A potentially disturbing warning has come out of California (paid subscription required): class action plaintiffs' attorneys' fees might [shudder] come to be based upon actual work done. While this isn't disturbing to American banks and other businesses who've been victimized by subject to class action lawsuits in which the plaintiffs are rewarded with a Pez dispenser and a signed copy of "Transcendental Meditation The Trump Way," while their attorneys rake in bazillions a tidy sum, it must be disconcerting to the vultures lawyers who run class-action firms. We'll try to say a prayer for all of them (my preference would be "Lead all souls to heaven, especially those most in need of thy mercy").
Typically, attorneys who represent plaintiffs in class actions—like employees accusing a company of discrimination, or customers claiming a product misled them—are paid a percentage of any money recovered for their clients. The payouts, which nationally average about 25% of the collected funds, can be substantial.
But a Berkeley, Calif., lawyer who has waged a decadeslong crusade to reduce class-action fees is pushing to pay lawyers based only on the hours they put into a case.
“Every dollar class lawyers get for their fee is a dollar the class doesn’t get for recovery,” the lawyer, Lawrence Schonbrun, said.
He lost his fight in two lower courts, but the Supreme Court of California decided earlier this year to consider the issue and could rule in the coming months. Mr. Schonbrun argues that California case law requires the hourly method to be applied, an interpretation that others dispute.
The California appeal stems from a 2004 wage-and-hour class action against staffing firm Robert Half. In 2013, a judge approved a $19 million settlement on behalf of 4,000 employees, who said they were denied overtime pay and other benefits. Using the percentage method, $6.33 million was slated for the plaintiffs’ attorneys.
Mr. Schonbrun, who represents one of the employees, is trying to convince the court that the lawyers should instead be paid according to the amount of work they put in.
But the plaintiffs’ lawyers say in a court filing that if their percentage-based fee is overturned, “class counsel will be less inclined to take on complex class action suits against large, well-financed institutions.” They haven’t been paid while the appeal works its way through the courts. Robert Half said it doesn’t have a stake in the fee dispute.
Being less inclined to take on complex class action suits against large, well-financed institutions" is a bad thing?
The CFPB would think so. Last month, it proposed to ban arbitration provisions that would prevent consumer financial class action lawsuits. The political left ant the trial lawyers' bar in this country have been making whoopee together for years, so that's to be expected. On the other hand, if trial lawyers only get paid for the actual hours they work, that still will act as a deterrent to class action lawsuits no matter what the CFPB does regarding arbitration provisions. I mean, why would a lawyer want to only get paid for what he or she actually does? Are you kidding me??
Before we get all misty-eyed about the folks who are taking this fight to the California Supreme Court, however, let's drill down a bit deeper into their motivation.
Mr. Schonbrun, who began his fight against high fees in the late 1990s, is part of an active field of so-called fee objectors, who step into class actions to challenge the plaintiffs’ attorneys’ fees.
Such objectors sometimes make side deals with plaintiffs’ lawyers looking to avoid prolonging a lawsuit, and they can be paid as much as $1 million, those familiar with the practice say. Mr. Schonbrun said he has filed objections in 150 cases and in some instances received more than $100,000 for his role in reducing a fee.
You read that right: some of the professional "fee objectors" cut deals with class action lawyers to ease up in return for the payment of some cold, hard cash. All sides of the bar in this struggle make hard examples of "soft and cuddly."
As usual, the people getting the short end of the stick are the plaintiffs.
Theodore Case, an American Airlines pilot in Atlanta who has been a plaintiff in a class-action labor dispute for more than 12 years, said he unsuccessfully fought against his lawyers to reduce their fee request of $15.5 million, based on a 30% calculation of a settlement. When paying a percentage, “the only people it benefits is the attorneys,” said Mr. Case, who received about $113,700 of the settlement money.