The Challenges of Large-Scale
Consumer Litigation


In 2022, the rhythm of intense litigation of consumer demands was maintained, with alternative conflict resolution tools not having achieved the desired efficiency. The Brazilian National Council of Justice (“Conselho Nacional de Justiça”) has not yet released official figures, but an increase in the number of new actions is expected, when compared to 2021, involving banking services, especially payroll loans; of insurance, with emphasis on controversies over review of premiums and extension of coverage of insurance contracts and health plans. There is also a perception of an increase in the number of lawsuits involving retail trade, driven by a growth of almost 20% in the turnover of online operations. Some sectors with historical litigation, such as telecommunications and energy distribution concessionaires, are expected to report a decrease in demands compared to the previous year.

With 80 (eighty) million lawsuits pending, the causes over the national phenomenon of consumers seeking the Courts for everything, and for nothing, to claim compensation for damages allegedly caused by suppliers, have long been discussed. A firmly protective consumerist norm, easy access to free litigation, a favorable judicial environment for consumers, in addition to repeated and large-scale failures by suppliers are the most mentioned reasons. With so many cases pending, the Courts have frequently used the procedural instruments available to resolve repetitive questions (for example, extension of a certain contractual or legal right of the consumer; statute of limitations; burden of proof of a certain fact, etc.), such as the so called Incidents of Repetitive Claims (“Incidentes de Demandas Repetitivas”), IRDR, in its Portuguese initials, or the Assumption of Competence Incident (“Incidente de Assunção de Competência”), IAC, also in its Portuguese initials. In 2022 alone, the Superior Court of Justice  (“Superior Tribunal de Justiça”), STJ, in its Portuguese initials, judged 40 (forty) new themes, but even these instruments have not been sufficient to resolve or prevent large-scale litigation

In 2022, and certainly for the next few years, the discussion and disputes regarding another judicial phenomenon was intensified, that of the so called “predatory claims” or even “aggressive claims”. These would be the overloading of the Courts with the filing of a large volume of lawsuits, in a standardized fashion, in a short period of time, promoted by a determined group of lawyers who advertise to consumers the possibility of quick financial gains. Several of these suits have demonstrations of fraud, whether documentary, or the very proposition of lawsuits in which consumers were unaware of or did not even authorize. In general, lawsuits are presented to the court without prior complaint or request for a direct service to the supplier and without documents to determine the circumstances of the case, which ends up making it difficult for companies to defend themselves. In some sectors, such as banking, there is a standard set of themes that have reached a failure rate of 80% on the part of the consumers. However, the high probability of failure has not discouraged lawyers nor consumers from continuing to sue, with new lawsuits but identical requests, prompting companies to review their strategies for these types of lawsuits.

The challenge for companies is to balance between two goals, taking care of their customers and managing the cost of legal liabilities. Companies have sought to understand the root cause of each of the complaints received, gathering them according to their origin to create specific action plans. In those legitimate complaints, where it is possible to identify failure in the service provided, the legal departments can be a great source of information and correction for the business activity. Review of advertisements and contracts to improve the quality of consumer information; revision of the logistics chain or Service Level Agreement – SLA, of the carrier for cases of delay in delivery; revision of manufacturers’ contractual guarantee are also examples where the Legal Departments not only defend the client against claims for damages, but act preventively, helping companies to avoid having new dissatisfied consumers and prevent new complaints. When legal departments act in this way, they don’t just solve legal problems, they are business tools for companies.

In 2023, the Legal Departments will push for firm control of the cost of managing legal liabilities, increased by the rise in legal taxes and the growth of “aggressive claims”. With high inflation and the SELIC – Basic Interest Rate above 2 (two) digits, in addition to the decision reached in the judgment – REsp 1820963/SP of the STJ – which decided that the debtor has to pay interest even on amounts deposited in court -, caused a need for companies to resolve lawsuits much faster. All the control and cost reduction factors have led the Legal Departments to reduce costs with legal fees; outsource internal tasks, especially to alternative service providers; expanding the use of technology to all stages of the chain, from task flow, automation of ancillary activities, such as filling out forms, surveys, research for the progress of legal proceedings and, thus in a revolutionary way, expending data analysis. In the scenario of intense litigation, in which small movements in the lawsuits portfolio strategy have millionaire financial repercussions, there is no room for decision-making dissociated from the analysis of the financial effects of the strategy. The root cause of the lawsuit must be assessed; the existence of fraud or tampering of documents; whether the claim is legitimate or aggressive; the profile of the opposing lawyer, judicial expert or magistrate; what is the statistical prognosis of outcome for the case, average cost of conviction and time of sentence among various elements.

To meet market demands, law firms are undergoing a strong process of innovation, with the understanding that law must be a tool to develop their clients’ businesses. There is an important effort to simplify and increase the efficiency of work processes, with intensive use of technological tools to provide security, speed, and cost reduction in secondary activities. Our firm developed the powerful Performa platform, with which we managed a provisioned portfolio of BRL 2 billion (two billion Brazilian reais) of our clients, in 180,000 (one hundred and eighty thousand) active lawsuits, with which we carried out more than 150,000 (one hundred and fifty thousand) tasks per month, supported by more than 150 (one hundred and fifty) automation robots. In the last 12 (twelve) months, we have won more than 37,000 (thirty-seven thousand) cases. We have a history of 700,000 (seven hundred thousand) cases closed that allow us to identify the probable prognosis of the outcome of the current ongoing actions. There are more than 2,200 (two thousand and two hundred) adverse lawyers monitored to identify aggressive practices and set up efficient containment measures. Currently, there are more than 130 (one hundred and thirty) performance control panels for fast and accurate analysis and simulation of scenarios for strategic decision-making in the performance of our actions.

This also meant that law firms needed to train their teams not only in terms of understanding new technologies, but also how this technology is designed and its potential to influence our daily lives. We were pioneers in carrying out the first extension project developed between the Information Technology Center of UFPE (“Federal University of Pernambuco”) and our firm regarding “Computer Paradigms and Computational Thinking for Lawyers”, which allowed our members to have a greater familiarity with the technology used in our daily activities, enabling our team in the most diverse subjects, such as the intersection between law and technology, computational thinking, distributed systems and ubiquitous computing, cloud and mobile digital services, computational paradigms, big data, AI, Machine learning, and Data Science, among others.

In 2022[ADWdC1] , our firm expanded the use of legal design, with the production of simpler and more efficient legal documents, with text and visual presentation that more accurately communicate its content, not only to consumers, but also to judges. The work always begins with the review of the line of defense and production of evidence, uniting profound legal technique with objectivity, in addition to constant presence in the courts to present our clients’ reasons to the Judiciary. One of the projects was featured in the Brazilian newspaper Valor Econômico and led our client, in the e-commerce sector, to obtain over a 90% success in their lawsuits

It is difficult to imagine the adequate support of mass litigating companies outside of large law firms, with the capacity to handle not only thousands of lawsuits, but multiple, diverse, and simultaneous action plans aimed at different business solutions. Perhaps for this reason, the Brazilian legal market has been consolidating and concentrating services in a few law firms, which have generally grown year after year, whether due to geographic coverage or the expansion of expertise in a specific economical sector.

There is no doubt that both the Legal Departments, as well as law firms, will need to expand and accelerate the development of new practices and initiatives, extending the use of technological tools, to support companies in the development of their businesses, satisfying and retaining their customers, always thinking in the rationalization of resources spent on the management of judicial liabilities.

 [ADWdC1]Não deveria ser 2022 aqui?