Wednesday, July 28, 2010

Feinberg to Disclose Compensation for Administering BP Fund

The Associated Press reports that Ken Feinberg announced on Tuesday that he will disclose BP's compensation to him for administering the $20 billion BP oil-spill claims fund, after he had previously stated such information would be "confidential" and "between [him] and BP."  Feinberg now concedes the "perception of a conflict."  Feinberg also said the he might request that than an outsider "with great credibility" set his salary.  (H/t to Ted Frank of the Center for Class Action Fairness for apprising me of this development.)  

On Sunday, July 18, I posted about the possible conflict of interest for Feinberg, arguing that he should disclose his compensation and seek a federal judge to assess his billable hours and rate, as is routinely done in class-action fee requests by class counsel.  My post triggered a short article by Forbes and a post on Legal Ethics forum.  I doubt my post had anything specifically to do with Feinberg's decisionmaking, but I'm happy that he has decided both to disclose his compensation and to seek a reputable third party to oversee his compensation, rather than BP (presumably, BP will agree to whatever the third-party determines).  As I mentioned in my earlier post, I never meant to call into question Feinberg's integrity; rather, I urged this path as a way to help the success of the fund by removing any possible conflict of interest, and I expect that both Feinberg and BP will be happy to put this issue behind them.

BGS

UPDATE -- A Forbes article today discusses my prior blog post and Feinberg's recent decision to disclose his compensation.

July 28, 2010 in Aggregate Litigation Procedures, Environmental Torts, Ethics, Informal Aggregation, Lawyers, Mass Disasters, Procedure | Permalink | Comments (0) | TrackBack (0)

Sunday, July 18, 2010

Ken Feinberg Compensation for Administering BP Fund -- A Problem and Possible Solution

Today, I saw on Bloomberg Rewind a video of several questions to Kenneth Feinberg, administrator of the $20 billion BP oil-leak compensation fund.  (Video of the interview apparently not yet available on the internet.)  At one point, the reporter asked Feinberg how he would be paid, and Feinberg responded that BP would pay because neither the victims nor taxpayers should have to pay him.  Fair enough.  But when the reporter asked Feinberg whether his compensation would be disclosed, Feinberg said that his compensation "would be confidential."  

The issue of Feinberg's compensation is interesting.  Feinberg worked pro bono on the 9/11 victim compensation fund -- a remarkable and laudable commitment given the substantial time involved.  I'm not suggesting that Feinberg should go on doing such monumental administrative tasks pro bono -- but is it appropriate for him to keep his compensation from BP confidential?  

As with the 9/11 fund, Feinberg will likely have tremendous discretion in fashioning the administrative claim mechanism for the BP compensation fund.  His exercise of discretion could possibly result in BP saving substantial funds, especially if any remainder of the $20 billion fund is to be returned to BP. Accordingly, a fair process at a minimum requires that both the amount of his compensation, and the method of compensation be disclosed publicly.  If BP has the ability to review and cut his billable hours or his billable-hour rate, for example, Feinberg might have a conflict of interest that could lead him unconsciously to favor BP in structuring the administrative fund or making awards.  As a result, in addition to public disclosure, an even better solution might be for BP and Feinberg also to agree to have a federal judge review Feinberg's billable hours, billable-hour rate, and total fee, much as is already typically done by judges reviewing class counsel fee awards in class-action settlements under Rule 23.  See Fed. R. Civ. P. 23(h) ("In a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement."). 

I of course do not mean in any way to call into question Feinberg's integrity; he is widely viewed as the nation's leading claims administrator.  But even federal judges have their compensation set publicly and in a manner that could not be said to incentivize them to favor one litigant over another.  We would never approve of a judge being paid confidentially by only one litigant -- and we shouldn't here either, especially when the claims structure could be seen as quasi-public in light of the President's central involvement and comments that "[i]n order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent, third party."  Ultimately, removing the issue of Feinberg's fees from any controversy would aid Feinberg in making the BP fund a success. 

BGS    

UPDATE -- Professor Andrew Perlman (Suffolk) comments at Legal Ethics Forum on my post above.

UPDATE #2 -- Forbes' On The Docket blog discusses my post above: Feinberg's BP Pay: Should It Be Disclosed?, by Daniel Fisher.

July 18, 2010 in Aggregate Litigation Procedures, Class Actions, Environmental Torts, Ethics, Informal Aggregation, Lawyers, Procedure, Settlement | Permalink | Comments (7) | TrackBack (0)

Monday, May 17, 2010

Mass Tort Crisis Management

Recent crises stemming from BP's oil spill and Toyota's acceleration problems have brought a swarm of media coverage, congressional hearings, regulatory agency activity, corporate news conferences, and lawsuits.  Indeed, theories of liability may stem not only from the initial traumatic incident or incidents, but from the corporation's putative mishandling of the crisis once it unfolds.  On the corporate side, what's called for is thoughtful and coherent crisis management that moves the corporation through the crisis in a way that resonates with corporate core values, thereby maintaining the value of the ongoing enterprise, and that is mindful of impending theories of liability.


Despite the great need for such a coherent approach to mass tort crisis management, what's remarkable is the apparent paucity of attention given the subject by legal scholars.  That may be because crisis management involves public relations and communications, as well as management and leadership; hence crisis management has been the focus of public relations consultants and some professors in communications schools and business schools.  But at the heart of corporate crises are frequently the law and liability, so law professors should not be absent.  Lawyers and law firms already occasionally promote their ability to handle an emerging corporate crisis by quickly assembling a team of lawyers from a broad array of areas -- see, e.g., Skadden's Crisis Management; and lawyer practitioners have delivered various continuing education talks and papers on crisis management, as well as an interesting short symposium paper by Harvey L. Pitt and Karl A. Groskaufmanis, When Bad Things Happen to Good Companies: A Crisis Management Primer, 15 Cardozo L. Rev. 951 (1994).  But while practitioners bring on-the-ground expertise, they may lack the theoretical depth and interdisciplinary zeal of law professors, and practitioners present a conflict-of-interest risk in preferring, for example, fee-heavy litigation over other methods of mass tort crisis management and resolution.  A full academic account of mass tort crisis management would entail an awareness and integration of various legal areas -- tort, procedure, litigation, ethics, regulatory action, congressional investigations and activity (including possible compensation funds), and pertinent constitutional issues -- with public relations and management.  I look forward to turning my attention increasingly to that task.


Where do you look for corporate crisis management expertise in mass torts?  Books, articles, law firms, or consultants?  Does your law firm market itself as offering corporate crisis management; if so, what's your approach?  If you work at a consulting group that does crisis management, do you have in-house lawyers that assist you or do you work with the corporation's outside counsel?  Feel free to post a resource or comment.


BGS

May 17, 2010 in Aggregate Litigation Procedures, Current Affairs, Environmental Torts, Ethics, Lawyers, Mass Disasters, Mass Tort Scholarship, Procedure, Regulation, Vehicles | Permalink | Comments (0) | TrackBack (0)

Thursday, April 29, 2010

Sebok on Alienation of Claims

Tony Sebok (Cardozo) has posted his piece "The Inauthentic Claim" to SSRN.  This is a very important paper arguing against the usual rule limiting types of litigation financing.  The implications of the thesis for mass torts is significant.  If people could sell lawsuits the landscape of aggregate litigation would change in significant ways. Here is the abstract:

This Article argues that third parties should be able to invest in lawsuits to a much greater degree than is currently permitted in most jurisdictions in the United States. The laws of assignment and maintenance limit the freedom of litigants to sell all or part of their lawsuits to strangers. I argue in the Article that the foundation of both doctrines is based on something I call the theory of “the inauthentic claim.”

The theory of the inauthentic claim asserts that there is a quality, separate and in addition to legal validity, which confers “authenticity” to a lawsuit. It does not presuppose that “inauthentic” lawsuits are more likely to be spurious, fraudulent, or frivolous than “authentic” lawsuits. It holds, instead, that the mere fact that a third party involved him or herself in the suit for the wrong reasons (either by taking an assignment in the suit or supporting the suit), is proof that the suit is against public policy.

This Article examines two arguments that might be used to defend the theory of the inauthentic claim, one from history and one from jurisprudence. I conclude that neither argument is persuasive. I conclude the Article by sketching a research agenda based on empirical evidence that would help policymakers and judges choose the socially optimal set of rules for third party investment in litigation.

ADL

(h/t Chris Robinette at  Torts Prof Blog)

April 29, 2010 in Aggregate Litigation Procedures, Ethics, Informal Aggregation, Lawyers, Mass Tort Scholarship, Regulation | Permalink | Comments (0) | TrackBack (0)

Monday, March 1, 2010

Erichson & Zipursky on mass settlements

SSRN 
Benjamin Zipursky and I have completed a paper entitled "Consent versus Closure."  Ben is one of the nation's leading experts on torts and legal theory.  He and I have long shared an interest in mass tort litigation, and we share certain concerns about the direction mass tort settlements seem to be heading.  In particular, we were both troubled by the mandatory withdrawal provision of the Vioxx settlement, and we both opposed the American Law Institute's proposal to permit advance consent to aggregate settlements.  More generally, we see the Vioxx deal and the ALI proposal as part of a troubling broader trend, in both practice and scholarship, toward embracing the pursuit of absolute closure by empowering plaintiffs' lawyers to deliver their clients' claims in settlement.  Here's the abstract:

Claimants, defendants, courts, and counsel are understandably frustrated by the difficulty of resolving mass tort cases. Defendants demand closure, but class certification has proved elusive and non-class settlements require individual consent. Lawyers and scholars have been drawn to strategies that solve the problem by empowering plaintiffs’ counsel to negotiate package deals that effectively sidestep individual consent. In the massive Vioxx settlement, the parties achieved closure by including terms that made it unrealistic for any claimant to decline. The American Law Institute’s Principles of the Law of Aggregate Litigation offers another path to closure: it proposes to permit clients to consent in advance to be bound by a settlement with a supermajority vote. This article argues that, despite their appeal, both of these strategies must be rejected. Lawyer empowerment strategies render settlements illegitimate when they rely on inauthentic consent or place lawyers in the untenable position of allocating funds among bound clients. Consent, not closure, is the touchstone of legitimacy in mass tort settlements.

"Consent versus Closure" critiques mandatory withdrawal, looking at specific legal ethics rules and doctrines as well as the more basic problem of inauthentic consent.  It critiques the ALI's advance consent proposal based not only on the problem of inauthentic consent, but also the problem of nonconsentable conflicts, exploring what it means for claimants to own their claims and for lawyers to represent clients in pursuing those claims.  

This article picks up on the theme of "The Trouble with All-or-Nothing Settlements," in which I used six case studies to show various problems caused by demands for fully comprehensive settlements outside of class actions and bankruptcy.

HME

March 1, 2010 in Ethics, Lawyers, Mass Tort Scholarship, Settlement, Vioxx | Permalink | Comments (0) | TrackBack (0)

Sunday, February 14, 2010

BAR/BRI Attorneys Awarded Costs, but No Fees

The Wall Street Journal's Law Blog reported Friday that Judge Manuel Real told Bar/Bri antitrust litigators that they could recover around $1.26 million in costs, but not the $12 million in attorneys fees.  Judge Real cited concerns about conflicts of interest and ethical concerns in forfeiting McGuireWoods LLP's fees. The full story is available here.

ECB

February 14, 2010 in Class Actions, Ethics | Permalink | Comments (0) | TrackBack (0)

Tuesday, February 2, 2010

Adequacy of Representation

I recently posted a response to Jay Tidmarsh's article, Rethinking Adequacy of Representation, 87 Texas Law Review 1137 (2009) on SSRN.  Although I ultimately find his recommendation troubling for the reasons I highlight below, I highly recommend his article.  Here's his abstract:

This article by Jay Tidmarsh questions the usefulness of traditional tests for adequacy of representation in class action proceedings.  When determining whether to certify a class, courts have sought to avoid endorsing those classes marred by conflicting interests or the possibility of collusion.  Yet, Tidmarsh argues, such conflicts of interest are an intrinsic characteristic of class actions, stemming from the very policy rationales that have prompted the judiciary to allow litigation by classes.

As a result, the current doctrine of adequate representation has left the courts without a bright-line rule; instead, the courts' inquiries into adequacy of representation must focus primarily on the degree of conflicts, leading to confusion and uncertainty--indeed, were prevailing case law strictly applied, virtually no class action could survive the test for adequacy. Tidmarsh therefore proposes an alternative, bright-line rule: "Representation by class representatives and counsel is adequate if, and only if, the representation makes class members no worse off than they would have been if they had engaged in individual litigation." This rule, he believes, would afford far better protection to the interests of individual class members while simultaneously providing the judiciary with a more intelligible test that could be applied with far more consistency.

And here's the abstract from my response, titled Procedural Adequacy:

This short piece responds to Jay Tidmarsh’s article, Rethinking Adequacy of Representation, 87 Texas Law Review 1137 (2009). I explore Professor Tidmarsh’s proposed “do no harm” approach to adequate representation from a procedural legitimacy perspective. I begin by considering the assumption underlying his alternative, namely that in any given class action both attorneys and class representatives tend to act as self-interested homo economicus and we must therefore tailor the adequacy requirement to curb self-interest only in so far as it makes class members worse off than they would be with individual litigation. Adopting the “do no harm” principle as our yardstick for adequate representation is alluring - it removes motivations and morality from the equation and avoids the stickiness that those calculations entail. Plus, Professor Tidmarsh’s careful treatment of the philosophical and economic arguments underlying the joinder rules make a compelling argument for the change. My concern, however, is two-fold: (1) tailoring adequacy to egocentric behavior by providing a floor to minimally acceptable conduct creates a troubling anchor that is at odds with agency and ethical principles and (2) this proposed change, particularly as it tolerates collusion and unequal treatment among class members, may adversely impact perceptions of procedural justice and class action legitimacy.

ECB

February 2, 2010 in Class Actions, Ethics, Mass Tort Scholarship, Procedure | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 13, 2010

Misjoinder and Mass Torts

The folks over at Drug and Device Law (now under partially new management that apparently is more fond of literary allusions than the old) have an interesting post on misjoinder, for those of you interested in the real nitty gritty of procedure.  The bottom line: they are worried about plaintiffs who jigger their cases through joinder to avoid the federal courts' jurisdiction.  For those of you not into the technical aspects of procedure in complex litigation, there are lots of federalism issues raised by this as well.

The post is called Gresham's Lawyers and is available here.  ADL

January 13, 2010 in Aggregate Litigation Procedures, Ethics, Procedure | Permalink | Comments (1) | TrackBack (0)

*Really* Selling Out the Class

Usually when academics and policymakers talk about class action lawyers selling out the interests of the class in favor of increasing their fees there isn't any direct proof that this is what occurred, and its always hard to second guess the outcome of negotiations (not to mention hindsight bias).  But here is a case that is quite obvious, the kind that ends up making things worse for upstanding plaintiffs lawyers.

A class action lawyer settled a class action on behalf of 7 plaintiffs, paying the class reps $7 million and himself $2 million, rather than arranging payment for the entire class. The settlement was overturned.

Now whether this is an efficient approach from an economic perspective I leave to your consideration.  But in any event its not currently permitted.  For an argument that it is more efficient to pay the lawyers than try to pay the class from a deterrence perspective, see Myriam Gilles & Gary Friedman, Exploding the Class Action Agency Costs Myth - the link is to SSRN.

The Florida Bar has recommended discipline. You can see the article here at the ABA Law Journal

ADL

January 13, 2010 in Class Actions, Ethics | Permalink | Comments (0) | TrackBack (0)

Monday, November 16, 2009

Around the Web

Dan Levine, Pair of Plaintiffs Lawyers May Face Different Fates in 9th Circuit Disciplinary Action, The Recorder (discussing disciplinary action in Nicaraguan pesticides case).

Francis E. McGovern (Duke), The Second Generation of Dispute System Design: Reoccurring Problems and Potential Solutions, Ohio St. J. Disp. Resol. (2008) (posted on SSRN).

William H. Simon (Stanford & Columbia), Moral Freaks: Lawyers’ Ethics in Academic Perspective, Geo. J. Lgl. Ethics (forthcoming) (posted on SSRN).

Keith N. Hylton (Boston Univ.) & Haizhen Lin (Indiana), Trial Selection Theory and Evidence: A Review (posted on SSRN).

Neil Vidmar (Duke) & Mirya R. Holman (Duke), The Frequency, Predictability and Proportionality of Punitive Damages in State Courts (posted to SSRN).

Patrick M. Connors (Albany), Which Party Pays the Costs of Document Disclosure?, Pace L. Rev. (2009) (posted to SSRN).

BGS

November 16, 2009 in Aggregate Litigation Procedures, Ethics, Lawyers, Mass Tort Scholarship, Procedure, Trial | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 4, 2009

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

November 4, 2009 in Conferences, Ethics, Fen-Phen, Lawyers, Mass Tort Scholarship, Settlement, Vioxx | Permalink | Comments (0) | TrackBack (0)

Wednesday, August 19, 2009

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

August 19, 2009 in Environmental Torts, Ethics, Lawyers | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 18, 2009

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

August 18, 2009 in Ethics, Fen-Phen, Lawyers | Permalink | Comments (0) | TrackBack (0)

Friday, August 14, 2009

Elizabeth Nowicki on Apologies and Good Lawyering

SSRNElizabeth 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

August 14, 2009 in Ethics, Lawyers, Mass Tort Scholarship, Settlement | Permalink | Comments (0) | TrackBack (0)

Art Hinshaw and Jess Alberts on Attorney Negotiation Ethics

SSRNArt 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 

August 14, 2009 in Ethics, Mass Tort Scholarship, Settlement | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 15, 2009

The Law of the Banana, Part II

Article in the Los Angeles Times -- Pesticide cases could be upended, by Victoria Kim and Alan ZaremboHere'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

July 15, 2009 in Environmental Torts, Ethics, Food and Drink, Lawyers | Permalink | Comments (0) | TrackBack (0)

Monday, April 27, 2009

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

April 27, 2009 in Ethics | Permalink | Comments (0) | TrackBack (0)

Thursday, April 16, 2009

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

April 16, 2009 in Ethics, Lawyers, Lead Paint, Pharmaceuticals - Misc. | Permalink | Comments (0) | TrackBack (0)

Wednesday, April 8, 2009

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

April 8, 2009 in Aggregate Litigation Procedures, Ethics, Lawyers, Pharmaceuticals - Misc., Products Liability | Permalink | Comments (0) | TrackBack (0)

Tuesday, April 7, 2009

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


April 7, 2009 in Aggregate Litigation Procedures, Asbestos, Ethics, Products Liability | Permalink | Comments (0) | TrackBack (0)