Paying The Lawyers' Expenses in Class Actions

by  Brian Wolfman

When a class action settles (or in the unusual case where the plaintiffs win a litigated judgment), the court awards the plaintiffs' lawyers fees and expenses from the class's recovery. That's a good thing because lawyers won't bring cases if they can't get paid. On the expense side, lawyers have to dig into their pockets to pay the costs of the litigation. One thing the lawyers must do is travel. They need to take trips to interview witnesses and experts, gather facts, take discovery, and attend court. And, so, when the plaintiffs win or settle, the class members should reimburse their lawyers for their reasonable travel expenses. The key word here is "reasonable."

Leigh Jones of the National Law Journal has penned this story about a federal judge presiding over a class action in Washington state who, Jones reports, slashed the lawyers' outlandish expense requests. Here's an excerpt:

A federal judge in Washington state has publicly disciplined two attorneys from a prominent plaintiffs' firm for claiming unreasonable expenses while handling a securities class action. ... The two attorneys were lead counsel for a plumbers pension fund in a 2007 case against Ambassadors Group Inc., a publicly traded student exchange company in Spokane, Wash. The case settled last year for $7.5 million. The attorneys originally claimed about $223,000 in expenses but revised that figure to $114,137 after Quackenbush questioned the amount, according to an opinion he issued in May. Following that revision, the judge and his staff took a closer look at other expenses claimed by the firm. Some of the more troubling expenses, the judge wrote in May, included a $400 claim for a "pre-mediation" dinner for four that included two $70 bottles of wine and a $60 tip. It is unclear which Robbins Geller attorneys claimed those expenses. [The Robins Geller firm represented the plaintiff class.] Also cited was a $1,676 first-class ticket for an investigator's air travel and another first-class plane ticket costing more than $2,100.

I admire Judge Quackenbush for really digging in. In my experience, sometimes no one cares or pays attention. In one case, I repeatedly asked the court-appointed Special Master (who was in charge of on-going fee and expense recommendations in the case) to limit reimbursement of air travel to regular coach fares. I was rebuffed, even though the first-class flights cost as much $8,000 each (and coach fares could be had for $1,000 or so). I complained that lawyers were getting reimbursed for meals at fancy restaurants -- gourmet meals on the class members' tabs without the class members' knowledge -- when perfectly good meals could be had for far less money. No one cared. In that case (and other class actions in which I've been involved), the lawyers booked rooms at the fanciest hotels in town.

These types of expense requests are just awful. It's fine if people want to stay at swanky hotels and eat at high-end restaurants. I love good food. But it's ridiculous for class members to foot the bill. What's the theory? That the lawyers have to eat and drink like kings and queens to do a good job in court the next morning? Please.

But there's more to it than just the odor created by an occasional National Law Journal article. And I'm not worried just because class members are paying a few thousand here and there for their lawyers' high-class habits (though that's bad).

The problem goes deeper. Class actions are important tools for justice. They have served us well for decades. I've been working on class actions for 25 years, and, in most cases, the lawyers do right by their clients. But, as our readers know, class actions are under fire in the courts and legislatures, generally for the wrong reasons (and precisely because they provide justice to people when individual suits and arbitrations can't). Do we really want to give ammunition to the anti-class-action crowd?

Listen up lawyers! Eat at the local deli. Shop around for a reasonably priced hotel. Fly coach. Or pay for the high life on your own.

Comments

[Louise Miller]

Excellent review from Mr. Wolfman.
I wish I could be more constructive on the subject but he has said it all beautifully and with elegant restraint.