Lawyer fees - what happened here

[Texas Proud]

I know there are some lawyer on this site, so do not shoot me...


Saw this article and was a bit surprised that the lawyers are going to get $2.7 mill and the whole class may not exceed $900,000. And the fee was being reduced from $4.77 mill.... A bit on the strange side when lawyers get 3x to over 4x of the plaintiffs....

Suit on front load washers that were built defective...



https://www.yahoo.com/news/sears-whi...--finance.html

[Gumby]

It helps to understand what a class action is. Consider a scenario where a manufacturer makes a defective product. A large number of consumers are harmed because the product is defective. But the damages suffered by any one of those consumers is so low that there is no single consumer who will bring an action to hold the manufacturer to account, because the costs of litigation in relation to the amount of harm can't justify it. Together, however, the consumers could bring one action to collect damages for all of them. But will they?

The issue is known in some circles as the collective action problem. Some consumers may be willing to pitch in to pay a lawyer to bring a collective action on their behalf against the manufacturer of the defective product. But many consumers, if not most of them, will be happy to free ride on the efforts of others, stepping in at the end to hold out a hand for some recovery, but not willing to chip in early on when the outcome is uncertain.

The class action case avoids these problems. Class counsel develops the case, fronts all the expenses and spends a substantial amount of otherwise unremunerated time prosecuting the manufacturer. NB - If you have ever been involved in litigation, you know that it is long and drawn out and costs a fortune. And the reason they do this is because they will get paid handsomely if they win.

Suppose, at the end of the day, class counsel prevails in litigation or reaches a settlement. Each member of the class then obtains a recovery that they would not otherwise have received because the case was not cost efficient to bring on their own. Class counsel gets paid for the time and effort they put into a case with uncertain outcome. Yes, there is an entrepreneurial component, but don't forget that if they lose, they get nothing. They won't recover anything for all the time they themselves spent on the case, and they may be out a substantial sum of actual cash that they used to pay experts, take depositions, process documents, etc.

Comparing the amount the class receives collectively to the amount class counsel receives is deceptive and unfair. If there were no class counsel, the class members would receive zero.

[euro]

Quote:

Originally Posted by Gumby Comparing the amount the class receives collectively to the amount class counsel receives is deceptive and unfair. If there were no class counsel, the class members would receive zero.

Helpful summary - thanks for that, Gumby! However, it is also true that if there were no class then there would be no need for class council. At the end of the day, most of these class actions suits will pay out somewhere in the $2-25 range per member (I have been part to many of these over time, and so has probably everyone else). In other words, barely worth the effort of filling out the form. The only party that really benefits are the lawyers because ultimately, the overall cost gets recovered by the business through higher prices for the consumer. Other than lawyers making a living (and I acknowledge that is important too, especially if you are a lawyer), there is little overall benefit to society from most of these lawsuits.

[CaliKid]

The reality, in my mind, is that many class actions prevent future abuse by big corporations. I can't remember the term but the attorney is sort of like a "private attorney general" taking action to help society. The fact that they get paid is good for them as it encourages them to continue protecting society. Unfortunately, some attorneys take it too far and bringforth wasteful litigation with little benefit to anybody but themselves. However, a lot of class actions are in the realm of consumer protection and provide just that to all of us.

[walkinwood]

Thanks for the explanation, Gumby.

[athena53]

Quote:

Originally Posted by euro At the end of the day, most of these class actions suits will pay out somewhere in the $2-25 range per member (I have been part to many of these over time, and so has probably everyone else). In other words, barely worth the effort of filling out the form.

Yep- I used to spend my "award" on Chinese takeout just to be silly. That's about all it would buy. I understand the deterrent effect and I also support making companies pay when they chisel a small amount from a very large number of people, but it just seems wrong, especially when the plaintiffs get a discount in some future purchase from a company they may never buy from again and the lawyers get cash.

I no longer join class action suits.

[HadEnuff]

I just got $3.85 (just cashed the check about 2 hours ago) for some add on fee on my cable bill that turned out to be bogus.

This is the start of the big turnaround in my life that I have been hoping for.

[Texas Proud]

I have been a member of a number of classes.. and as mentioned, most were very low dollar...

The one that irks me the most if the Ford class (Mercury Cougar for me).... it had a stalling problem which I paid MANY dollars chasing down... and Ford knew about the problem for many years but did nothing... after I sold the car after 10 years I get something in the mail for this problem...

Long story to short... the attorneys decided to agree to have Ford give me a coupon to buy another Ford and get $500 off!!! So I got nothing and the lawyers got paid....

Documents Indicate Ford Knew Of Engine Defect but Was Silent - The New York Times



Most of the other classes I really did not feel that I was cheated or they did anything wrong... and I even got over $100 from something a few years back... can not remember what it was

[MichaelB]

Like many others, I have received small financial settlements from class action suits, along with vouchers or coupons that have no value to me. I hope I'm never in a position to receive a large sum, because that would only happen if I were seriously harmed in some way.

Class action suits have benefitted me in other ways, by forcing companies that I do business with to change some business practices that have been deemed uncompetitive or unlawful. Verizon, AT&T, Comcast all have charged customers inappropriately, knowlingly, refused to acknowledge customer complaints, and only agreed to change these practices as a result of class actions. The benefit to me is not the refund, it's the change in behavior.

Having lived and worked most of my adult life in countries where this type of legal recourse is not available, I'll take it here as is, even if it does have some warts and is not perfect.

[REWahoo]

Quote:

Originally Posted by MichaelB I hope I'm never in a position to receive a large sum, because that would only happen if I were seriously harmed in some way.

You betcha.

One of my brothers was the beneficiary of a large class action suit in the $300K range. As you note, it was the result of a permanently disabling injury from being struck by an auto as a pedestrian. Didn't come close to compensating him for the pain he lived with for the rest of his life.

[imoldernu]

Virtually all of the contracts that we've had to agree to, now include the "binding arbitration" clause.
Legal status vis a vis class action?
Has anyone here been involved in "binding arbitration"?

[CoolRich59]

Quote:

Originally Posted by Texas Proud Saw this article and was a bit surprised that the lawyers are going to get $2.7 mill and the whole class may not exceed $900,000.

Us lawyer's want to retire early too ya' know.

[euro]

Quote:

Originally Posted by MichaelB Like many others, I have received small financial settlements from class action suits, along with vouchers or coupons that have no value to me. I hope I'm never in a position to receive a large sum, because that would only happen if I were seriously harmed in some way. Class action suits have benefitted me in other ways, by forcing companies that I do business with to change some business practices that have been deemed uncompetitive or unlawful. Verizon, AT&T, Comcast all have charged customers inappropriately, knowlingly, refused to acknowledge customer complaints, and only agreed to change these practices as a result of class actions. The benefit to me is not the refund, it's the change in behavior.

I agree that this is the main justification for these lawsuits. However, behavior can be changed much more inexpensively with well-crafted and enforced regulations instead of armies of lawyers.

PS:I know the statement above may. for some, cross the forum rule boundaries of politics, so, moderators: please feel free to remove my post if you feel it warranted.

[exnavynuke]

Quote:

Originally Posted by euro I agree that this is the main justification for these lawsuits. However, behavior can be changed much more inexpensively with well-crafted and enforced regulations instead of armies of lawyers. PS:I know the statement above may. for some, cross the forum rule boundaries of politics, so, moderators: please feel free to remove my post if you feel it warranted.

There becomes a point where regulating things so specifically is realistically impossible to do proactively. Thus, it can only be done retroactively. Also, there is the whole "regulation can often have unintended consequences" thing and crafting "perfect" legislation/regulations is virtually impossible as well.

[rodi]

Quote:

Originally Posted by imoldernu Virtually all of the contracts that we've had to agree to, now include the "binding arbitration" clause. Legal status vis a vis class action? Has anyone here been involved in "binding arbitration"?

I have and it was a disaster. The other party, a building contractor, failed to pay his half of the fees as required and we were left to either pay his fees to continue the arbitration or lose the fees we'd already paid (several thousand). We walked away and pursued it through administrative law court (state attorney going after his license) rather than throwing more money into the arbitration system. I am *not* a fan of arbitration.

[OldShooter]

Just because there are no bright lines, that doesn't mean that there aren't both good and bad class actions. "Good" being one that benefit society and "bad" where the lawyers' objective is to blackmail defendants into settlements in order to avoid the defendants' cost of a nearly-certain success in court.

IMO we need a discretionary form of "loser pays" that would allow judges to weed out the bad class actions. This would of course have limited effect because judges were/are lawyers, but I think it still would help.

[JoeWras]

I was surprised to get a class award in the $200 range against Invesco where my IRA used to be. That was unexpected, and a huge wake up call to move the rest of my stuff out of mutual funds that churn. Because I had moved my IRA to Vanguard in the meantime, the actual payment was tricky to execute to avoid the IRS deciding it was a distribution! For $200, the extra form and check-reissue was worth it.

All other class actions have been ridiculous, usually vouchers.

[athena53]

Quote:

Originally Posted by JoeWras All other class actions have been ridiculous, usually vouchers.

My feeling is that if the plaintiffs get vouchers, the attorneys should be compensated in vouchers, too.

The most egregious I ever saw was one against the airlines years ago for price-fixing, probably late 1980s when my first husband traveled a lot on business and I had the receipts to prove it. The plaintiffs were to receive 10% off vouchers for future flights, which ad to be redeemed by booking directly with the airline, meaning the airlines saved travel agents' commissions which were then- about 10%. I didn't even bother.

[oneill225]

Loser pays and caps on lawyer fees would fix most of the unfairness seen in these class action settlements without discouraging the valid suits.

[CoolRich59]

Quote:

Originally Posted by OldShooter IMO we need a discretionary form of "loser pays" that would allow judges to weed out the bad class actions.

I disagree. I think we need mandatory loser pays for pretty much every type of litigation, not just class actions.