Posted in Law

Class Action Lawsuits and Unethical Settlements

 

AN INVITATION FOR CLASS ACTION ATTORNEYS TO ENGAGE IN UNPROFESSIONAL CONDUCT?

 

No portion of this article, including this web page, may be copied, retransmitted, reposted, or duplicated in significant portion without the express written permission of Dr. Michael Guth. Users are always welcome to establish links to this web page or to quote from it freely. Modern multiforum litigation creates a conflict of interest environment in which attorneys representing class plaintiffs may be tempted to settle class action lawsuits for the wrong

=

Attorneys Conduct While Serving as Class CounselDuring the course of the class action, the class counsel must comply with the notice requirements of Fed. R. Civ. P. 23(c)(2) or a similar state rule. [Section (C)(1)]. If the class representative asks the lawyer to take some action that either violates the law or harms the interests of the class, then the lawyer should ask the class representative to reconsider the matter. If the class representative persists with his instructions, then the lawyer may ask the court for permission to withdraw as class counsel. Furthermore, the lawyer may make a Anoisy withdrawal,@ as defined in Model Rule 1. 16.

Section (C)(2) follows the process of Model Rule 1. 13, in which an officer of an organization asks the attorney representing the organization to act unlawfully or in a manner inconsistent with the best interests of the organization. In the case of class representation, the class counsel will receive instructions exclusively from the class representative; the class counsel has no higher authority to whom he can appeal adverse instructions. The class counsel=s only recourse is to request permission to withdraw from the court.

 

Under Model Rule 1. 13, a lawyer representing an organizational client must explain to any constituent of the organization, at any time when the constituent=s interests are adverse to those of the organization, that the lawyer represents the organizational client and not the constituent. Section (C)(3) establishes a corresponding duty for the class counsel with respect to any interest of the class representative that may be adverse to those of the class as a whole. Section (C)(4) prohibits the lawyer from discussing his fee with anyone except the class representative and the court.

 

This section is a key to the entire new proposed ethical rule, because the crux of the problem with multiform class action representation has been lawyers bargaining away the claims of class members in exchange for an attorney fee award as part of any proposed settlement. In the context of ordinary, single-party litigation, the suggestion that plaintiff=s counsel would discuss with the defendants a Adeal@ that includes his payment for services seems unethical and collusive. Yet this practice has prevailed in class action litigation for years.

 

This section of the proposed new rule is intended to eliminate the potential for class counsel to enter into award fee negotiations with the defendants, or their counsel, that might influence his recommendation to settle the class action. Similar provisions in Section (C)(9) and (C)(10) prevent the class counsel from submitting to the court a proposed settlement, which offers class members little or no relief, but which includes a significant or disproportionately high payment of attorney fees.

Section (C)(5) imposes an ethical duty for the class counsel to act impartially in actions concerning the class members. Sections (C)(6) and (C)(7) discuss the lawyer=s duty to keep information confidential and is patterned after Model Rule 1. 6. Section (C)(8) requires the lawyer to consult with the class representative on decisions that affect the litigation and advise him on theMichael A. S. Guth, Ph. D. , J. D. , is a constitutional law attorney, legal brief writer, and health care researcher based in Oak Ridge, TN.

A web page describing his law practice and other legal writings is available at biz His current research comprises inefficiencies in health care insurance, pharmaceutical pricing, and best available treatments for Alzheimer? disease, osteoporosis, and high cholesterol. He has developed and/or taug ht more than twenty on-line courses at more than a dozen educational institutions in the areas of economics, finance, business strategy, business law, health care administration, politics, a

Leave a Reply

Your email address will not be published. Required fields are marked *