A recent article in Investor’s Business Daily (IBD) raises some eyebrows when it discusses the positions held by Dollar General Managers against lawsuits. According to IBD, “Dollar General’s [managers] take particular aim at the most vocal and outspoken opponents of its business model, particularly in light of the fact that many of these opponents are large corporations with substantial wealth.” IBD goes on to say that the “Dollars” are apparently “particularly focused” on “new lawsuits and anti-dollar stock price manipulation cases, which seem to be gaining in popularity.” This article does raise some questions regarding how well the company is performing financially despite such opposition, especially given the fact that their financial statements have not been able to accurately reflect third party accounts of their business. As always, when dealing with large corporations there will always be questions raised as to how well they are doing financially.
Dollar General Managers Lawsuit
However, a closer examination of both their financial statements and lawsuit funding trends reveals that there is a clear discrepancy between the two. In regard to their lawsuit funding, Dollar General has substantially increased their lawsuit funding over the past several years. The financial statements do indicate that a significant portion of their lawsuit funding is coming from either third party entities or litigation funding entities.
However, just a cursory examination of their financial statements shows that their primary source of capital comes from Dollar General itself. Given this fact, it would seem that in light of their opposition to lawsuits, and the increase in their own lawsuit funding, that they are financially healthier as a company than is reflected in their financial statements.
It would also appear that Dollar General’s management is concerned about their image and is concerned about the bad press.
On a recent visit to the corporate headquarters of both Companies, I could see very little evidence of any such concern. Despite having employees in the front row of what appeared to be a soft sue presentation, General Manager Robert Muysken was relaxed and confident as he addressed investors and shareholders. He repeatedly emphasized that he expected both companies to perform well in the current climate and that he looked forward to strong cash flow as both companies made progress in their operations. He explicitly declined any comment on the current trends in either company’s lawsuit funding.
Regarding their compensation and the mix of their compensation between their own performance and the performance of the business, it seems both companies are performing well.
While Dollar General’s CEO is receiving a record salary, their other managers all except one are receiving compensation in excess of the yearly salary of their last colleague. And there is no indication that any of the managers have received anything substantial in relation to their performance as an employer. Similarly, there is nothing to suggest that the financial statements of either company favor either of their operations. There is one case in point with respect to both companies: During the fourth quarter of fiscal year 2021, Dollar General incurred an additional net loss of approximately $0.2 million.
If this is the performance of your company, it would be reasonable to expect that either you or a board of directors would make some effort to obtain monies from either the Company or any of its investors to finance plaintiffs’ lawsuits against the company.
Unfortunately, however, the efforts of most corporate directors and officers are so insufficient to assure the desired result that such lawsuit funding rarely becomes a reality. This is often due to the reluctance of investors to invest in companies that cannot demonstrate a sustainable track record of profitability.
What should you do?
If your company is demonstrating financial difficulty and you are concerned about the prospects for either your assets or your employees in the face of potential litigation, you should contact a qualified litigation funding expert who can provide guidance as to the chances of success and the likelihood of loss.
Litigation funding specialists typically will work with plaintiff’s attorneys to analyze the underlying facts that support the potential claim and to evaluate the potential impact such a claim could have on the Company. The goal of this analysis is to provide sufficient evidence to the trier of fact to establish the liability and the financial loss that would result if the lawsuit were approved.