Mass Tort Litigation Blog

The Trouble with All-or-Nothing Settlements

My new paper, The Trouble with All-or-Nothing Settlements, is now available on SSRN.  I presented it at last week's symposium in Kansas on "Aggregate Justice: Perspectives Ten Years After Amchem and Ortiz."  The theme of the conference got me thinking about the shift in mass dispute resolution.  The failed settlements in Amchem and Ortiz were driven by defendants' insistence on peace, and defendants today often demand similar comprehensiveness.  Much of the action, however, has shifted from settlement class actions to non-class aggregate settlements.  Rather than peace through Rule 23, defendants try to obtain peace by negotiating settlements with all-or-nothing clauses, mandatory withdrawal provisions, or other terms to ensure comprehensiveness.  Too often, however, such all-or-nothing settlements lead to ethical problems.  This paper is my attempt to unpack the various problems engendered by such deals.  Here's the abstract:

When defendants settle litigation involving multiple plaintiffs, they often insist that they will settle only if they obtain releases from all or nearly all of the plaintiffs in the group. Judges, lawyers, and academics largely accept the drive for comprehensive settlements as a given, and many embrace such settlements as a positive goal. All-or-nothing settlements, however, create uncommon pressures and opportunities for abuse. Exploring a number of recent mass settlements that have led to disciplinary proceedings, civil litigation, and criminal prosecutions, this article shows the pressures and opportunities that arise out of defendants' insistence on bringing all claimants into a deal.

The article describes seven types of ethical problems created by demands for fully inclusive settlements. First, all-or-nothing settlements create client-client and lawyer-client conflicts of interest. Second, such settlements exacerbate problems concerning the allocation of settlement funds, including incentives to misallocate. Third, they create a risk of strategic hold-outs as savvy clients may attempt to extort additional money by withholding consent. Fourth, they create an incentive for lawyers to keep settlement money in reserve as a slush fund to ensure full participation, leading to problems of misallocation and client deception. Fifth, they generate loyalty problems by pressuring lawyers to withdraw from representing non-settling clients. Sixth, they create special problems concerning clients’ informed consent to aggregate settlements. And seventh, they introduce a risk of collusion as the interest of plaintiffs’ counsel aligns with the defendant’s interest in getting every plaintiff to sign on to the deal. Although all-or-nothing settlements provide peace for defendants and value for claimants, the troubles they engender suggest that the current love affair with comprehensive settlements - evident in academic writings, judicial pronouncements, and defendant demands - should be tempered by a realistic appreciation of the ethical downside.

I'd be very interested in any comments readers may have.  If you have thoughts or suggestions either about the overall analysis or about any of the specific settlements discussed in the paper, please feel free to e-mail me directly or to comment on the blog.

HME

Fraud in the DBCP Lawsuits

The Wall Street Journal's Steve Stecklow offers a detailed article that's riveting reading.  Here's a link to Judge Chaney's opinion on fraud on the court in the DBCP lawsuits.

BGS

Kentucky Fen-Phen Lawyers Given Long Prison Sentences

Attorneys William Gallion and Shirley Cunningham Jr. were sentenced yesterday to 25 and 20 years, respectively, for defrauding clients out of millions of dollars in connection with a settlement of fen-phen claims.  They were ordered, in addition, to pay over $127 million in restitution and to forfeit $30 million to the government.  Both were already disbarred.  Although lighter than the prosecutors recommended, these sentences mean that Gallion and Cunningham will probably spend most of the remainder of their lives in prison; both men are in their 50s and the federal system does not allow parole.  The defendants plan to appeal.

According to this news report from the Louisville Courier-Journal, U.S. District Judge Danny Reeves said that both lawyers were guilty of "unbridled greed" and neither showed "a grain of remorse."  Had they taken what they were entitled to, each would have earned millions of dollars in legitimate fees, but Judge Reeves said that it “appears to the court that they just wanted more.”  Bloomberg reports that the judge stated that the sentences are intended to deter other lawyers from stealing settlement funds.

The case involved a settlement of over 400 fen-phen plaintiffs who had opted out of the nationwide diet drugs settlement class action reached by Wyeth (formerly American Home Products).  After thousands of plaintiffs nationwide opted out of the settlement class action, Wyeth proceeded to negotiate aggregate settlements with plaintiffs' law firms around the country.  In Kentucky, a state court had certified a fen-phen class action for litigation but Wyeth negotiated a settlement of the individual clients' claims on condition that the class be decertified.  The attorneys -- Gallion, Cunningham, and Melbourne Mills -- had individual retainer agreements with their clients that provided for contingent fees of 30% and 33%.  The government charged that the lawyers took far more than they were entitled to.  It charged that the lawyers lied to their clients about the settlement allocations, took millions of dollars in court-awarded fees in addition to their contingent fees, and took millions more to set up a foundation called the Kentucky Fund for Healthy Living that would pay them as salaried managers.  Mills was initially charged along with Gallion and Cunningham, but he was acquitted in an earlier trial where he successfully contended that he was too drunk to have been guilty of the crime.  According to the Bloomberg report, Gallion and Cunningham tried to avoid responsibility by arguing that they didn't understand what they were doing and were following another lawyer's advice:  "Lawyers for Gallion and Cunningham argued that they were innocent, inexperienced in handling large awards in class-action suits and made mistakes. They tried to blame Cincinnati lawyer Stan Chesley for many of the men’s decisions."

At the trial, I testified for the government as an expert on questions of civil procedure and legal ethics.  The case raised questions about the intersection of class actions and non-class aggregate settlements and about lawyers' duties in connection with class and non-class settlements.  The court, after a Daubert hearing, agreed with my analysis of the issues and disqualified the defendant's expert from testifying, finding his proposed testimony unreliable.  U.S. v. Gallion, 257 F.R.D. 141 (E.D. Ky. 2009).

In one of many odd twists, the case captured the attention of sports fans because Gallion and Cunningham were part owners of the champion racehorse Curlin.

HME

Elizabeth Nowicki on Apologies and Good Lawyering

Elizabeth Nowicki (Tulane) has posted to SSRN her article, Apologies and Good Lawyering.  Here's the abstract:

In everyday life, apologies are common. For example, if one shopper bumps into another in a crowded grocery store, apologies abound. Or if a child on the playground accidentally crashes into another child, the crashing child will apologize. If the crashing child does not apologize, a teacher, playground monitor, or parent will instruct the child to apologize, because apologizing for hurting someone is the 'right' thing to do. This apology norm largely disappears if the crashing child grows up and becomes a lawyer, however. Despite empirical research showing that apologies have value in settlement, facilitate cost-effective dispute resolution, and are important to injured parties, it appears that lawyers do not regularly either suggest that a client ask for or suggest that a client offer an apology as part of a conflict resolution. Why does the instinct to facilitate dispute resolution with a sincere apology disappear when students enter law school or when law students become lawyers? Some suggest that lawyers – and consequently the clients they advise – disavow apologies as a matter of defense because apologies are viewed as costly admissions of liability. Others suggest that attorneys for injured parties have no obvious incentives to suggest apologies since quick dispute resolution results in smaller legal fees. Still others suggest that those who become lawyers tend to be logical and analytical, and tend to eschew conduct viewed as purely emotive, such as apologizing. This paper shows that a good lawyer must recognize the value of apologies in conflict resolution, litigation, and settlement, and this paper provides guidance for offering apologies.

BGS

Art Hinshaw and Jess Alberts on Attorney Negotiation Ethics

Art Hinshaw (Arizona State) and Jess Alberts have posted their article, Doing the Right Thing: An Empirical Study of Attorney Negotiation Ethics.  Here's the abstract:

The code of ethical conduct for lawyers -- the American Bar Association’s Model Rules of Professional Conduct (the “Model Rules”) -- legitimizes a certain amount of dissembling and misdirection in the negotiation realm, only prohibiting legal negotiators from making fraudulent misrepresentations about material matters. To determine if attorneys are meeting this low standard, the authors surveyed practicing lawyers and asked them if they would agree to engage in a fraudulent pre-litigation settlement scheme if a client requested them to do so. Nearly one-third of the respondents indicated they would agree to the client’s overtures, and only half indicated that they would refuse the client’s overtures, thereby following the Model Rules. Follow-up questioning suggested several reasons for these results: there appears to be substantial misunderstanding as to what constitutes a fraudulent misrepresentation, there seems to be considerable confusion surrounding the rule’s operative term “material fact,” and it appears that some of the attorneys believe that other legal rules, including other portions of the Model Rules, either gave them permission or required them to engage in the fraudulent negotiation scheme. To rectify these apparent misunderstandings among practicing lawyers, the article offers three interdependent means for improving lawyer negotiation ethics – rule clarification, education, and increased rule enforcement.

BGS 

The Law of the Banana, Part II

Article in the Los Angeles Times -- Pesticide cases could be upended, by Victoria Kim and Alan Zarembo.  Here's an excerpt:

The unraveling of multimillion-dollar Los Angeles cases alleging that Nicaraguan men had been sterilized by pesticide exposure is now threatening to upend hundreds of other claims in U.S. courts, as judges examine charges that plaintiffs' lawyers orchestrated an extraordinary international fraud.

At the center of the claims is the pesticide DBCP and allegations that workers in banana plantations in Central America and Africa were harmed by exposure to the chemical.

In November 2007, a Los Angeles jury awarded $5.7 million to six Nicaraguan men who sued Dole Food Co. and chemical companies, alleging they had been made sterile by DBCP on Dole's plantations. The amount was later reduced by a judge and is now on appeal. The case will probably be thrown out entirely in the wake of a judge's findings of fraud in two related cases.

Those cases against Dole, Dow Chemical Co. and AMVAC Chemical Corp. were set to go to trial this year. Then, in April, Superior Court Judge Victoria Chaney dismissed the claims, ruling that U.S. lawyers and their Nicaraguan partners had concocted the cases through an audacious fraud, recruiting plaintiffs who had never worked on banana plantations, training them to lie on the witness stand and then waging a campaign of intimidation to prevent the scheme from being uncovered.

For more, see Professor Lahav's prior blog post, The Law of the Banana.

BGS

The Law of the Banana

Los Angeles Superior Court Judge Victoria Chaney dismissed two tort cases against Dow Chemical and Dole as fraudulent.  The suits alleged that chemicals manufactured by the defendants and used on banana plantations caused sterility.  Law.com reports of the lawyers' misconduct (see the full article here) - the Edelman referenced below is the defendants' attorney:

They offered a $20,000 bounty in Nicaragua for information about witnesses, Edelman said, and saw to it that Dole investigators were subject to intimidation by police and other officials. The court testimony that led to Chaney's ruling detailed how a group of Nicaraguan lawyers, in apparent collusion with local officials, judges and lab technicians, rounded up 10,000 men whom they coached to claim sterility -- and to blame that sterility on Dole's chemicals. In fact, many of the men had never worked for Dole, and many weren't sterile. Some even had multiple children. "There [are] massive amounts of evidence demonstrating the recruiting and training of fraudulent plaintiffs to bring cases in both the Nicaraguan and U.S. courts," Chaney wrote.

The transcript of the hearing in which the judg excoriated the plaintiffs' lawyers can be found at this link.  She will hold a contempt hearing and potentially refer the lawyers to the bar disciplinary committee.

(H/T Legal Ethics Forum - Roy Simon gives this the cute title "Banana Lawyer Slips, Tort Cases Fall")

ADL

Second Wall Street Journal Editorial on Plaintiffs' Lawyers Hired for Contingency Fee by State of Pennsylvania

Following last week's editorial, the Wall Street Journal expanded its discussion in today's editorial.  Here's an excerpt:

Our editorial last week on the state lawsuit racket has created a stir in Pennsylvania, where Governor Ed Rendell has finally had to defend his "pay-to-play" relationship with Houston plaintiffs lawyer F. Kenneth Bailey. That's the good news. The rest of this underreported story is that Mr. Bailey has been running a nationwide "pay-to-sue" operation with Democratic state Attorneys General.

As we reported, Mr. Bailey made repeated donations to Mr. Rendell's 2006 re-election campaign in the months before his law firm was given a no-bid, contingency-fee contract to sue Janssen Pharmaceuticals on the state's behalf. Mr. Rendell told the Philadelphia Inquirer -- whose reporters have roused from their slumbers -- that "there wasn't the slightest bit of pay-to-play here." But the Governor was obliged to acknowledge that Mr. Bailey had approached the state about suing Janssen. Normally, the state Attorney General would handle such legal matters, but the AG rebuffed Mr. Bailey. Mr. Rendell's office then decided to hire the law firm that was also his major campaign donor. Smile if you think the two were related.

The episode speaks volumes about Mr. Rendell's political ethics, but more important is what it reveals about the plaintiffs bar's latest "business" model. Mr. Bailey's Janssen suit is part of a national pay-to-sue operation, as he and his Bailey, Perrin & Bailey law firm have taken their pre-packaged lawsuit to many states. Janssen's complaint asking the Pennsylvania Supreme Court to dismiss Bailey Perrin from the suit notes that the firm has "taken on numerous engagements similar to this action, including representation in the states of Louisiana, South Carolina, Arkansas, Mississippi and New Mexico."

BGS

Wall Street Journal on Plaintiffs' Lawyers Hired for Contingency Fee by State of Pennsylvania

Editorial in the Wall Street Journal -- The State Lawsuit Racket: A case study in the politician-trial lawyer partnership.  Here's an excerpt:

State Attorneys General regularly hire private plaintiffs lawyers on a contingency-fee basis to prosecute cases. The trial bar returns the favor with campaign donations to state office holders. And despite the inherent conflicts of interest and questionable ethics of the practice, corporate defendants have rarely challenged such arrangements. Which is why a motion pending before the Pennsylvania Supreme Court is so remarkable -- and deserves more public attention.

Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson, is a defendant in a lawsuit filed by the state of Pennsylvania over Janssen's antipsychotic drug Risperdal. The state alleges that Janssen has improperly marketed the drug for off-label uses not approved by the Food and Drug Administration. Janssen denies the accusation, but the merits of the case -- which hasn't gone to trial yet -- are not what's at issue in the motion before the court.

Rather, what's at issue is the fact that the civil action against Janssen is being prosecuted on behalf of the state by Bailey, Perrin & Bailey, a Houston law firm. And it turns out that Pennsylvania Governor Ed Rendell's Office of General Counsel was negotiating this potentially lucrative no-bid contingency fee contract with Bailey Perrin at the same time that the firm's founding partner, F. Kenneth Bailey, was making repeated campaign contributions totaling more than $90,000 to the Democratic Governor's 2006 re-election bid.

BGS

Wall Street Journal Editorial on Silicosis Fraud Follow-Up

Here's an excerpt from the Journal's editorial, The Silicosis Abdication: A scam that deserves as much scrutiny as Lerach and Scruggs:

It is going on four years since a Texas judge blew the whistle on widespread silicosis fraud, exposing a ring of doctors and lawyers who ginned up phony litigation to reap jackpot payouts. So where's the enforcement follow-up?

That's an especially apt question given news that New York's State Board for Professional Medical Conduct has finally revoked the license of Dr. Ray Harron. He was among the doctors who Texas Judge Janis Graham Jack showed had fraudulently diagnosed thousands of plaintiffs with silicosis, a rare lung disease. These doctors were later called to testify in Congress, where many, including Dr. Harron, took the Fifth Amendment.

Dr. Harron has since lost his medical licenses in California, New Mexico, Texas, Florida, North Carolina and Mississippi. This is progress, though hardly sufficient. Among the questions Congress asked state departments of health during the silicosis hearings were why those bodies hadn't moved to shut down these doctors and their mobile X-ray vans at the time they were committing medical malpractice.

BGS

Flight 3407 Lawsuits and the Ethics of Client Solicitation

Litigation over Continental Flight 3407, which crashed near Buffalo last week, is inevitable.  But for lawyers interested in representing the plaintiffs, New York's new ethics rules on lawyer advertising and solicitation impose a significant constraint.  Over at the NY Personal Injury Law Blog, Eric Turkewitz (here and here) has been watching how law firms have tried to market themselves in the wake of the crash.  Interesting.  (Hat tip:  Overlawyered)

HME

Southwestern University Law Review Asbestos Symposium Issue

The Southwestern University Law Review has published its issue in connection with the symposium, Perspectives on Asbestos Litigation, which Professor Alan Calnan and I co-chaired here at Southwestern Law School on Friday, January 18, 2008.  Here are the articles contained in the issue:

Alan Calnan & Byron Stier, Perspectives on Asbestos Litigation: Overview and Preview, 37 Sw. U. L. Rev. 459 (2008).  Download calnan_stier_introduction_final_pdf.pdf

Mark A. Behrens & William L. Anderson, The "Any Exposure" Theory: An Unsound Basis for Asbestos Causation and Expert Testimony, 37 Sw. U. L. Rev. 479 (2008).  Download behrens_anderson_article_final_pdf_121808.pdf

Helen E. Freedman, Selected Issues in Asbestos Litigation, 37 Sw. U. L. Rev. 511 (2008).  Download freedman_article_final_pdf_121808.pdf

Michael D. Green, Second Thoughts About Apportionment in Asbestos Litigation, 37 Sw. U. L. Rev. 531 (2008).  Download green_article_final_pdf_121808.pdf

Phil Harley, Judicial and Practical Perspectives: Transcript of Phil Harley, 37 Sw. U. L. Rev. 533 (2008).  Download harley_transcript_final_pdf_121808.pdf

David G. Owen, Against Priority, 37 Sw. U. L. Rev. 557 (2008).  Download owen_article_final_pdf_121808.pdf

Keith N. Hylton, Asbestos and Mass Torts with Fraudulent Victims, 37 Sw. U. L. Rev. 575 (2008).  Download hylton_article_final_pdf_121808.pdf

James A. Henderson, Sellers of Safe Products Should Not Be Required to Rescue Users From Risks Presented by Other, More Dangerous Products, 37 Sw. U. L. Rev. 595 (2008).  Download henderson_article_final_pdf_121808.pdf

Gregory C. Keating, The Heroic Enterprise of the Asbestos Cases, 37 Sw. U. L. Rev. 623 (2008).  Download keating_article_final_pdf_121808.pdf

Richard Nagareda, Public and Private Law Perspectives: Transcript of Professor Richard Nagareda, 37 Sw. U. L. Rev. 659 (2008).  Download nagareda_transcript_final_pdf_121808.pdf

Howard Erichson, Public and Private Law Perspectives: Transcript of Professor Howard Erichson, 37 Sw. U. L. Rev. 665 (2008).  Download erichson_transcript_final_pdf_121808.pdf

Jospeh Sanders, Medical Criteria Acts: State Statutory Attempts to Control the Asbestos Litigation,  37 Sw. U. L. Rev. (2008).  Download sanders_article_final_pdf_121808.pdf

Anita Bernstein, Asbestos Achievements, 37 Sw. U. L. Rev. 691 (2008).  Download bernstein_article_final_pdf_121808.pdf  

Neil Vidmar, Social and Cultural Perspectives: Transcript of Professor Neil Vidmar, 37 Sw. U. L. Rev. 717 (2008).  Download vidmar_transcript_final_pdf_121808.pdf

Judy Sloan, Perspectives on Asbestos Litigation: Introduction to the Keynote Address, 37 Sw. U. L. Rev. 731 (2008).  Download sloan_transcript_final_pdf_121808.pdf

Barbara Rothstein, Perspectives on Asbestos Litigation: Keynote Address, 37 Sw. U. L. Rev. 733 (2008).  Download rothstein_transcript_final_pdf_121808.pdf

My many thanks again to all those who worked on the symposium and the issue, and of course to all of the speakers (including co-blogger Howard Erichson) who made for a fascinating day.

BGS

Lawyer's Conviction Affirmed for Fen-Phen Settlement Fraud

Article in the Clarion Ledger -- Fen-Phen conviction upheld: Vicksburg lawyer bilked company out of $6.7M, by Jerry Mitchell. (H/t to Pharmalot.)  Here's an excerpt:

The 5th U.S. Circuit Court of Appeals on Monday upheld the conviction of Vicksburg lawyer Robert Arledge, convicted of bilking the drug company Wyeth of more than $6.7 million over the diet drug Fen-Phen.

"We find that there was sufficient evidence to support the jury's verdict as to all counts," the court wrote.

U.S. District Judge David Bramlette sentenced Arledge to six years in prison for knowingly allowing clients to make claims of about $250,000 each for health complications although they had no legitimate reason.

Arledge was the sole lawyer charged in the joint Internal Revenue Service-FBI investigation of fraudulent claims in a $400 million settlement fund and subsequent settlement funds involving the use of Fen-Phen - a prescription diet drug pulled from the market in 1997 after research revealed it could cause heart problems.

BGS

Mel Weiss Disbarred

Here's an excerpt from In re Weiss, 2008 N.Y. Slip. Op. 09935 (App. Div. 1st Dep't Dec. 18, 2008) (h/t Overlawyered):

Specifically, respondent admitted that beginning around the 1970's and continuing at least into 2005, he and other individuals at Milberg Weiss, entered into secret, illegal kickbacks with a cohort of persons who were essentially on call to act as lead plaintiffs in class actions. The Milberg Weiss partners who agreed to this secret pay arrangement to certain named plaintiffs included, among others, William Lerach, David Bershad, and Steven Schulman ("the conspiring partners"). The individuals, who received the secret kickbacks to serve as lead plaintiffs in the class actions ("paid plaintiffs") included Howard Vogel, Seymour Lazar, Steven Cooperman and three individuals who resided in Florida. This arrangement permitted Milberg Weiss to file lawsuits faster and to gain the position as lead counsel to receive higher legal fees.

Respondent further admitted that he agreed to the secret payment agreement between Milberg Weiss and Lazar; he was aware of the payment arrangements between Milberg Weiss and the Florida plaintiffs, and personally made a cash payment to one of those plaintiffs in the late 1980's; and he was aware of the payment arrangement between Milberg Weiss and Cooperman, to whom he personally made at least one payment by check. In addition, respondent and others caused Milberg Weiss to issue checks to intermediary law firms, lawyers and other professionals with the intent and understanding that the money would be distributed to the paid plaintiffs. Respondent and others' also knew that although these payments were falsely described [*3]as, among other things, "referral fees" or "professional fees" owed by Milberg Weiss to the intermediaries, they were actually disguised kickbacks to the paid plaintiffs.

Additionally, respondent and others knew they had to conceal their payment scheme with the paid plaintiffs from the federal and state courts presiding over the class actions by making and causing to be made false and/or misleading statements in documents filed in class actions (including complaints, motions and certifications) and in testimony and discovery documents. Absent such concealment, there was a risk of disqualification because the kickbacks created an apparent conflict of interest between the paid plaintiffs and the class members they purported to represent. Respondent admitted that he knew the secret arrangement was improper. Among the false and/or misleading statements one or more of the conspiring partners caused to be submitted to the court in connection with four class actions were certifications by Cooperman, Lazar, and Vogel that they would not accept any payment for serving as a representative party beyond their pro rata shares of any recovery. These certifications falsely represented the true nature of Milberg Weiss' payment arrangement with the paid plaintiffs and constituted four racketeering acts that formed a "pattern of racketeering activity" under 18 USC § 1961(1) and (5).

BGS

WSJ on Asbestos Screenings in Michigan

The Wall Street Journal commented today in an editorial on problems involved with asbestos screenings involving a particular doctor in Michigan State Court.  Here's an excerpt from Michigan Malpractice:

One reason we know about the great silicosis legal scam is that a Texas judge was brave enough to expose doctors who'd been paid by tort lawyers to gin up phony diagnoses. So it is encouraging to see a Michigan judge now helping to expose evidence of similar medical fraud in asbestos claims.

This action is taking place in the courthouse of Wayne County Circuit Court Judge Robert Colombo, Jr. Asbestos defendants have been attempting to disqualify Michael Kelly, a physician who appears to have falsely diagnosed thousands of people with asbestos-related disease. Judge Colombo recently gave them an opening, which is already having a dramatic effect on state asbestos claims.

BGS

Impermissible Client Solicitation After Metrolink Crash in L.A.

Article in the L.A. Times -- Lawyers swoop in after the Metrolink crash, looking for clients: State bar officials cite possible professional sanctions, but the aggressive attorneys note that time is limited and the stakes are expected to be very high, by Carol J. Williams.  Thanks to Robert Glassman for bringing the article to my attention.  Here's an excerpt:

The phone rang at a rare moment between Angie Akins' frantic drives from her home and her husband's bedside in an intensive-care unit, between shuttling to her job and driving her 14-year-old daughter to after-school sports and ballet.

It was a lawyer who'd spotted her husband's name among those badly injured in the Sept. 12 Metrolink crash in Chatsworth. An attorney she had never met was urging her to retain him and sue the government railroad for all it was worth. Only a week had passed since her comfortable suburban life had been upended by tragedy.

"I didn't even write down the name, I was so upset at the time," Akins recalled. "I said I couldn't think about a lawsuit now when my husband might be dying!"

BGS

WSJ Editorial on Milberg

Editorial in the Wall Street Journal -- Justice and Milberg.  Here's an excerpt:

Poor Bernie Ebbers, the former WorldCom boss now serving a 25-year prison sentence. If he'd been a class-action lawyer, the former CEO might have ended up with a fat payout from his employer despite his felony rap. At least that's one way to look at the Justice Department's recent nonprosecution agreement with the notorious Milberg law firm.

We criticized the deal last month for letting the law firm pay Melvyn Weiss -- its former lead partner and now admitted felon -- a share of the firm's future lawsuit winnings. Milberg also picked up his legal fees and expenses. We've since learned that all of this was fine with prosecutors at Justice. Thom Mrozek, spokesman for the U.S. Attorney's office in the Central District of California, confirmed the contents of last week's letter to us from five Milberg partners saying Justice had given them the green light to keep Weiss in the financial style to which he had become accustomed

BGS

Bauer on Secret Settlements

Jon Bauer (Connecticut) has recently posted an important article on SSRN on the ethics of settlements that impede other parties' access to evidence entitled "Buying Witness Silence: Evidence Suppressing Settlements and Lawyers' Ethics."  This issue is relevant to the civil rights context and products liability.  Here is the abstract:

Lawyers frequently draft settlements that impede other parties' access to relevant evidence, through clauses that prohibit the plaintiff from making voluntary disclosures to anyone with a claim against the defendant, or forbid all uncompelled disclosures concerning the facts underlying the dispute. This Article argues that lawyers who negotiate these "noncooperation" agreements violate Rule 3.4(f) of the Model Rules of Professional Conduct, which prohibits requesting someone other than the lawyer's own client to withhold relevant information from another party, and Model Rule 8.4(d), which prohibits "conduct that is prejudicial to the administration of justice."

The conventional wisdom among practitioners and legal ethics scholars has been that lawyers may ethically negotiate any settlement terms that serve their clients' interests and are not criminal or fraudulent. (Some recent critics of settlement secrecy have argued that noncooperation settlements violate obstruction of justice statutes or other criminal laws, but the illegality argument is largely unconvincing.) This Article argues that the conventional view has looked at the problem through the wrong lens. In the ethos of the ethics codes, third party and societal interests generally take a back seat to client service, but certain types of conduct deemed especially harmful to the justice system have long been placed off-limits to lawyers because of their special role as "officers of the court."

This Article traces the history of one such duty, the principle that lawyers must not ask nonclients to refrain from voluntarily disclosing relevant information to other parties or their attorneys, and shows the important function that it plays in safeguarding the integrity of adversary adjudication. After providing a theoretical justification for liberally construing ethics rules that limit client advocacy for the sake of the adversary system's effective functioning, this Article explores what the rules mean for settlement practices. The Article examines how far the duty to allow disclosures of relevant information to other parties extends; the scope of the exception allowing noncooperation requests to be made to a client's employees; whether it is permissible to require that certain types of information, such as settlement amounts, discovery materials, privileged information, and trade secrets, not be disclosed; and what limits may be placed on the manner of disclosure. The conclusion addresses the critique that prohibiting lawyers from negotiating agreements that their clients could lawfully enter into on their own is either futile or paternalistic, and shows that it is neither.

ADL

July 2008 Issue of Skadden's Class Action Chronicle

Skadden has posted the July 2008 issue of Class Action Chronicle, which includes several interesting, brief comments by Skadden lawyers, including Communicating Ethically with Class Members, by David Clancy; an interview with Raoul Kennedy on defending class action trials; and an editor's note by Russell Jackson on trends in consumer class actions.

BGS

Melbourn Mills Cleared in Kentucky Fen-Phen Settlement

Yesterday a federal jury acquitted Melbourne Mills, one of the three attorneys accused of defrauding clients in the Kentucky fen-phen settlement. The Associated Press story can be found here.

ECB