Front-End Fiduciaries: Precertification Duties and Class Conflict

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INTRODUCTION  I.   CLASS CONFLICT IN CLASS ACTION LITIGATION      A. The Back-End Focus      B. Means and Ends II.  THE IMPORTANCE OF FRONT-END FIDUCIARIES      A. CAFA-Created Conflict      B. Binding Stipulations to Avoid CAFA Removal: A Case Study      C. The Need for a Framework III. A FRAMEWORK FOR RESOLVING LOYALTY PROBLEMS ON THE FRONT END      A. The Contours of a Front-End Fiduciary Duty      B. The Framework Applied to Binding Stipulations         1. Binding stipulations prejudice substantive legal rights         2. Probability of success multiplied by potential judgment            amount         3. Ex post judicial oversight         4. The inadequacy of opt-out CONCLUSION 

"[A] lawyer must never forget that he is the master. He is not there to do the client's bidding.... [T]he lawyer must serve the client's legal needs as the lawyer sees them, not as the client sees them." (1)


The traditional wisdom among attorneys and jurists has been that while clients decide the ends of lawsuits, their attorneys control the means of achieving those ends. Clients decide whether to settle suits or plead guilty to crimes, but their attorneys decide, sometimes contrary to clients' wishes, which legal arguments are made. Accordingly, commentators have given many means decisions less attention: which claims are pleaded in a complaint, which witnesses are called at trial, and whether an issue is raised on appeal are all decisions that are frequently, and without objection, made by an attorney. Instead, the focus has conventionally been on ends: whether the outcome of litigation was fair and in line with what was sought by the client.

The potential for conflicts of interest in class actions between attorneys and class members has prompted renewed attention to decisionmaking about litigation ends. In class actions, where most "clients" are absent, decisions about ends--in particular, whether to settle--must be made by an attorney. Much has been said of the potential for conflicts to emerge between attorneys and absent class members in these circumstances. (2) Scholars have outlined the misincentives that cause conflicts to emerge, the extent to which these conflicts undermine the class action as a device for vindicating claims, the problems that arise when settling claims, and whether, as a result, settlements accurately reflect the merit of the suit. (3) Myriad solutions have also been suggested for dealing with these conflicts--ranging from applying more scrutiny under the adequacy requirement of Rule 23(a) of the Federal Rules of Civil Procedure, to providing a more robust notice and opt-out regime, to requiring more active informed consent from unnamed class members. (4)

Taken together, this scholarship can largely be defined by its focus on settlements. Because many analyses of conflicts of interest are retrospective, making ex post judgments about the fairness of a lawsuit's outcome, almost all of the relevant commentary deals with ethics at the end of litigation, following class certification. As a result, most of the discussion about solutions for dealing with these conflicts takes place in a Rule 23 certification framework. Few commentators have recognized the possibility of conflicts of interest at the beginning of class litigation--or, as Linda Mullenix has described it, "at the front end" (5)--and those who have done so have only urged that Rule 23 certification take place sooner. (6) Less attention has been paid to precertification conflicts or to the fiduciary duties, if any, a plaintiff's attorney owes to a class prior to certification. At the same time, while some courts recognize a fiduciary duty owed by class counsel to the unnamed class members before certification, courts are not uniform on this point. (7) Even assuming that courts do recognize a precertification duty, the contours of that duty are unclear.

This Note fills two gaps in the literature about conflicts of interest in class actions. …