For the last six or seven years, a growing academic literature has put forward the argument that the primary justification for class actions is not to compensate absent class members, but to deter corporate wrongdoing. That justification has formed the basis of a number of arguments, from Professor Fitzpatrick’s proposal that class action attorneys earn a 100% commission on their cases to Professor Lahav’s that the law should go a little easier on the class-action lawyer. It also underlies many of the fears that tightening the class-action rules may lead to rampant corporate misconduct.

Few practitioners or scholars have … Continue Reading

Last year, Vanderbilt professor Brian Fitzpatrick made the bold argument that class action plaintiffs’ attorneys aren’t paid enough. Now, the University of Pennsylvania Law Review’s online presence, PENNUmbra, has a response by University of Arizona professor David Marcus

Marcus levels several criticisms against Fitzpatrick’s proposal. I’m going to ignore the easy ones and focus on two of his more interesting arguments. First, Marcus focuses on the effect of the Rules Enabling Act:.

Fitzpatrick believes that Federal Rule of Civil Procedure 23(h), which licenses "reasonable" fee awards in class actions, permits courts to do what he urges. But the

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Today, the United States Supreme Court hears oral argument in Concepcion v. AT&T, a case on appeal from the Ninth Circuit concerning whether the Federal Arbitration Act preempts states like California from requiring arbitration clauses to allow for classwide arbitration. (The venerable SCOTUSBlog has an excellent roundup of the issues and briefing.)

I’m not interested in pre-gaming the argument. (Although if I were a betting man, I’d lay odds on the Roberts Court finding in favor of AT&T.) I’m more interested in the rash of stories and op-eds (like this one from Vanderbilt Professor Brian Fitzpatrick) that … Continue Reading

One of the larger points of contention in class-action settlements is the size of the attorneys’ fees. Indeed, with a few exceptions, no one defends the size of attorneys fees, and the most heated criticisms decry the size of the fees compared to the recovery the class actually receives. Which is what makes a recent case from the Ninth Circuit, In re Mercury Interactive Corp. Securities Litigation, so surprising: it turns out that Rule 23 already has one simple, often-ignored measure for limiting the amount of fees class counsel can charge.

The Mercury case arose after public … Continue Reading

 Brian Fitzpatrick (of "Objector Blackmail" fame) has published another article in the University of Pennsylvania Law Review asking the provocative question: are class-action lawyers paid too little? His provocative answer: yes they are. According to Fitzpatrick, in small-stakes class actions, lawyers should collect a 100% contingency fee. What’s his justification? An argument he refers to as "insurance-deterrence theory." Fitzpatrick assumes that any money that goes to class-action lawyers serves a deterrence function, because not only does it cost the defendant money, it also funds further opposition to corporate wrongdoing. (Fitzpatrick is not the only person to … Continue Reading

Vanderbilt law professor Brian Fitzpatrick’s year-old paper The End of Objector Blackmail has received a fair amount of attention from various lawyer-bloggers and lawyer-tweeters in the last week.  The chatter stems from the attention he draws to a practice known as quick-pay provisions – provisions to pay plaintiffs’ counsel immediately when settling a case, even before the class has received any relief.

The logic behind these provisions is that, if plaintiffs’ counsel were paid up front, they wouldn’t have to bribe objectors to drop their objections to the proposed settlement, which would reduce the amount of litigation over … Continue Reading