(Reuters) - If you’ve ever wondered why plaintiffs lawyers compete so ardently to be appointed to lead big, consolidated cases, you ought to look at a pair of rulings U.S. District Judge Anita Brody of Philadelphia issued Thursday in the billion-dollar NFL concussion litigation.
As you’ve probably seen, the judge approved a request for $112 million in fees and costs for the lawyers who represented the class of NFL retirees, writing that their skill, creativity and hard work justified an award that amounted to about 11 percent of the anticipated recovery for onetime pro football players who blame the league for exposing them to debilitating brain injuries. It’s a good bet that class lawyers from Seeger Weiss, Anapol Weiss, Levin Sedran & Berman, NastLaw, the Locks Law Firm, and Podhurst Orseck are going to have a good weekend.
But lawyers who only represent individual ex-players, not the class as a whole, may not feel so much like celebrating. Judge Brody ruled that regardless of the private contracts they signed with their clients, some of which called for 40 percent contingency fees for the lawyers, individual counsel for ex-players are entitled only to 22 percent of the clients’ recovery. Class counsel did the heavy lifting in this case, the judge said. It’s simply not fair to expect ex-players who also signed up with individual counsel to overpay those lawyers for work that basically amounted to “shepherding of their clients through the claims process,” the judge wrote.
“This reduction is necessary to prevent a ‘free-rider problem — enabling (lawyers for individual players) to financially benefit from the work of class counsel even though they did not bear the costs,” Judge Brody said. “Additionally, it is necessary to reduce (individual lawyers’) contingent fees to avoid the problem of class members paying twice for the same work — once to class counsel and then again to (their individual lawyers).”
Frankly, it could have been worse for the lawyers outside of class leadership. As I’ve reported, Judge Brody’s court-appointed expert, Harvard professor William Rubenstein, originally recommended a 15.6 percent cap on their contingency fees from individual ex-players’ recoveries. After pushback from the affected lawyers – and after reconsidering a rise in the expected net value of the settlement, and a corresponding decline in the percentage of the settlement to be awarded to class counsel – Rubenstein upped the recommended cap to 22 percent.
Judge Brody endorsed Rubenstein’s detailed analysis of why she has the authority, as the overseer of a mixed class action and multidistrict litigation, to interfere with private contracts between clients and their lawyers. She cited precedent from the World Trade Center Disaster Site case (754 F.3d 114, 126), the Deepwater Horizon oil spill litigation, Vioxx (650 F. Supp. 2d 549) and Zyprexa 424 F. Supp. 2d 488). “Courts must curb such excessive or unreasonable fees to safeguard the public’s perception of the courts and the legitimacy of the legal system’s handling of massive MDLs and class actions,” she wrote. “The way to curb such fees is with a cap.”
Judge Brody (quite shrewdly) cut off a potential avenue of appeal for individual lawyers by allowing them to pitch her on why they believe their contributions warrant deviation upward from the 22 percent cap “in exception or unique circumstances.” That way, the lawyers can’t argue the fee cap violates their due process rights.
The judge reserved a ruling on a temporary holdback of 5 percent of individual lawyers’ fees in the event that administrative costs balloon over the long life of the settlement, writing that she hopes the holdback will prove unnecessary. (Her expert, Rubenstein, had recommended a maximum holdback of 2 percent.)
Figuring out fees for non-class counsel could become a more common problem in MDLs. The NFL concussion case, as you know, revived the long-disfavored use of a class action to resolve personal injury claims consolidated in an MDL. If future consolidated personal injury cases – in which plaintiffs typically retain their own lawyers and sign contingency fee contracts – end up settling as class action, we’re likely to see similar haircuts for those individually-retained lawyers.
The 9th U.S. Circuit Court of Appeals, as I’ve told you, is looking at a parallel question stemming from the Volkswagen emissions cheating litigation overseen by U.S. District Judge Charles Breyer of San Francisco. The $175 million fee award by Judge Breyer in the $15 billion case was shared among about 100 plaintiffs firms that worked on the case alongside lead class counsel Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein. But the judge refused to award fees to about 250 lawyers for individual class members who wanted VW to pay them as well because they’d entered into contingency fee deals with their clients. Those lawyers have appealed, which should result in important guidance on compensating lawyers outside of MDL and class leadership.