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ACS:Law reportedly scoops more settlement money than rights holders

by Sarah Griffiths on 6 October 2010, 11:23

Tags: General Business

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Adding fuel to the fire?

ACS:Law, which hunts down suspected sharers of copyrighted material and asks them to pay a settlement, keeps about 40 percent of the payment, while rights holders receive just 20 to 30 percent, an investigation by The Guardian has revealed.

The law firm is in seriously hot water after thousands of broadband users' details were splashed over the web courtesy of a 4chan attack, but the firm could still face a fine of up to half a million pounds if it is found in breach of the Data Protection Act.

Many ISPs now plan on challenging court orders asking for customers' details after the debacle, with BT managing to stall the process in court this week.

A typical letter from the law firm reportedly includes a demand for £300 as settlement for alleged file sharing, of which ACS:Law would pocket £120, while the record company would reap between £60 and £90. It is believed the remaining cash goes to the firms that find the file sharers and ISPs that hand over the data.

The newspaper reported that 10 percent of net revenue from people paying settlement upon receiving the letters is handed over to the firm that finds the IP addresses of suspected illegal file sharers, while a further 15 percent is believed to be paid to the ISP for following a court order and surrendering customers' details including names and addresses.

According to a leaked business plan on Torrent Freak from a German copyright firm called DigiRights Solutions used by ACS Law and Gallant Macmillan, a fifth of money collected from damages paid is given to the rights holders, turning the law firm, which keeps 80% before paying ISPs and IP tracking companies, into cash cows.

However, the Guardian's sources said record companies usually receive around a third of the damages pie. ACS:Law did not comment when approached by the newspaper.

Meanwhile another report leaked as part of the batch of ACS:Law's Andrew Crossley's personal emails posted online by 4chan, reportedly hinted that ACS:Law could grab about £10m from just sending out letters.

Ars reported it has seen ACS:Law's confidential business plan and said, while the amount of money demanded in the letters varies depending on the rights holder, the number of letters sent out by the law firm has turned its business into ‘a numbers game' so the payments of between £300 and £500 quickly add up.

The firm reportedly expects a 15 percent recovery rate but said "in practise, we are able to demonstrate a 20 percent recovery rate."

Company spreadsheets reportedly reveal that a small campaign could bag 12,000 suspected IP addresses, around 3,500 are ‘useable' and 1,500 of which are sent as letters. But with a 15 percent response rate and demand for £400 per letter, that could snag over £80,000.

HEXUS Forums :: 3 Comments

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And the actual artists and talent get none. Not about copyright, it's about profit.
Hands up… who's surprised by this?

no-one? thought so…

I'd be interested in exactly what the agreements are about fees. There are very strict rule about what and how solicitors can charge and how they can charge.

As they are threatening litigation, I would think this has to be classed as “contentious” business, and it is just not allowed* for solicitors to charge a fee which is defined as a percentage of what is recovered. I'm presuming this is the Guardian looking at the figures charged and saying the fees amount to x% of the sum recovered, otherwise Mr Crossley is in a lot of trouble with the SRA

Either way, I'd be surprised if the SRA went through all of this with a fine tooth comb and didn't find something amiss.

*Saracen may well be along in a minute to correct me…