Texans for Lawsuit Reform

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In the News

Judge to opioid lawyers: Show me you’re worth 7% of multibillion-dollar settlement

Legal Newsline, June 5, 2020

By Daniel Fisher

CLEVELAND (Legal Newsline) – The judge overseeing federal multidistrict litigation against the opioid industry has given plaintiff lawyers three weeks to provide more information to justify their request to steer 7% of any global settlement toward a “common benefit fund” for lead attorneys, which could amount to more than $3 billion based on reported settlement amounts.

The order follows recommendations of William B. Rubenstein, a Harvard Law School professor and expert on class actions, who submitted a report suggesting caution on approving any fees given the complexity of the opioid litigation and strong opposition from state attorneys general and others.

Earlier this year, AGs from 37 states urged U.S. District Judge Dan Aaron Polster, who is overseeing the federal MDL, to reject the fee request because it might endanger their own negotiations and siphon away money that should be used to address the opioid epidemic.

Rubenstein took those complaints seriously, saying in his 10-page report that the opioid MDL is unlike most multidistrict litigation, in which a committee of plaintiff lawyers negotiate a settlement that concludes all litigation at once. In those cases, the lawyers who did most of the work are entitled to take a slice of the fees and expenses as compensation, while individual plaintiffs pay the rest to their own lawyers under existing contingency fee agreements.

Here, state AGs are playing a lead role in negotiating any settlement entirely outside the MDL. Judge Polster has no jurisdiction over those cases and the AGs argue there is no power to tax them for the efforts of private attorneys. After more than two years of intense litigation in federal court, it is far from clear the private lawyers representing thousands of cities and counties can deliver a settlement that provides the global peace opioid defendants will require in exchange for their money.

“What is unique here is that it is entirely unclear at this point if an aggregate settlement is feasible, what structure it might take, which defendants will settle, what role this forum will play in it, and whether the settlement will require a `common benefit fee’ approach,” Rubenstein wrote.

Private lawyers say they have spent more than $100 million and 1.2 million hours on the opioid litigation so far. Given much of that money has likely been supplied by hedge funds and other outside funders, law firms and the entities funding them are both anxious to start seeing a return on that investment. While some states are represented by those same private lawyers, other states are handling the litigation in-house and might be more interested in injunctive relief that doesn’t yield fees, such as consent agreements to change how the opioid industry does business.

In his report submitted June 3, Rubenstein noted that the firms on the Plaintiffs Executive Committee haven’t supplied any documentation to show how much time and money they’ve spent so far. “The record would be stronger if their legal arguments were substantiated with proper supporting affidavits or documents,” he wrote.

The 7% request for fees and costs is high based on research Rubenstein cited in his report. His study of 35 fee assessments found a median of 6%, but that doesn’t fully reflect the fact common-benefit fees tend to fall with the size of the settlement. Plaintiff lawyers should provide more information on how the fee should be adjusted for the size of a settlement as well as the additional fees lead lawyers and others will earn under their contingency fee agreements. Most lawyers representing cities and counties have negotiated contracts paying them 20-30% of any money recovered.

The professor offered several more recommendations, all of which Judge Polster adopted in his order. They include briefing on the following questions:

-How likely is it a global settlement will include specific funds to pay private attorneys’ fees, so no common benefit fund order is needed. Can the court wait to find out?;

-How likely is it plaintiffs and defendants in a round of bellwether cases scheduled for trial later this year will agree on a common benefit contribution? If it’s unlikely, explain the obstacles and how they might be resolved; and

-How likely is it the lead plaintiff lawyers can negotiate an agreement with state court litigants operating outside the reach of the MDL judge? If they can’t reach agreement, identify the obstacles and explain whether Judge Polster can order a lien on state-court proceeds anyway.

Judge Polster gave the lawyers 21 days to supply additional briefs answering Rubenstein’s questions.

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Texans for Lawsuit Reform

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Texans for Lawsuit Reform

Texas ports are thriving today, but in the early 2000s, abusive personal injury lawsuits threatened to shut them down. As the Port of Houston begins a long-awaited expansion, read more about the common-sense lawsuit reform in 2007 that saved our state’s shipping industry in this week’s TLR blog, For the Record: bit.ly/3aeTy6n ... See MoreSee Less

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Texans for Lawsuit Reform

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Texans for Lawsuit Reform

5 days ago

Texans for Lawsuit Reform

In case you missed it: Specialized business courts like the Delaware Court of Chancery can be an important addition to a state’s economic foundation. These courts quickly and expertly handle complex business litigation, freeing up other courts to handle other types of cases. Read and share: bit.ly/3y7zwnI ... See MoreSee Less

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