A Practitioner's Perspective on the Selection of Class Counsel, page 7

A PRACTITIONER'S PERSPECTIVE (continued)

Page 7

Tort claimants possess claims that are both economically valuable and personally important; they are thus highly motivated to bargain for the best deal with their attorneys. The exchange of information, via the Internet, gives them both the strength of information, and the power of numbers. Because personal injuries -- circumstances that effect their daily lives and the quality of their lives -- are involved -- these clients are probably more motivated in negotiating with potential attorneys than are the much-touted institutional investors in the securities context. Thus, the resulting "market" of attorneys' fees, at least as it applies to analogous tort or consumer class action litigation, may be particularly valuable, and may substitute for auction bidding in determining the percentage fee, or range of fees, that the court establishes as the presumptive fee at the outset of the case.

CONCLUSION

Active court participation in the selection of lead counsel in a class action early on promotes effective case management. Awarding fees on a percentage basis aligns the interests of class counsel and the class, avoids collateral litigation about fees, and rewards prompt resolution. Setting the percentage ex ante through a market mechanism, such as an auction, reduces the fee paid by the class and raises the net recovery to the class. Court review of the ex ante fee at the conclusion of the litigation can ensure that unforseen events do not cause unfairness to either the class or its class counsel.

*Partner, Lieff Cabraser Heimann & Bernstein, LLP, San Francisco/New York. Thanks to my partner Melanie Piech who provided her insights and participated in the preparation of this statement.

For example, the "Totally Hip Support Group" formed by recipients of the Sulzer hip prosthesis that is the subject of In re Inter-Op Hip Prosthesis Product Liability Litigation, MDL 1401, rates and discusses plaintiffs' lawyers in its website chat room. One discussion, earlier this month, related specifically to attorneys' fees, and discusses the wisdom and necessity of contingent versus hourly fees in general, and the 1/3 fee in particular. In response to a suggestion that plaintiffs should try to avoid contingent fees and pay counsel by the hour, one patient responds:

"The alternative would be that you pay them by the hour, win or lose. The trouble with this is that it can get expensive very fast. And it gives them an incentive to run up the number of hours spent shuffling papers. With the contingent fee, at least it keeps them focused on getting the largest possible settlement."

With respect to the contingent fee itself, the word is out: "No, they don't expect you to pay 1/3." As one client reported,

"You get what you negotiate with your lawyer. You can get them to agree that they will pay any costs, or to do it for less than 1/3, or both. I got both. In this situation, you pretty much just have to ask for it. Plenty of lawyers want the kind of money involved here, so your lawyer should do this for less. Their other option is to get ‘100% of nothing' if you go across the street. And this is very much less work for them, and has a very much higher return to them, than the usual one-of-a-kind case they get. But -- you've got to ask."

The notion of informed, unsophisticated tort clients, and the sanctity of the "standard" contingent fee contract, is obsolete. There is a market in the making; one that may serve as a useful factor in setting the market for class action contingent fees.

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