Bum deal – a fresh look at the “common benefits” of mass claims

Comments – both on blog and in email contacts – about today’s post, Bum steer, have prompted a fresh look at the “common benefits” of mass claims.

However, less I be misunderstood,  it’s important to start this post recognizing the work of plaintiffs’ lawyers following Hurricane Katrina.  Working largely on a contingency fee basis, some at great personal sacrifice, they opened the door to justice for many who would have otherwise had both their damage claim and justice denied.  Admittedly, some eventually made a lot of money,particularly those who also invested a lot of money; others not so much; and. a few probably lost money; but, pay day, if it came at all, didn’t come until after a case had been decided or settled and then some.

Even then, the result did not always fully compensate plaintiffs for their loss or plaintiffs’ attorneys for their cost; but, individual cases are a different matter from a mass claim action – cases where a win can be a loss for everyone but the lead attorneys representing the class or mass of plaintiffs,  cases such as the one subject to this recent 5th Circuit opinion.

A federal appeals court…rejected a $21 million settlement of Hurricane Katrina damage claims that some residents had complained was unfair, and that one group said would have entitled residents and businesses to as little as $40 each.

“Hope is not an investment strategy;” yet, many were left with nothing else following Hurricane Katrina – $40, however, would hardly buy gas to drive a “chevy to the levee” and jump in.  Such hopeless results, no doubt, are behind the concerns SLABBED readers have expressed about the oil spill litigation before Judge Barbier.

One was so concerned, in fact, he sent of copy of the memorandum of support of the motion for court review of fees proposed by the” Katrina Canal Breaches Litigation Plaintiffs Liaison Counsel, MRGO Subgroup Liaison Counsel, Robinson Trial Counsel on behalf of themselves and other interested attorneys, (hereinafter collectively referred to as “Movers”)”.

“Movers” indeed!  State Farm’s legal eagle Shelia Birnbaum was one of two only two attorneys on the eight-member board of editors of the Manual for Complex Litigation – the  source document “Movers” cited for the terms of the proposed “common benefits” agreement! (Memorandum below in scribd format)

Judge Duval denied the motion as “premature” but the thought of it reaching maturity would likely produce the “absurd result” of greater “common benefit” to the Court and the “Movers” than the plaintiffs who suffered the loss.  (Order below in scribd format)

Consolidating cases first benefits the Court with the claimed “efficiency” such provides.  It next benefits the chosen few who form the Steering Committee or whatever the body of various liaison attorneys is called.  After those benefits, it’s a toss up – but I doubt there’s much to be caught by the small town lawyers who stepped up and did without to help family, friend or neighbor.

As to those who actually suffered the loss, I suppose I was lucky to get a coupon entitling me to a discount on my next purchase from T.J.Maxx (assuming I completed the paperwork needed to actually receive the coupon).  Coupons don’t cut it when you’ve lost your home or your means of earning a living – and neither does a token settlement.

Is there a solution that’s fair to all? the Court? the Plaintiffs’ Attorneys who do the “heaving lifting”? all Plaintiff Attorneys? the Plaintiffs?

SLABBED reports. You decide.

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3 thoughts on “Bum deal – a fresh look at the “common benefits” of mass claims”

  1. The last paragraph of that order is interesting. Is the judge saying he’s going to establish a common fund to pay these attorneys? Does he appear to be saying the case law he cited in his reasons actually supports what he proposes to do? As a non-lawyer, I thought the common fund had to be created or established or discovered or something by the attorneys from the defendants; not from the pockets of other plaintiff lawyers. And, I thought the set-asides were made from the common fund; not fees set aside from other attorneys who are able to obtain a recovery for their client.

    If there is no litigation or settlement class created, then how do the committee lawyers become entitled to share fees obtained by a lawyer with a bona-fide attorney client contract, and whose case was stayed while the Robinson case could proceed with preference? BTW, doesn’t a client have to approve a fee split or is this a different issue?

  2. All good questions, NAAS, but I’m not a lawyer either. However, if I represented Robinson and my work on his behalf helped everyone in the group but him win, I’d expect some compensation.

    None of this is about anything other than making certain there’s no incentive for a low ball settlement. The attorneys that finance these big cases deserve a return on investment but not at the expense of other plaintiffs or their attorneys.

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