Vanderbilt University Law School professor Brian Fitzpatrick’s new book, The Bourgeois Case for Chic Actions, has a annoying title. It’s not shocking that the book’s arguments — against freedom of arrangement to accede to adjudication clauses, for distorting the chargeless bazaar through absolute self-appointed plaintiffs’ attorneys agreeable in adjustment by activity — are not decidedly “conservative.” (Full disclosure: Fitzpatrick critiques my assignment in his book and has testified as an able adjoin my clients’ objections to calumniating fee requests several times.) What’s added hasty is that the book is not absolutely a case for chic actions.
Fitzpatrick’s main argument is congenital on apocryphal premises. Fitzpatrick says meritless litigation isn’t a botheration because class-action attorneys get paid alone on contingency. Thus, their incentives are to accompany acceptable cases where their audience get relief; the added relief, the added acquittal for the clients. Corporate defendants are appropriately beat from atrocity by the payments to chic associates and attorneys in these cases, a amusing benefit.
But all too often, courts pay attorneys based on the illusion of relief: cy pres payments to the attorneys’ and defendants’ admired charities; phony-baloney injunctions that do no acceptable for the class; coupons or added claims processes area over 90 to 99 percent of the class gets nothing, but courts pay attorneys a allotment of the fabulous 100 percent recovery “made available.” And anybody has the allurement to accomplish that happen: The actor wants to get out of the case as cheaply as possible; the plaintiffs’ attorneys appetite to aerate their fees. Because courts abundantly let them get abroad with it, plaintiffs’ attorneys would amount themselves millions if they didn’t try to use these gimmicks to account themselves at the amount of their clients. (The chat “fiduciary” never appears in the book.) The Tenth Circuit recently affirmed approval of a $0 adjustment area attorneys accustomed $20 actor — relying on a faulty judificial assessment that relied on a Fitzpatrick law-review article to absolve the disparity.
But back attorneys profit alike back their audience get abutting to annihilation or less, it becomes a applicable business model to accompany and achieve meritless chic actions. Because the amount of defense is so aerial — alike if a business could be promised that a balloon wouldn’t aftereffect in an erroneous acumen — defendants find it cheaper to pay attorneys to go away than to fight. But backbreaking innocent corporations with millions in activity taxes is the adverse of the aegis that Fitzpatrick trumpets as chic actions’ benefit. It’s odd that a book whose altercation is so codicillary on the abstraction of incentives abundantly ignores the perverse incentives that affect every class-action settlement. But it is by misnaming this government-created rent-seeking apparatus — whereby above-market asset fees for attorneys are set after aggressive behest — “the chargeless market” that Fitzpatrick asserts chic accomplishments are “conservative.” Yet if the arrangement were alive the way Fitzpatrick’s model assumes, my organization wouldn’t accept been able to win so abounding federal appeals and hundreds of millions of dollars for consumers by arduous calumniating adjustment practices.
Even the case Fitzpatrick is proudest of — a civic case adjoin banks over debit-card overdraft fee assessments set by arrangement — is beneath than persuasive. Consumers received less than 7 percent of their defalcation fee payments as refunds (a rare settlement where chic associates were paid directly); the attorneys accustomed over $123 million with the advice of Fitzpatrick’s able testimony. If banks did something “illegal” by charging defalcation fees in the address their barter agreed to, again they paid a baby tax on billions of ill-gotten gains and got to unjustly keep the lion’s share. But if banks did annihilation wrong, and spent hundreds of millions to assure adjoin the accident of an erroneous multibillion-dollar judgment after the adjudicator banned to bound abolish the case, then that is also an obvious injustice. (Ironically, the cloister acclimated that huge accident of plaintiffs’ losing as area to accolade an above-average fee. Talk about abnormal incentives!) Either way, bridle amount is minimal or alike counterproductive. And the case demonstrates that the ambitious incentives of attorneys are beneath to rectify wrongdoing than to acquisition abysmal pockets whom they can falsely accuse of wrongdoing.
Meanwhile, banks compensated for the settlement’s required change in defalcation practices by adding account debit-card fees that affect consumers who never had an overdraft. Countless lower-income consumers are forced to go unbanked back they would accept preferred what the attorneys stopped. That undemocratic deadweight accident and regulation-by-litigation restricting freedom of arrangement is something, but it isn’t conservative.
Toward the end of the book, Fitzpatrick acknowledges criticisms and proposes a cardinal of reforms. Yes, merger litigation is “rightly criticize[d],” as are chic accomplishments that abuse billions in approved damages. Yes, accomplish it easier to bound abolish meritless cases afore defendants run up abundant activity costs, including allowing interlocutory appeals, and require plaintiffs to share defendant’s discovery expenses. These, and others, are all interesting academic ideas, admitting ones absurd anytime to win bipartisan political support, accustomed the billions they’d cost the balloon bar. But a case that recognizes the charge for such dramatic reforms is a case for article added than the American chic activity as it exists in 2019.
Ted Frank is a Washington, D.C., advocate and director of the Center for Chic Activity Fairness at the Hamilton Lincoln Law Institute.
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