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Thursday, May 22, 2014

Burch on Judging Multidistrict Litigation

Beth Burch (Georgia) has posted to SSRN Judging Multidistrict Litigation.  The abstract provides:

High-stakes multidistrict litigations saddle the transferee judges who manage them with an odd juxtaposition of power and impotence.  On one hand, judges appoint and compensate lead lawyers (who effectively replace parties’ chosen counsel) and promote settlement with scant appellate scrutiny or legislative oversight.  But on the other, without the arsenal class certification once afforded, judges are relatively powerless to police the private settlements they encourage.  Of course, this power shortage is of little concern since parties consent to settle. 

Or do they?  Contrary to conventional wisdom, this Article introduces new empirical data revealing that judges appoint an overwhelming number of repeat players to leadership positions, which may complicate genuine consent through inadequate representation.  Repeat players’ financial, reputational, and reciprocity concerns can govern their interactions with one another and opposing counsel, often trumping fidelity to their clients.  Systemic pathologies can result:  dictatorial attorney hierarchies that fail to adequately represent the spectrum of claimants’ diverse interests, repeat players trading in influence to increase their fees, collusive private deals that lack a viable monitor, and malleable procedural norms that undermine predictability.

Current judicial practices feed these pathologies.  First, when judges appoint lead lawyers early in the litigation based on cooperative tendencies, experience, and financial resources, they often select repeat players.  But most conflicts do not arise until discovery and repeat players have few self-interested reasons to dissent or derail the lucrative settlements they negotiate.  Second, because steering committees are a relatively new phenomenon and transferee judges have no formal powers beyond those in the Federal Rules, judges have pieced together various doctrines to justify compensating lead lawyers.  The erratic fee awards that result lack coherent limits.  So, judges then permit lead lawyers to circumvent their rulings and the doctrinal inconsistencies by contracting with the defendant to embed fee provisions in global settlements — a well recognized form of self-dealing.  Yet, when those settlements ignite concern, judges lack the formal tools to review them.

These pathologies need not persist.  Appointing cognitively diverse attorneys who represent heterogeneous clients, permitting third-party financing, encouraging objections and dissent from non-lead counsel, and selecting permanent leadership after conflicts develop can expand the pool of qualified applicants and promote adequate representation.  Compensating these lead lawyers on a quantum-meruit basis could then smooth doctrinal inconsistencies, align these fee awards with other attorneys’ fees, and impose dependable outer limits.  Finally, because quantum meruit demands that judges assess the benefit lead lawyers’ conferred on the plaintiffs and the results they achieved, it equips judges with a private-law basis for assessing nonclass settlements and harnesses their review to a very powerful carrot: attorneys’ fees.

--CJR

http://lawprofessors.typepad.com/tortsprof/2014/05/burch-on-judging-multidistrict-litigation.html

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