BulletProofBlog the blog on crisis communications

In this regular feature, Bulletproof interviews top plaintiffs' attorneys for their perspective on the crises likely to affect businesses in the near future. Today we talk to Daniel S. Mason, a partner in the San Francisco office of Zelle Hofmann Voelbel & Mason LLP, one of the nation' s leading firms on both the plaintiffs' and defense sides of complex litigation. We asked Mr. Mason to address the trends affecting plaintiffs' antitrust actions, an area where he and his law firm are consistently ranked best-in-show.

What would you single out as the most important change ahead affecting your clients?

Dan Mason: There are extraordinarily important developments in Europe. The EC [European Commission] has been aggressive in its approach to cartels, recently imposing tough penalties and fines. However, there has not been recourse for individuals or companies to seek remedy for being overcharged as a result of price fixing.

That is now changing as the EU is creating a private cause of action system. In March, the European Parliament formally endorsed concrete recommendations for such a system. It is expected that, within the next few months, the EU will direct member nations to pass legislation.

The impact will be enormous for some companies. In the past, the profits generated by breaking the law were so big that even stiff EC penalties were an acceptable cost of doing business. Imprisonment for antitrust violation is less of a factor in Europe than it is in the U.S. At the EU level and in many member states, antitrust violations are only administrative in nature. However, cartel activity is a criminal offense in the UK, and three executives were sentenced to prison last year for participating in the marine hose cartel.

But I do see a significant increase in class actions (called "collective actions" over there) as a new effective deterrent. In combination with EC penalties, the total liabilities can be quite material, even for cartels.

What time frame are you anticipating for implementation?

Dan Mason: There are certainly important legal and procedural hoops ahead. The private action engine won' t crank up by tomorrow. We may be talking about two or three years, but that is actually a short enough time frame for both sides to prepare for the inevitable.

The full impact of the private enforcement system will be determined by a few related issues, including legal fee arrangements in each member nation; specifically, changes where necessary to allow contingency fees as well as address "losers pay" provisions.

These changes will encourage the kind of broad-based plaintiff population that we' re accustomed to in the U.S. Spain and Germany have already changed their laws to allow contingency fees. The UK has not, but it has a "double uptick" provision that increases lawyers' share of awards and incentivizes them to litigate these cases. I believe the "losers pay" provisions will come under increasing pressure as national legislators attempt to implement the directives of the EU.

How do you think cartel members will respond to the looming change?

Dan Mason: The smart ones will seek amnesty. A case in point is Lufthansa, which was granted amnesty in the air cargo case of a few years ago, and which simultaneously cooperated with enforcement officials in Europe. We see the power of the self-reporting strategy everywhere these days, in antitrust as well as other areas like the Foreign Corrupt Practices Act. Europe will be no exception.

Once the private enforcement system is fully implemented in Europe - and it' s a matter of when, not if - it will be a little late in the game for cartels to insulate themselves from significant judgments or to protect their reputations. Law firms and insurance companies will also be investing on the plaintiffs' side, irrespective of fee arrangement changes I mentioned earlier. They' ll do so because, obviously, they will be confident the actions they invest in will succeed.

Under such circumstances, the sooner cartels self-report, the better for them.

Larry Smith is Senior Vice President of Levick Strategic Communications and a contributing author to Bulletproof Blog.