Report on Contingent Fees in Class Action Litigation January 11, 2006

Article excerpt

Task Force on Contingent Fees, Tort Trial and Insurance Practice

Section of the American Bar Association*

Sandra R. McCandless

Partner, Sonnenschein Nash & Rosenthal, LLP

San Francisco, California

(Tort Trial & Insurance Practice Section Chair, 2005-06)

James K. Carroll

Partner, Fowler, Rodriguez, Chalos, Flint, Gray, McCoy, O'Connor Sullivan & Carroll, LLP

New Orleans, Louisiana

(Tort Trial & Insurance Practice Section Chair, 2004-05)

Linda A. Klein

Partner, Gambrell & Stolz, LLP

Atlanta, Georgia

(Tort Trial & Insurance Practice Section Chair, 2003-04)

Steven B. Lesser

Shareholder, Becker & Poliakoff, P.A.

Ft. Lauderdale, Florida

(Chair, Task Force on Contingent Fees)

Tort Trial & Insurance Practice Section

Task Force on Contingent Fees

Steven B. Lesser, Chair

Shareholder, Becker & Poliakoff, P.A.

Ft. Lauderdale, Florida

Edward R. Blumberg

President, Deutsch & Blumberg, P.A.

Miami, Florida

Janice P. Brown

Principal, Brown Law Group

San Diego, California

Thomas A. Demetrio

Shareholder, Corboy & Demetrio, P.C.

Chicago, Illinois

Lewis H. Goldfarb

Lew Goldfarb Associates, LLC

New York, New York

Kim D. Hogrefe

Attorney and Managing Director, Chubb & Son

Warren, New Jersey

Perry K. Huntington

Attorney and Senior Vice President, AIG Technical Services, Inc.

New York, New York

Robert Johnson

Senior Counsel, McDonald's Corporation

Chicago, Illinois

Daniel M. Klein

Partner, Buckley & Klein, LLP

Atlanta, Georgia

Marc S. Moller

Partner, Kreindler & Kreindler, LLP

New York, New York

Professor Charles M. Silver

The University of Texas Law School

Austin, Texas

Professor Patrick E. Longan, Chief Reporter

Mercer Law School

Macon, Georgia

Professor D. Christopher Wells, Reporter

Mercer Law School

Macon, Georgia

I. INTRODUCTION

The Task Force on Contingent Fees of the Tort Trial, and Insurance Practice section of the American Bar Association was created in the fall of 2003 to study the role of contingent fees in the American judicial system. In its first year, the Task Force heard from a variety of invited guests about contingent fee issues in medical malpractice actions and class actions. The Task Force issued its first report on medical malpractice actions in the fall of 2004.1 In its second year, the Task Force turned its attention primarily to class action cases, with particular attention to contingent fees in securities, antitrust, and consumer cases. These are class actions in which a "common fund" is created from which attorneys' fees can be paid. The Task Force heard testimony about civil rights actions and other cases in which fees are shifted by the applicable statutes. There was some discussion of cases in which the primary relief was not monetary, but the primary focus of the Task Force's discussion was the payment of contingent fees in common fund cases. That is the exclusive subject of this Report.

The Task Force met with leading academics, practitioners, and judges to hear from those various perspectives about how contingent fees are awarded in class actions, what problems have been encountered, and how the system could be improved.2 Members of the Task Force, which included members of the plaintiffs' and defense bar as well as representatives of academia and the insurance industry, brought their own expertise to the discussions.3

The Task Force benefited not only from the active participation of its witnesses and members, but also from the efforts of previous studies of contingent fees in class actions. …