Posts Tagged ‘attorneys’ fees’

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]

Liability roundup

CRST Van Expedited v. EEOC

Another unanimous loss for Obama, another trip to the dunking booth for the Equal Employment Opportunity Commission: my new Cato post on last week’s Supreme Court decision on the proper standard for awarding attorneys’ fees to prevailing defendants in Title VII employment discrimination cases. Justice Thomas has it right in his concurrence: the ruling at hand is all well and good, but the Court needs to go further and rethink precedents that bend over backward to give prevailing employment plaintiffs a set of fee entitlements that it does not allow to prevailing defendants (& welcome SCOTUSBlog readers).

“‘Good ol’ boys club’ in multidistrict litigation: Same plaintiffs firms repeatedly lead suits”

A familiar roster of plaintiff’s firms keep grabbing profitable lead positions in mass litigations that begin with multiple filings in different states. Judges and critics suspect that committees are often overstaffed to set up a likelihood of higher fees, and that cozy mutual backscratching helps allocate lucrative positions to repeat players in the club. [Amanda Bronstad, National Law Journal]

Arizona cops vs. Rhonda Cox’s truck

Cato’s Caleb Brown talks with attorney J. Cabou about the legal fight over Arizona’s civil asset forfeiture law, which authorizes “one-way” fees to be made available to prevailing law enforcement, but not to prevailing citizens. Note, by the way, that the (very real) due process objections to one-way fee-shifting are in many ways equally applicable to one-way fee-shift provisions found in numerous other areas of law, including discrimination and environmental statutes.