Legal Fee Sharing Where Part of Class Action

There are two studies that indicate any concerns of attorney fees in representative actions escalating may be unfounded. The Results in both studies show that fess in class action lawsuits rarely go over the contingency rate of the customary 30 percent.

The National Economic Research Associates, which is an international consulting firm for economic issues, published a paper concluding that regarding fees in securities class action lawsuits that not much has changed over the past several years, even though some judges deem otherwise. The study shows that regardless of the case size, the average fee remained 32% of the settlement. The study reviewed securities class action lawsuits from 1991 to 1994.

The was a broader study by The Federal Judicial Center, which was created by a congressional act in 1967 to improve the growth of Judicial Administration in the federal courts and now has become an agency for policy research, planning, continuing education and systems development in Washington D.C., reviewed ALL class actions from 7/1/92 to 6/30/94, in four federal district courts: the Southern District of Florida, the Northern District of California, the Eastern District of Pennsylvania and the Northern District of Illinois. Out of the 407 cases reviewed, only 152 were certified as class actions, and 59 of those certified, were for settlement purposes only.

The FJC drafted a report and concluded that the net monetary distributions to the class regularly exceeded attorneys fees by a substantial margin. In cases where the benefits to the class can be quantified, the ‘Fee-Sharing’ rate infrequently exceeded the traditional 33% contingency fee. But, despite this evidence of ‘Shared Fee’ stability, the general perception is one where attorneys are making too much money.

In some cases, the ‘Shared Fee’ requests are excessive, which could produce harmful backlash effects on class action lawsuits, by having Legislators step in and limit the class actions. If that happens then a there might be a significant reduction in attorneys who will represent the plaintiffs. Having Legislation step in and cap or reduce the ‘Shared Fees’ will only injure the consumers in need of representation against a large corporation that caused harmful acts.

This entry was posted on Monday, March 1st, 2010 at 1:14 pm and is filed under Legal. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

 

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