related to shareholder class action damages and possible solutions. Find out more from Dawna Wright here:

Our five-part series covers the following:

Part 1 – Class Actions Damages: The Big Picture
Part 2 – Dura Principles: How Would They Apply in Australia?
Part 3 – LIFO, FIFO, Event Studies? Demystifying Damages
Part 4 – Calculating Damages: The Uniquely Australian Challenges
Part 5 – Expert Q&A: The Use of Experts Explained


Part 1 - Class Actions Damages: The Big Picture

Australians may be surprised to hear that, while shareholder class actions have been common in the United States for many years, there remains a dearth of judgements dealing with the details of damages. Although the high-level principles of assessing loss seem at first glance to be straight-forward, the devil is in the detail. And most securities class actions filed in the United States settle long before judges turn their minds to the details of assessing the loss suffered by each shareholder.


Part 2 – Dura Principles: How Would They Apply in Australia?

As we continue to compare notes with our American experts, and have deeper discussions, the more we realise the “rules” applied in the United States don’t necessarily apply here in Australia. We will explore the “Dura Principles” (as we will refer to them), and how (and why) they changed earlier methodologies in the Unites States. We uncovered some fundamental differences in the evolution of shareholder damages methodologies in Australia compared with elsewhere. That deeper understanding leads us to consider whether the Dura Principles would apply in Australia and whether options might be available - or even required.


Part 3 - LIFO, FIFO, Event Studies? Demystifying Damages

What is an event study, and what is it not? What are LIFO and FIFO, and why does it matter? Even if we could adopt the same methodologies as those employed in the United States, and have a common understanding of the damages principles, there are still additional issues unique to the Australian landscape that don’t seem to have been dealt with elsewhere. Adding the effect of litigation funding arrangements and multiple competing class actions to the mix significantly increases the degree of difficulty. We're sure it's tempting for lawyers to leave these issues to be dealt with by their experts behind the scenes, down in the depths of complex financial modelling scenarios.


Part 4 - Calculating Damages: The Uniquely Australian Challenges

Part 4 of our series tackles what lawyers need to know about the impact of those uniquely Australian challenges on damages calculations. Involvement in many shareholder class action matters over the last few years has also confirmed what we already knew… it takes a diverse set of skills to truly surround the issues.


Part 5 – Expert Q&A: The Use of Experts Explained

Whilst there are some issues that can be equally dealt with by forensic accountants, business valuers or economists, as soon as the degree of difficulty increases, a greater depth of specialised expertise is required. Do you need so many experts, and who does what?


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