Lawyer Appeals Judge’s Award Of $21 Million In Fees, $8 Coupons For Clients
Forbes reports on Ted Frank addressing the issue of class-action lawyers requesting huge fees and gaining small coupons for the class members who were harmed.
For a thorough description of how a compliant judge can allow class-action lawyers to turn practically worthless coupons into a fountain of fees, read Ted Frank’s appeal of a St. Louis judge’s award in the A.G. Edwards case. St. Louis Judge Angela T. Quigless approved a settlement that gives lawyers at Milberg and other firms $21 million in cash but only $6 million for some customers and three annual coupons of $8.22 apiece for the rest. The judge didn’t even see fit to inquire into the lawyers’ valuation of the coupon portion of the settlement, despite strong evidence that less than 10% of coupons in such cases are ever redeemed. (A simple question to the lawyers might have sufficed: “If they’re so valuable,” Judge Quigless might have asked, “why don’t you accept them at the same 100 cents on the dollar you have told the court they are worth?”)
The judge did show some backbone when Frank asked her to order an inquiry into how many coupons were redeemed in a nearly identical settlement Milberg negotiated with Edward D. Jones in 2006. She rejected the request. Milberg won’t volunteer the information. Class-action lawyers rarely do. They like the idea of coupons when it comes to calculating their fee — it sounds better to say they are getting 20% of a $100 million award than 100% of a $20 million award — but they treat the actual redemption rate like a state secret. Judges who understand the law know it is their duty to inquire into the value of a settlement on behalf of absent class members. Some judges can’t be bothered, which is just fine with class-action lawyers and their corporate targets.
Read the full article at Forbes.