Tuesday, January 31, 2012
Eyal Zamir (Hebrew Univ.), Barak Medina (Hebrew Univ.), and Uzi Segal (Boston College, Economics) have posted to SSRN their article, The Puzzling Uniformity of Lawyers’ Contingent Fee Rates: An Assortative Matching Solution. Here is the abstract:
Lawyers’ Contingent Fee (CF) rates are rather uniform, often one-third of the recovery. Arguably, this uniformity attests to collusion in the market, resulting in clients paying supra-competitive fees. This paper challenges this common argument.
Uniform CF rates are not necessarily superior to negotiable ones; yet they provide clients with an important advantage. They result in clients making a defacto “take-it-or-leave-it” offer. It precludes lawyers from exploiting their private information about the lawsuit’s expected value and the amount of work it requires. The uniformity of CF rates enables clients to hire the best available lawyer, either directly, if clients know lawyers’ ranking, or indirectly, through the referral system. This uniformity thus fosters a positive assortative matching of lawyers and clients. Finally, the fact that both direct clients and clients obtained through paid-for referrals pay the same CF rate does not attest to cross-subsidization, as the cases a lawyer gets through referrals are quite different than those she gets directly.
Tuesday, January 17, 2012
American Lawyer has put together a list of most-appearing law firms over the past 10 years of its rankings for Litigation Department of the Year. Several firms on the list are cited for past awards for practice-area expertise in products liability. Here are those firms' rankings places in the overall Litigation Power Rankings AmLaw list (counting the firm with highest score as #1):
#3 Jones Day
#11 Shook, Hardy
#14 (tied) Reed, Smith
#14 (tied) Skadden
#19 King & Spalding
I practiced at both Jones Day and Skadden, and have worked with lawyers from Shook, Hardy; Reed Smith; King & Spalding; and Dechert. All are excellent.
Saturday, January 14, 2012
All that in the recent interesting op-ed from New York Times business columnist Joe Nocera -- BP Makes Amends.
January 14, 2012 in Aggregate Litigation Procedures, Environmental Torts, Informal Aggregation, Lawyers, Mass Disasters, Procedure, Punitive Damages, Settlement | Permalink | Comments (0) | TrackBack (0)
Thursday, January 12, 2012
Hermann asks why class action defense lawyers aren't bringing up Redish's arguments more in courtrooms across the nation. More thoughts on this later...in the meantime, I recommend his post.
Thursday, January 5, 2012
You can find a list of the 10 best class actions articles according to class action countermeasures here. Our own Beth Burch gets praise for her latest piece Financiers as Monitors, which I also thought is a great contribution to the literature.
While I don't agree with Mr. Trask's assessment of my own work, legal academia or what people ought to write about, his wish list of articles is a great starting place for students looking to write a note on class action related topics.
Monday, December 5, 2011
Yesterday's NY Times had an article by John Schwartz titled, "Plaintiffs' Lawyers in a Bitter Dispute Over Fees in Gulf Oil Spill Cases." The article chronicles the now typical battle over attorneys' fees in multidistrict litigation where judges compensate Plaintiffs' Steering Committee members from other attorneys' fee awards. This dispute is particularly bitter; the steering committee is asking for fees not just from those involved in the federal multidistrict litigation, but from those who negotiated their own recoveries from the privately administered Gulf Coast Claims Facility.
Sunday, November 27, 2011
The Fifth Annual Conference on the Globalization of Class Actions and Mass Litigation is being hosted by Tilburg University and will be held on December 8-9, 2011 in The Hague, Netherlands. The conference is being organized by Professors Deborah Hensler (Stanford Law School), Christopher Hodges (Oxford Centre for Socio-Legal Studies and Erasmus University), and Ianika Tzankova (Tilburg University). Master claim administrator Kenneth Feinberg is delivering the keynote speech.
Monday, October 31, 2011
In today's Wall Street Journal, There's a profile of Ted Frank of the Center for Class Action Fairness. The WSJ Law Blog also has a companion post on him today. Ted Frank has been toiling for years on class actions, as well as law reform generally in his previous position at the American Enterprise Instititue. Today's recognition is well deserved.
For one indication of his devotion to class-action reform, check out Ted Frank's license plate.
Monday, October 10, 2011
Morris Ratner (Harvard) has posted to SSRN his article, A New Model of Plaintiffs' Class Action Attorneys, Rev. Litig. (forthcoming). The article presents a nuanced, updated portrait of plaintiffs' class action firms today that challenges prior conceptions of class-counsel bias. Here's the abstract:
This Article offers a new model for conceptualizing plaintiffs’ class action attorneys, and thus for understanding principal-agent problems in class action litigation. It responds to the work of Professor John C. Coffee, Jr., who, in a series of influential articles, demonstrated that principal-agent problems may be acute in class action litigation because class members lack the information or financial incentive to monitor class counsel; class counsel is thus free to pursue his own interests at the expense of the class members. But what are those interests, and how do they diverge from the class members’ interests? Professor Coffee provided one answer to this sub-set of questions, presenting a conventional account of class counsel and the precise parameters of his disloyalty corresponding with three descriptive assertions: that class counsel is either a solo practitioner or in a small firm; that he is predominantly interested in maximizing his law firm profit; and he capably pursues his fee-maximizing goal by investing his time in cases based on confident predictions about expected fees. In this Article, I articulate an updated and competing conception of the dominant class action attorneys and firms: the leading firms today are relatively large and internally complex; law firm structural complexity creates diverse incentives other than maximization of law firm profit; and class counsel invest time in cases for complex reasons other than the effect on expected fees, particularly because fees are notoriously difficult to predict. Modeling class counsel to recognize this complexity has three virtues: it better reflects the actual characteristics of the most significant class action attorneys, and hence is a more accurate descriptive tool; as such, it enables a more precise understanding of the extent and nature of agency or loyalty problems; and thus, finally, it provides a more solid basis for reforms. In particular, this new model sheds insight on the importance of direct versus incentive-based regulation to manage agency costs in class actions. In light of the diverse incentives this new model reveals, direct regulation of outcomes by trial courts using enhanced final approval standards should be a central part of any package of reforms to manage agency costs in class litigation.
Thursday, August 25, 2011
RAND's Institute for Civil Justice last week released its report, Asbestos Bankruptcy Trusts and Tort Compensation, by Lloyd Dixon and Geoffrey McGovern. Here's the summary:
Payments by asbestos bankruptcy trusts have played an increasingly important role in compensating asbestos injuries and have become a matter of contention between plaintiff and defense attorneys. At issue is how tort cases take into consideration compensation paid by trusts and the evidence submitted in trust claim forms. This monograph examines how such evidence and compensation are addressed by state laws and considered during court proceedings. It also examines how the establishment of the trusts potentially affects plaintiff compensation from trusts and the tort system combined, payments by defendants that remain solvent, and the compensation available to future, as compared to current, plaintiffs. The authors find that the potential effects of trusts' replacement of once-solvent defendants are very different in states with joint-and-several liability than in states with several liability. In states with joint-and-several liability, total plaintiff compensation should not change. In several-liability states, the replacement of once-solvent defendants by trusts can cause total plaintiff compensation to increase, decrease, or remain unchanged. The findings underscore the importance of information on plaintiff exposure to the products and practices of the bankrupt firms in determining the trusts' effects on plaintiff compensation and on payments by defendants that remain solvent.
RAND also published the shorter Research Brief, Bankruptcy Trusts, Asbestos Compensation, and the Courts, by the same authors.
Tuesday, August 23, 2011
Since my earlier post on loser pays as a solution to frivolous lawsuits, attention to loser pays as lawsuit reform has increased, apparently largely as a result of Texas Governor Rick Perry's announcement that he is seeking the Republican nomination for President. Recall that Governor Perry in May enacted a form of loser pays in Texas. (See also this July speech by Perry discussing passage of loser pays in Texas.) Then, in August, when Governor Perry announced his candidacy for President, he included in his speech a reference to loser pays, eliciting a surprisingly large cheer from the crowd (see this video at 25 seconds). Governor Perry's presidential-campaign website then again highlighted lawsuit reform (and thereby also his loser-pays approach) by claiming that "Texas' unmatched record on job creation was based on a few simple ideas: Don't spend all the money. Keep taxes low. Make regulations fair and predictable. And stop the frivolous lawsuits that paralyze job creators." (Emphasis added.)
In response, the media and policy groups have turned their attention to loser pays. The Washington Examiner several days ago ran an editorial entitled, Lawsuit Reform Could be Big in 2012, which discussed the passage of loser pays in Texas. The Wall Street Journal Editorial Report on Fox News last weekend highlighted Perry's record on loser pays in Texas, calling it a "major, major reform." The Institute for Legal Reform of the U.S. Chamber of Commerce yesterday sent out an email blast linking a survey that asked if lawsuit reform should be part of a pro-growth agenda. And yesterday, Politico published a lengthy analysis of plaintiffs' lawyers preparing to organize politically against Governor Perry, should he be the Republican nominee, because of Perry's record on Texas tort reform: "Among litigators, there is no presidential candidate who inspires the same level of hatred — and fear — as Perry, an avowed opponent of the plaintiffs’ bar who has presided over several rounds of tort reform as governor."
What might Governor Perry do on loser-pays lawsuit reform were he to become President Perry? Perry is an avowed defender of federalism, so one would think he would not attempt to push loser pays in areas traditionally under state law (such as tort law). But he might attempt to insert loser-pays provisions in federal statutes creating causes of action. And as candidate, nominee, or president, he could significantly influence the debate in statehouses about loser pays by continuing to cite loser pays and lawsuit reform as a reason for his claimed relative success of the Texas economy in creating jobs. Stay tuned.
Friday, July 8, 2011
The U.S. Chamber of Commerce is arguing in favor of the Lawsuit Abuse Reduction Act, which is pending in the House and would change Rule 11 back to its pre-1993 mandatory sanctions approach and remove the current 21-day "safe harbor" for a litigant to withdraw challenged filings. In the 1980s, I believe the mandatory-sanctions/no-safe-harbor regime was blamed for increasing costly satellite Rule 11 litigations brought by both plaintiffs and defendants who perhaps in an excess of zeal repeatedly argued that the other side's positions were utterly meritless and frivolous.
The U.S. Chamber of Commerce also suggests that the Lawsuit Abuse Reduction Act would make it easier for parties challenging to recover their attorneys' fees. That modification raises the larger question of "loser pays" as a broad and perhaps more effective way to deter frivolous lawsuits. Under loser pays, the party that loses in a litigation must pay the attorneys' fees of the prevailing party. Followed in much of the world outside the U.S., loser pays deters frivolous litigation by removing much of the litigation costs that are used as a weapon to extract a nuisance-value settlement. For example, if it costs a defendant $50,000 in legal fees to obtain a ruling that a lawsuit is meritless, a plaintiff lawyer might offer to settle with the defendant for $25,000 -- less than it costs to litigate to a judge ruling. Unless the defendant thinks the plaintiff lawyer will turn around and sue the defendant again, the defendant may well choose the $25,000 settlement, even if the lawsuit seems clearly meritless or frivolous. But the $25,000 settlement may sufficiently compensate (via contingency fee) the plaintiff lawyer to incentivize the plaintiff lawyer to file another meritless claim against another defendant, and indeed, the plaintiff lawyer might even develop a successful business in frivolous claims. In contrast, if a loser-pays rule applies, defendant might well reject the $25,000 settlement and elect to spend $50,000 to obtain a court ruling exposing and dismissing the frivolous claim, also confident that the defendant can seek to recover the $50,000 in attorneys' fees from the plaintiff under the loser-pays rule. Moreover, ex ante, the plaintiff lawyer in a loser-pays jurisdiction should decline to even file a meritless claim, because the plaintiff lawyer would expect that the defendant would refuse a nuisance settlement and instead litigate to a ruling that will impose defendant's attorneys' fees on the plaintiff. The presence of loser pays is often cited as one reason that countries outside the United States have less litigation -- see, e.g., John Stossel, When Lawyers Become Bullies, Real Clear Politics (April 8, 2008).
One significant objection to loser pays is that impecunious plaintiffs will elect never to file their claims not because their claims are frivolous, but because they are risk averse about the possibility of defendants' attorneys fees being imposed on them. This concern is even greater in tort litigation, where injured plaintiffs are regular folks whose finances may already be strained by an injury. So the argument goes, loser pays should be rejected because these impecunious plaintiffs will not file what are meritorious suits -- and access to justice is denied.
But what if the cost of loser pays were permitted to be shifted from a plaintiff to his or her attorney? Plaintiff attorneys already make entrepreneurial decisions about the likelihood of success in a case when plaintiff attorneys decide whether to take a case on contingency fee and risk no reimbursement if they lose at trial or by judicial ruling. Adding fee-shifting via loser pays would only increase the size of the bet on each case, and plaintiff firms could adjust to that larger bet by becoming somewhat larger and greater diversifying that risk, or even by gaining greater access to outside capital and loans (the latter of which is itself controversial). Ultimately, injured plaintiffs would conceivably still have access to attorneys for meritorious cases, but having lost the threat of nuisance-value settlements and now fearing fee-shifting via loser pays, plaintiff lawyers would screen out frivolous claims and never file them.
I think there is much to recommend this market-finance-oriented version of loser pays, but of course plaintiff lawyers might resist it because it would remove the stream of income from nuisance-value settlements. And even though they might not admit it, defense lawyers also benefit from being hired to defend frivolous cases, so they might not vigorously push such a proposal, unless their defendant clients vigorously pushed them to do so. Ultimately, a reduction in frivolous litigation reduces the wealth of the entire bar, but the bar has no valid entitlement to enrichment by waste. Notwithstanding lawyers' interests, Alaska has had a version of loser pays, and Texas over a month ago enacted a version of loser pays. If Texas Governor Rick Perry enters the Republican primary as a candidate for President in 2012, loser pays as litigation reform (and tort reform) may well receive substantial national attention. That would be a good thing.
Sunday, March 27, 2011
The Mississippi College Law Review has posted the video for its symposium, Beyond the Horizon: The Gulf Oil Spill Crisis -- Analyzing the Economic, Environmental, and Legal Implications of the Oil Spill.
Panel One included Ms. Trudy Fisher, Executive Director, Mississippi Department of Environmental Quality; Professor Kenneth Murchison, James E. & Betty M. Phillips Professor, Paul M. Herbert Law Center Louisiana State University; and Professor David Robertson, W. Page Keeton Chair in Tort Law University Distinguished Teaching Professor, University of Texas at Austin. The moderator for Panel One was Ms. Betty Ruth Fox, Of Counsel, Watkins & Eager.
Panel Two included Professor Jamison Colburn, Professor of Law, Penn State University; Professor Edward Sherman, W.R. Irby Chair & Moise S. Steef, Jr. Professor of Law, Tulane University; and myself. The moderator for Panel Two was Professor Jeffrey Jackson, Owen Cooper Professor of Law, Mississippi College School of Law.
Kenneth Feinberg, claims administrator for the Gulf Coast Claims Facility, delivered the symposium Keynote Presentation.
Papers from the symposium will published in the Mississippi College Law Review. Here's the abstract for my symposium talk and forthcoming article:
The Gulf Coast Claims Facility set up following the BP Gulf Oil Spill might be seen as creating a new category of claims fund that might be termed a quasi-public mass tort claims fund. Unlike purely public funds such as the 9/11 Victim Compensation Fund, or purely private funds such as are increasingly created for mass settlements as in Vioxx, the Gulf Coast Claims Facility is funded privately by BP, but bears the public imprimatur of having been initially negotiated by President Obama. Indeed, in an Oval Office Address, President Obama promised that claims would be "fairly" paid and that the fund would "not be controlled by BP," but would instead be administered by an "independent third party." While a quasi-public fund has the advantage of delivering swift compensation in response to an ongoing crisis, the quasi-public fund risks claimant confusion about claim-administrator independence and whether claimants should retain their own counsel to assist in evaluating fund settlement offers. In turn, that claimant confusion can jeopardize the fund's societal savings in attorney-fee transaction costs, and lower claimant participation in the fund. Accordingly, to minimize claimant confusion, a quasi-public fund should provide transparency in its fee structure for claims administrators, and seek a claims-administrator fee structure that minimizes bias, such as utilizing a fixed fee not subject to reevaluation or having defendant agree to a third-party panel's assessment of fees for claims administrators. With regard to the Gulf Coast Claim Facility, claimant participation would likely be enhanced by greater transparency and use of a third-party panel to determine claim-administrator fees.
Friday, March 25, 2011
S. Todd Brown (Buffalo) has posted a paper entitled The Market for Specious Claims on SSRN. It promises to be an interesting application of the adverse selection problem to our favorite subject here at the Mass Tort Litigation Blog! Here is the abstract:
Few problems are more disruptive to the efficient operation of comprehensive mass tort settlements than over-subscription, which, at times, appears to be fueled primarily by specious claims. In settlements with opt out rights, a flood of claims can generate a market for lemons, with the weakest claims submitting to the settlement and the strongest opting out and seeking recovery at trial or in private settlement. In binding settlements, they may result in a commons problem, requiring dramatic reductions in payment that effectively transfer recoveries from those with intrinsically strong claims to those with weak claims.
This Article evaluates the history of three mass torts where specious claim practices were uncovered and identifies common themes that reflect broader lessons about the potential for over-subscription. In particular, although commentators often focus on the incentives that drive claim recruiting, this Article explains that over-subscription has its origins in claim development incentives, which may be distorted by fixed settlement criteria and encourage practices that lend themselves to specious claim filings. This dynamic is particularly likely to generate specious claim markets for low or negative expected value claims. Moreover, the manner in which this process unfolds presents special difficulties for ethical enforcement and deterrence, suggesting that other mechanisms for controlling specious claim markets may be necessary.
Saturday, March 5, 2011
The title of an article by John Markoff at the NYTimes called "Armies of Expensive Lawyers, Replaced by Computers" says it all. The article is about software programs that sort through documents received in e-discovery.
I often tell my students that if they want to find a growth sector in law, its development of tools for conducting e-discovery -- those law students who have computer engineering degrees or programming knowledge can really make a place for themselves in a world where technology is going to shrink the need for associates and contract attorneys who grind through giant databases of documents.
Wednesday, February 16, 2011
On this Friday, February 18, Mississippi College School of Law will be hosting a law review symposium, Beyond the Horizon: The Gulf Oil Spill Crisis -- Analyzing Economic, Environmental, and Legal Implications of the Oil Spill. Here's the short-form brochure: Download MC Law Review Symposium Brochure.
Speakers include Professors Jamison Colburn (Penn State), Kenneth Murchison (LSU), David Robertson (Texas), Edward Sherman (Tulane), and Trudy Fisher (Miss. Dep't Envt'l Quality). Moderators include Jeffrey Jackson (Mississippi College) and Betty Ruth Fox (Watkins & Eager). Papers will subsequently be published in the Mississippi College Law Review.
I will also be speaking at the symposium, discussing issues of claim-administrator compensation, transparency, and independence in connection with the Gulf Coast Claims Facility. My talk will expand upon my prior blog posts raising concerns (see here and here), which last summer triggered two articles in Forbes (see here and here), as well as a post from Legal Ethics Forum. Two weeks ago, the federal MDL court overseeing the BP litigation granted in part plaintiffs' motion to have the court oversee communications by the Gulf Coast Claims Facility, and the MDL court ordered that the Gulf Coast Claims Facility may not state that it is "neutral" or completely "independent" of BP. Here's the MDL opinion: Download Order - Mot to Supervise GCCF Doc 1098 2-2-2011. On the recent MDL opinion, see also this Reuters article from Moira Herbst, quoting David Logan (Roger WIlliams), Monroe Freedman (Hofstra), and me.
UPDATE -- Here's the full-length brochure for the symposium: Download MC Law BP Symposium Handout.
Sunday, January 23, 2011
Interesting article from the New York Times on services that offer loans to litigants and the high interest rates typically charged: Lawsuit Loans Add New Risk for the Injured, by Binyamin Appelbaum. The article discusses the movement to subject such loans, and their high interest rates, to regulation. Of course, if the interest rates able to be charged are limited by state law, the effect may be to destroy the lawsuit loan market, because the default risk for such loans may be high enough that only a high-interest rate lending model may be profitable over the long term. Losing such loans would be unfortunate, because litigants with meritorious cases may need access to funds while the the justice system processes the case. Instead of regulatory capping of interest rates, why not instead rely on clear disclosure of rates in contracts, and market forces of vying lenders competing over interest rates?
Thursday, January 20, 2011
Lester Brickman (Cardozo) has posted to SSRN his article, Unmasking the Powerful Force that Has Mis-Shaped the American Civil Justice System, which appears in the Global Competition Law Review, Vol. 4, No. 3, 2010. Here's the abstract:
The contingency fee, once largely a uniquely American institution, is beginning to gain serious consideration in Europe and elsewhere. It is essential that those considering adopting some form of the contingency fee to finance civil litigation have a proper understanding of the impact of the contingency fee on the U.S. civil justice system. That understanding, however, appears woefully lacking. In Lawyer Barons: What Their Contingency Fees Really Cost America (Cambridge University Press 2011), I discuss the underappreciated and indeed, often unrealized costs of reliance on contingency fees to finance access to the tort system. In this essay, I reprise some of the impacts policymakers should take into account in determining whether the anticipated benefits of the American contingency fee system outweigh the considerable costs.
Monday, January 17, 2011
I hope are readers are having a good MLK day and that your employer gave you the day off in observance!
Benyamin Applebaum of the NY Times has an article on litigation funding in torts - the first story there is of a Vioxx plaintiff. See the article here.
For a very insightful take on litigation funding, in particular arguing that it is a good way to disgorge the appropriate amount from the defendant rather than permitting the defendant to get a discount because of plaintiffs economic situation, see Steven Gillers post at the Legal Ethics forum here.
Readers interested in this topic might also want to take a look at Maya Steinitz, Whose Claim is this Anyway? Third Part Litigation Funding, available on SSRN.
Wednesday, January 12, 2011
Congratulations to our co-blogger Alexandra Lahav of the University of Connecticut School of Law for being awarded the Fred C. Zacharias Memorial Prize for Scholarship in Professional Responsibility for her article, Portraits of Resistance: Lawyer Responses to Unjust Proceedings, which is forthcoming in the UCLA Law Review! The award was announced at the recent meeting of the professional responsibility section at the AALS conference.