f/k/a archives . . . real opinions & real haiku

January 29, 2004

Law Firm News is Making Me Queasy

Filed under: pre-06-2006 — David Giacalone @ 6:40 pm

“vampire”  agita?

 

Is it just me, or does the following combination of headlines from today’s NYSBA News Watch (which were listed in this exact order) cause anyone else uneasiness, distress, and good old agita?


01/29/2004    


Do you still regret passing up BIGLAW, Sherry?

Like Falling Off a (Web)log

Filed under: pre-06-2006 — David Giacalone @ 5:48 pm

tightrope

 

[believing that calm is better than complaining, haikuEsq deleted the text of this post]

 

Class (Underground) Act

Filed under: pre-06-2006 — David Giacalone @ 5:19 pm

small suave dude . . .


Evan Schaeffer at Notes from the (Legal) Underground “met” me online last week, when we engaged in a lengthy dialogue over both weblog etiquette and contingency fee ethics.   It wasn’t always pleasant, and we’re apparently still far apart on the latter topic.   Nonetheless, Evan graciously thanked me today.for participating at his site, and even linked back again to my argument against his position.   To me, that makes Evan a class act.  In addition, his weblog is filled with good humor and goods insights.  [Sorry ladies (or lads), but I cannot vouch for his hunkiness.]  If you haven’t checked it out, just what are you waiting for? 

Posner At His Best Sinking Fleet’s Class Action Settlement

Filed under: pre-06-2006 — David Giacalone @ 1:23 pm

Class action lawyers will surely be heading their shopping carts away from the 7th Circuit’s check-out aisle, after today’s decision in Mirfasihi v. Fleet Mort. Corp.  And district court judges might be slipping out the backdoor, too. (7th Cir, No. 03-1069, Jan. 29, 2004)  In a tour de force of Posnerian logic and rhetoric, the class action settlement involving Fleet’s distribution of customer information was unanimously set aside today. (Thanks to Howard for the pointer)


compass gray . . .


You didn’t need a compass to tell which way this opinion was heading, once Judge Richard A. Poser asked (emphasis added): 


Would it be too cynical to speculate that what may be going on here is that class counsel wanted a settlement that would give them a generous fee and Fleet wanted a settlement that would extinguish 1.4 million claims against it at no cost to itself?”

Judge Poser’s patience was also wearing a bit thin, when he penned (emphasis added): “Fleet, joined by the class counsel, argues that the members of the pure information-sharing class didn’t really receive nothing in exchange for giving up their claims; they received the emotional satisfaction of knowing that Fleet had been forced to give up its profits. That is a preposterous argument. . . . The idea that a rational fiduciary would surrender a claim worth $35 million in exchange for the satisfaction of knowing that his wrongdoer had been forced to pay $243,000 to members of another class staggers the imagination.”

 

Here are a few other points made in the opinion, which chides the plaintiffs’ attorneys for overlooking their fiduciary duties and the district court judge for ignoring his obligation to assure (emphasis added): 


A colorable claim may have considerable settlement value (and not merely nuisance settlement value) because the defendant may no more want to assume a nontrivial risk of losing than the plaintiff does.

“The part of the $2.4 million that is not claimed will revert to Fleet, and it is likely to be a large part because many people won’t bother to do the paperwork necessary to obtain $10, or even a somewhat larger amount.


“The district judge has approved a handsome fee for the class lawyers, $750,000, despite the meagerness of the relief agreed to in the settlement.


“Because class actions are rife with potential conflicts of interest between class counsel and class members [cites omitted], district judges presiding over such actions are expected to give careful scrutiny to the terms of proposed settlements in order to make sure that class counsel are behaving as honest fiduciaries for the class as a whole.”


“Unfortunately the district judge’s decision approving the settlement does not discuss the settlement’s questionable features—not only the one we’ve stressed, namely the denial of any relief to an entire class, the kind of thing that led to rejection of the settlements in Crawford v. Equifax Payment Services, Inc., 201, but also the reversion of unclaimed refunds to the putative wrongdoer and the fact that the class that was denied relief did not have separate counsel from the counsel for the favored class.”


“In Reynolds v. Beneficial National Bank, supra, 288 F.3d at 284-85, we emphasized the district judge’s duty in a class action settlement situation to estimate the litigation value of the claims of the class and determine whether the settlement is a reasonable approximation of that value.  [cites omitted] The district judge in this case made no estimate of the value of the legal claims of the information-sharing class.”


Summing up, “So the settlement cannot stand.”

Posner At His Best Sinking Fleet’s Class Action Settlement

Filed under: pre-06-2006 — David Giacalone @ 1:23 pm

Class action lawyers will surely be heading their shopping carts away from the 7th Circuit’s check-out aisle, after today’s decision in Mirfasihi v. Fleet Mort. Corp.  And district court judges might be slipping out the backdoor, too. (7th Cir, No. 03-1069, Jan. 29, 2004)  In a tour de force of Posnerian logic and rhetoric, the class action settlement involving Fleet’s distribution of customer information was unanimously set aside today. (Thanks to Howard for the pointer)


compass gray . . .


You didn’t need a compass to tell which way this opinion was heading, once Judge Richard A. Poser asked (emphasis added): 


Would it be too cynical to speculate that what may be going on here is that class counsel wanted a settlement that would give them a generous fee and Fleet wanted a settlement that would extinguish 1.4 million claims against it at no cost to itself?”

Judge Poser’s patience was also wearing a bit thin, when he penned (emphasis added): “Fleet, joined by the class counsel, argues that the members of the pure information-sharing class didn’t really receive nothing in exchange for giving up their claims; they received the emotional satisfaction of knowing that Fleet had been forced to give up its profits. That is a preposterous argument. . . . The idea that a rational fiduciary would surrender a claim worth $35 million in exchange for the satisfaction of knowing that his wrongdoer had been forced to pay $243,000 to members of another class staggers the imagination.”

 

Here are a few other points made in the opinion, which chides the plaintiffs’ attorneys for overlooking their fiduciary duties and the district court judge for ignoring his obligation to assure (emphasis added): 


A colorable claim may have considerable settlement value (and not merely nuisance settlement value) because the defendant may no more want to assume a nontrivial risk of losing than the plaintiff does.

“The part of the $2.4 million that is not claimed will revert to Fleet, and it is likely to be a large part because many people won’t bother to do the paperwork necessary to obtain $10, or even a somewhat larger amount.


“The district judge has approved a handsome fee for the class lawyers, $750,000, despite the meagerness of the relief agreed to in the settlement.


“Because class actions are rife with potential conflicts of interest between class counsel and class members [cites omitted], district judges presiding over such actions are expected to give careful scrutiny to the terms of proposed settlements in order to make sure that class counsel are behaving as honest fiduciaries for the class as a whole.”


“Unfortunately the district judge’s decision approving the settlement does not discuss the settlement’s questionable features—not only the one we’ve stressed, namely the denial of any relief to an entire class, the kind of thing that led to rejection of the settlements in Crawford v. Equifax Payment Services, Inc., 201, but also the reversion of unclaimed refunds to the putative wrongdoer and the fact that the class that was denied relief did not have separate counsel from the counsel for the favored class.”


“In Reynolds v. Beneficial National Bank, supra, 288 F.3d at 284-85, we emphasized the district judge’s duty in a class action settlement situation to estimate the litigation value of the claims of the class and determine whether the settlement is a reasonable approximation of that value.  [cites omitted] The district judge in this case made no estimate of the value of the legal claims of the information-sharing class.”


Summing up, “So the settlement cannot stand.”

Fen-Phen Plaintiff Challenges Her 40% Contingency Fee

Filed under: pre-06-2006 — David Giacalone @ 8:30 am

strike it rich . . .

 

Carolyn Elefant at MyShingle reports this morning on a law suit out of Utah, where a successful fen-phen plaintiff is attacking, among other things, the 40% contingency fee charged by her attorney — arguing that the attorney did very little work and faced very little risk in the case, making the percentage charged unreasonably high.  (Salt Lake Weekly, “Contentious Contingency,” by Shane Johnson, Jan. 29, 2004)

 

You don’t have to come to this site very often to know that I believe a contingency fee must relate to the apparent risk to the lawyer (e.g., click here), so I will be looking closely to the results of this suit.   Carolyn asks what I believe is a frequent but inapt question about the choice facing p/i clients.  Here’s her statement and my Comment:



“I can’t help but wonder this: if the clients had been given the option up front of paying, say, $10,000 out of pocket to retain Barton to pursue their claim or alternatively, to pay nothing and allow him to recover 40 percent, which would they have taken? Of course, that didn’t happen, so we’ll never know. However, I often wonder how willing clients would be to risk a decent sum of their own money for a purportedly “sure thing.” If a client isn’t willing to take this risk, shouldn’t the attorney then be compensated at a higher-than-typical average rate for assuming risk in the form of fronting case costs and working on contingency?”

DAG Comment:


The client should not have to choose between a large upfront payment to a p/i lawyer and an unreasonably large contingency percentage fee. The ethical lawyer gives the fully informed client the choice between (a) paying an hourly fee, after being given a good faith estimate of the likely number of hours the firm will put into the case (and perhaps the chance to pay on credit, if a recovery is highly likely), AND (b) a contingency fee level that is related to the perceived risk for the lawyer, and not simply a “standard” rate. See, e.g.,Fiduciary Duties and Contingency Fees  harvard.edu].

Fen-Phen Plaintiff Challenges Her 40% Contingency Fee

Filed under: pre-06-2006 — David Giacalone @ 8:30 am

strike it rich . . .

 

Carolyn Elefant at MyShingle reports this morning on a law suit out of Utah, where a successful fen-phen plaintiff is attacking, among other things, the 40% contingency fee charged by her attorney — arguing that the attorney did very little work and faced very little risk in the case, making the percentage charged unreasonably high.  (Salt Lake Weekly, “Contentious Contingency,” by Shane Johnson, Jan. 29, 2004)

 

You don’t have to come to this site very often to know that I believe a contingency fee must relate to the apparent risk to the lawyer (e.g., click here), so I will be looking closely to the results of this suit.   Carolyn asks what I believe is a frequent but inapt question about the choice facing p/i clients.  Here’s her statement and my Comment:



“I can’t help but wonder this: if the clients had been given the option up front of paying, say, $10,000 out of pocket to retain Barton to pursue their claim or alternatively, to pay nothing and allow him to recover 40 percent, which would they have taken? Of course, that didn’t happen, so we’ll never know. However, I often wonder how willing clients would be to risk a decent sum of their own money for a purportedly “sure thing.” If a client isn’t willing to take this risk, shouldn’t the attorney then be compensated at a higher-than-typical average rate for assuming risk in the form of fronting case costs and working on contingency?”

DAG Comment:


The client should not have to choose between a large upfront payment to a p/i lawyer and an unreasonably large contingency percentage fee. The ethical lawyer gives the fully informed client the choice between (a) paying an hourly fee, after being given a good faith estimate of the likely number of hours the firm will put into the case (and perhaps the chance to pay on credit, if a recovery is highly likely), AND (b) a contingency fee level that is related to the perceived risk for the lawyer, and not simply a “standard” rate. See, e.g.,Fiduciary Duties and Contingency Fees  harvard.edu].

Powered by WordPress