Posts Tagged ‘attorneys’ fees’

Lawyers milk Florida accident-bill law for one-way fee entitlements

A Florida law allows persons who have undergone treatment after auto mishaps to sign over to the medical provider their right to sue their insurer under so-called PIP (personal injury protection) auto coverage. Under the provisions of this assignment of benefits (AOB) law, when the medical provider sues, it is entitled to one-way attorney’s fees (payable if it prevails, but not if it loses). These attorneys’ fees can dwarf the underlying sums being sued over — amounting to about $40,000 following a $790 win in one extreme case.

Now Florida attorneys are rolling out tens of thousands of AOB suits, many of small enough quantum that they can be filed in small claims court, even if the fee entitlement thereby triggered is not so small. In Volusia County, where small claims filings more than doubled to over 12,000 cases in 2017, “a single local law firm accounted for all of that increase — and then some — by filing 8,400 cases that year…. In one example, Advantacare of Florida, represented by Kimberly Simoes, filed a lawsuit against State Farm saying the company had not paid it for services it rendered to Stephen Smith. Advantacare was awarded $789.62 according to court files. Simoes was awarded $39,985 in attorney’s fees. Attorney Mark Cederberg was awarded $3,500 for his expert testimony regarding whether Simoes’ fees were reasonable. About a month after the attorney’s fees were awarded, Advantacare dismissed the lawsuit.” [Frank Fernandez, Daytona Beach News-Journal; earlier here and here]

As I have written elsewhere, the true two-way loser-pays systems that operate in most other legal systems take care to avoid the fee-escalation incentives that typify many one-way fee entitlement laws in the U.S. In particular, they tend to hold fee recoveries below actual outlays, and often decline to reimburse fees unnecessarily expended.

Class action roundup

  • “For instance, linalool, which is cited as a cockroach insecticide by the law firm, is found in plants like mints and scented herbs. While it’s also used in insecticides, it’s not poisonous for humans…” [Aimee Picchi, CBS News on suit claiming that LaCroix flavored water wrongly claims “all natural” status]
  • “Appeals Court Strikes $8.7M in Legal Fees Based on Coupons in Class Action Settlement” [Ted Frank objection in ProFlowers and RedEnvelope class action; Amanda Bronstad, The Recorder] “Judge: Lawyers must justify fee requests for investor suits withdrawn vs Akorn over proxy disclosures” [Ted Frank objection in investor class action against Akorn Inc.; Jonathan Bilyk, Cook County Record]
  • Study: class action lawsuits hit innovative companies the hardest [Alex Verkhivker, Chicago Booth on study by Elisabeth Kempf of Chicago Booth and Oliver Spalt of Tilburg University]
  • “It’s Possible Woman Suing Over Sugar In ONE Protein Bars Never Actually Ate One” [Mary Ann Magnell, Legal NewsLine] And it is surprising how many reports continue to indulge the notion that typical consumer class actions spring from consumer grievance as opposed to lawyers’ entrepreneurial spotting of chances [ABA Journal on slack-fill suits]
  • “DOJ Tells Court: Class Lawyers Already Got $60M in Fees. Now They Want More? [Marcia Coyle, National Law Journal on Native American farmer case] “noting that it was difficult for him to believe the few boilerplate documents entered into the record took hundreds of hours to create. ” [D.M. Herra, Cook County Record; Western Union text messages]
  • “State Street settlement fiasco has Arkansas lawmakers questioning state’s role in class actions” [John O’Brien, Legal NewsLine, earlier here, etc.]

“Texas Officials Were ‘In Over Their Heads’ When They Struck Deals With Opioid Lawyers”

“You don’t auction professional services,” said Terry O’Rourke, assistant county attorney for Harris County (Houston), Texas, in charge of the opioid litigation, regarding the hefty 35% fee plus expenses the county has contractually agreed to pay to its contingency-fee outside counsel. Meanwhile, Dallas County for its representation in the same litigation “sets the contingent fee at the lesser of 12.5% or a “base fee,” calculated as four times hourly rates ranging from $900 an hour for partners to $200 for paralegals.” Some of the lawyers hired by Harris County have been active political donors: “It’s not uncommon for elected officials to hire their political allies for contingency fee work.”

Harris County’s contract with three outside law firms also requires the county to pay a fee based on its total recovery before expenses, while many municipal clients have negotiated more favorable deals in which the contingency fee is a percentage of the recovery after expenses….

The fact that some counties agreed to pay all of the expenses associated with their cases while others will pay fees net of expenses also shows a lack of sophistication and the potential for gamesmanship, [Cardozo emeritus professor and legal ethicist Lester] Brickman said. Lawyers in asbestos cases and securities litigation have been accused of double-billing and allocating the same expenses to multiple cases, and it can be difficult for individual clients to uncover wrongdoing unless they obtain records showing the overall distribution of expenses and recoveries – something lawyers rarely provide….

“Few of the cities and counties have required that the expenses claimed by the lawyers be detailed, including providing receipts and other supporting documents,” Brickman said. “There’s a possibility that some lawyers will emulate `The Producers’ and charge aggregate expenses that are in excess of actual expenses,” as has happened with asbestos litigation.

[Daniel Fisher, Legal Newsline/Forbes]

Labor and employment roundup

  • Lancaster, Calif. Mayor R. Rex Parris proposes that city ban employers from requiring male employees to wear neckties [Laura Newberry, L.A. Times]
  • Reasons to settle employment-law claims: “It’s Not the Damages, It’s the Attorneys’ Fees” [Daniel Schwartz]
  • “Court Ruling Casts Constitutional Doubt on State and City Salary-Inquiry Bans” [Marc Dib, WLF; related here, here]
  • I’m quoted hailing Supreme Court ruling on workplace arbitration [Jeff John Roberts, Fortune]
  • Federal labor regulators versus local food truck operators [Ira Stoll]
  • “What is happening to French labor law?” [Tristan Bird, On Labor]

DoJ intervenes against Clean Water Act frequent filer

The citizen-suit provision of the Clean Water Act (CWA) “allows any individual or organization that can establish standing to bring litigation against both private parties and the Environmental Protection Agency (EPA),” and incentivizes such suits by allowing filers to collect attorney’s fees. While some valuable enforcement actions may result, writes Marc Robertson for the Washington Legal Foundation,

it is not difficult for shakedown litigators to identify targets. One especially easy theory to advance in citizen-suit litigation is unlawful stormwater pollution. Stormwater regulations are exceedingly broad, and almost any business whose production process generates as a by-product anything that could be classified as a pollutant is vulnerable to a lawsuit. In many cases, attorneys’ fees can far exceed the damage from the alleged violations, leading companies to settle rather than litigate.

Recently, DOJ filed statements in three ongoing lawsuits that allege violations of stormwater discharge limits. … those suits are just three of more than 150 notices of violation submitted by this same law firm since 2016.

The similarly worded complaints, against industrial facilities in the Los Angeles area, alleged that pollutants at each facility washed off the property during rainstorms. While the government seldom exercises its right to intervene in citizen suits, DoJ in its three filings asked the court to examine whether the actions were truly an effective way to enforce the CWA or were serving other, less public goals. [Alfonso Lares v. Reliable Wholesale Lumber Inc. filing]

February 14 roundup

  • “One-Sided Loser Pays Is the Worst of Both Worlds” [Mark Pulliam at his new blog Misrule of Law, and thanks for mention]
  • My first piece for Quillette debunks claims of jump in rate at which gay men are being murdered in U.S.;
  • Welcome news: Department of Justice memo advises DoJ attorneys to seek dismissal of meritless False Claims Act suits [Reuters, Federalist Society teleforum with Brandon Moss, Greg Herbers/WLF, Michael Granston memo]
  • Empirical evidence on factors that lead to approval of low-quality patents [Timothy Lee, ArsTechnica, noting ideas for improving patent review process: (1) eliminate issuance fees, (2) limit re-applications, (3) give senior examiners more time per patent]
  • “Will we see tort reform in the midterms?” [Joseph Cotto interview with me for San Francisco Review of Books, YouTube audio, 33:51]
  • FSMA will drive many smaller farmers/foodmakers out of business, only question is how many [Baylen Linnekin, our earlier]

Local legal cultures and consumer bankruptcy

“In Memphis, an entrenched legal culture has made bankruptcy a boon for attorneys while miring clients in a cycle of futility.” [Paul Kiel with Hannah Fresques, ProPublica/The Atlantic]

Under federal bankruptcy law, people overwhelmed by debt have a choice: They can either file under Chapter 7, which wipes out debts and, since most filers lack significant assets, allows them to keep what little they have. Or they can choose Chapter 13, which usually requires five years of payments to creditors before any debts are eliminated, but blocks foreclosures and car repossessions as long as debtors can keep up. In most of the country, Chapter 7 is the overwhelming choice. Only in the South, in a band of states stretching from North Carolina to Texas, is Chapter 13 predominant….

Upon filing, debtors are shielded from garnishments and debt collectors. But whereas under Chapter 7 those protections are generally made permanent after a few months, under Chapter 13 they last only as long as payments are made. Most Chapter 13 filers in Memphis don’t last a year, let alone five.

The two options have a different structure of legal fees. While Memphis lawyers typically charge around $1,000 for a Chapter 7, most offer a Chapter 13 for free. “Ultimately, the fees for Chapter 13 filings are higher — upwards of $3,000 — but the payments are stretched over time.” Now, the no-money-down model of Chapter 13 bankruptcy is spreading to Northern states. But there is another point of view as well: “many see Chapter 13 as the more honorable form of bankruptcy because it includes some attempt to repay debts.”

“VW judge dares plaintiffs’ lawyers to go after clients for fees”

“It’s obvious from a ruling Monday by U.S. District Judge Charles Breyer of San Francisco that the judge does not think owners of Volkswagen ‘clean diesel’ cars needed individual counsel. The judge denied motions by 244 plaintiffs’ lawyers who wanted VW to pay them for the time they spent drafting filings for individual car owners, suggesting edits to classwide filings and advising their clients about developments in the case, including advice about whether to participate in the $10 billion class action settlement.” (Lawyers for the class itself, on the other hand, led by San Francisco’s Lieff Cabraser, are on track to get $175 million in fees and costs.) “So if VW doesn’t have to pay these 244 non-class lawyers for their time, will the 3,642 VW owners who signed individual contingency fee agreements with them be on the hook?” While Judge Breyer has instructed VW not to recognize liens for the individual attorney fees, they could still proceed against their clients for collection under the terms of the individual contingency fee contracts. [Alison Frankel, Reuters]

Labor and employment roundup

  • Just another day on the one-way-attorney’s-fee beat: after $87K cop-discrimination verdict, lawyer wants $2.2M award [NJ.com]
  • U.S. Chamber white paper on needed fixes in labor law [Jon Hyman and report, “Restoring Common Sense to Labor Law: 10 Policies to Fix at the National Labor Relations Board”]
  • California employee-seating class actions begin paying off, $700,000 against Abercrombie & Fitch [Ford Harrison, earlier]
  • And good riddance: Trump signs CRA bill repealing labor blacklisting rule for federal contractors [Kathy Hoekstra/Watchdog, Trey Kovacs/CEI, Ford Harrison, earlier, background via PLF]
  • Trend worth resisting, if true: transnational norms emanating from International Labour Organization etc. said to be increasingly shaping U.S. labor law [James Brudney via Employment Law Prof]
  • To protect free speech and jobs, cut the EEOC’s budget [Hans Bader]

“Courts Should Stop Approving Unfair Class Action Settlements”

A “claims-made” class action settlement

allows the defendant to make a large amount of money “available” to class members, but in order for the members to collect, they must jump through the hoops of correctly filing claims. Because of the low response rate in such settlements, the defendants will end up paying much less than the funds made available. Indeed, of the $8.5 million made available to the class members [in an action over gym membership fees], Global Fitness only paid $1.6 million — a payout of approximately 10 percent of the settlement funds. Despite this low payout to plaintiffs, class counsel are still paid a certain rate based on the funds that were made available — not the funds that were actually paid out — in some instances giving them attorney fees larger than the class members’ damages award!

The class counsel here were paid $2.4 million, nearly $1 million more than the class members collected.

Josh Blackman, a Cato adjunct scholar and law professor, is a member of the class and raised objections to the settlement. [Ilya Shapiro and Frank Garrison, Cato, on Blackman v. Gascho]