Promptly instituting a comprehensive litigation hold is imperative. Not only will you avoid the potentially case-determinative consequences of spoliation, but a properly scoped litigation hold can help ensure that you don't lose essential defense documents. Your institution's litigation hold should retain all back-office data relating to the class allegations, as well as all external facing documents, which can often assist you in demonstrating differences among the class members.

3. Consider arbitration

Many financial institutions' customer or member agreements contain arbitration clauses that prohibit them from pursuing claims as a class. This can be a silver bullet in a class action before it even begins. Your institution should be diligent in maintaining records that will be needed to prove compliance with the notice requirements for amendments to member agreements. The key to successfully enforcing an arbitration clause in your member agreements is being able to prove that the plaintiff received the applicable agreement.

4. Do a deep dive into the facts early

Successfully defending against a class action will require you to know exactly what happened – when, where, how and why. It is imperative to assemble the relevant documents and conduct in-depth interviews of key employees. In-person face-to-face interviews are often more fruitful than phone calls. Determining your institution's normal processes and procedures and identifying potential problems must be one of the first orders of business. It is also important to understand as much as possible about the named plaintiff's history with your institution. One of your ultimate goals at the class certification phase will be to show that common questions do not predominate. In your investigation and interviews, look for ways to show differences among the class members. Did they receive different agreements or marketing materials? Did some of your members benefit from your actions?

5. Fix your mistakes . . . immediately

If you discover during the course of your investigation that there is a potential problem, correct it immediately. Prompt corrective action mitigates potential damages and makes it harder for the plaintiff to portray you as a bad guy. Do not avoid change simply because you fear it might be construed as an admission.

6. Consider an early motion to dismiss

Filing a motion to dismiss may end the case in its early stages. And even if it doesn't completely end the case, early battles can be useful. Even if your motion to dismiss is not granted in full, it can still narrow the claims and reduce your potential exposure.

7. Consider settlement at all times

If there is a real problem or if the case can be settled cheaply (maybe even individually), it will save you significantly in the long run.

8. Member relations are key

Always remember that if your members are happy, they are not as likely to seek out plaintiff's lawyers, and they can be great witnesses help you defeat a class action.

While this list is by no means exhaustive, these key tips can help make sure that your institution is in the best position from the outset to defeat class claims as early and as inexpensively as possible.

Gregory C. Cook is an attorney in Balch & Bingham's Financial Services Litigation Practice Group. He can be reached at 205-226-3426 or [email protected].

Adam K. Israel is an attorney in Balch & Bingham's Financial Services Litigation Practice Group. He can be reached at 205-226-3495 or [email protected].