A Practitioner's Perspective on the Selection of Class Counsel, page 6

A PRACTITIONER'S PERSPECTIVE (continued)

Page 6

Most counsel realized, although courts rarely heeded the previous Task Force recommendation that fees be set at the outset of a case, that in fact there was a "benchmark" in terms of the historical range of percentage fees, within which they could expect an award to be made, based on their performance in a particular case. Thus, there was the incentive to save time, which always works to the benefit of all litigants and the court, and the incentive to maximize the recovery, which benefits the clients. Awarding fees on a percentage basis also does away with time-consuming collateral litigation on fee applications.

In Cendant/Prides we see, the never ending quest for the market. In Cendant/Prides, this Circuit updates the survey of percentage awards in large settlements in an attempt to construct a market, at least in terms of recent "comparables". Courts have periodically engaged in such endeavors, which have proved useful to the bench and bar in terms of the range of percentage awards which are, presumptively, appropriate in a given range of recoveries, or other circumstances. In this sense, Cendant/Prides follows the tradition of earlier decisions, such as Activision and MashburnFTNT2, that thoroughly surveyed the fee award jurisprudence to determine ranges or benchmarks of appropriate awards.

If this jurisprudential marketplace is to be revived, there is less need for auctions at the outset of the case, unless the auction is transformed into a primarily qualitative process for selecting class counsel, or lead plaintiffs' counsel, at the outset of the case. It is my suspicion that the court's desire to identify and establish, early on, the counsel with whom it will be dealing, has lead to the embrace of the auction as a mechanism to justify this process, despite the fact, as the Manual notes, that courts already have the authority and discretion to select and appoint counsel, through an application process, without conducting a fee auction to do so.

Yet another market may be developing that can be invoked to determine an appropriate range of percentage fees in complex class cases of any type. In the past five years, the increasing use of the Internet by clients in mass tort cases has lead to a situation in which the clients themselves exchange information about the fees charged, and the qualifications touted, by the many law firms that are competing for clients. For example, in the Breast Implants, Diet Drugs, and Sulzer Hip Replacement mass tort litigations, clients visited the official court websites and bulletin boards to obtain ongoing information about the litigation, hit the plaintiffs' lawyers firm websites, and established their own support groups and Internet chat rooms to exchange information on their medical conditions, possible treatments, liability issues, and the fees their lawyers were charging.

As a result, clients began to negotiate, individually, the terms and conditions of previously standardized contingent fee agreements. Again as a result, percentages have trended downward: in the mass tort context, a 25% contingent fee agreement, rather than a "traditional" 33 percent/40% agreement, has become common. Clients have also negotiated on costs, and on exempting certain categories or levels of recoveries from application of a percentage award.

This situation is beginning to approximate the "sophisticated client" or "empowered plaintiff" model discussed by courts and commentators. In these mass tort cases, attorneys are looking to aggregate large numbers of clients in order, to gain the bargaining and leadership leverage, and economies of scale, that result. These are the same characteristics that mark formal classes, as well as informal aggregates, of clients. Accordingly, the prevailing contingent fees in mass tort litigation may serve as a useful analog to appropriate percentage fees that may be awarded in class actions.

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