In class actions, we have negotiations between two organizations. On one side is a corporation or firm, an organization in the truest sense. On the other is an "organization" of class members represented by one or more plaintiffs. Does this affect the way that negotiations are handled?
Almost certainly. As Professors Mark Gradstein, Shmuel Nitzan, and Jacob Paroush wrote twenty years ago in their Public Choice article, Collective Decision Making and the Limits on the Organization’s Size, one reason organizations cannot grow beyond a certain size is that making decisions becomes too difficult. Or, as they put it:
Expansion confers both benefits and costs. Benefits include improvement in the organization’s decisions from inclusion of another mind involved with the resolution of the problems the organization faces. The costs include a lengthening of the decision-making process which may result in an increase in the direct payment for managerial time as well as an increase in the likelihood of failure to make decisions on time.
(Emphasis added.) In other words, the larger the organization, the harder it is to make quickly when necessary.
The authors also consider how the "technology" of decision making affects how large the organization can grow. By "technology," the authors mean the rule for making decisions (say, majority rule, or representation under Rule 23). But it also makes sense that communications technology (like conference call capability, email, or some kind of social media) may influence the size of an organization.
The application to class-action negotiations should be fairly obvious. The larger the defendant, the more defense counsel will have to make sure it knows exactly who to consult at the client when working out a deal, particularly if counsel is under time pressure. But, equally important, the more diverse the class, the more the defendant will have to make sure that it’s addressing all of the major interests within the class. To do otherwise may invite objections to, and ultimately rejection of any deal the parties bring before the court.
This analysis, of course, assumes a best-case for having multiple decision makers. The article does not consider whether the number of decision makers may actually decrease the quality of the decisions. Instead, they assume that adding decision makers enhances the quality of the decision, because more brains are better than fewer. For some kinds of decisions, this may well be true. But for many other cases, too many cooks can spoil the broth. (This is the difference between crowdsourcing and gridlock.) Of course, where that is the case, you’re not really deciding between benefits and costs, just costs and more costs.