St. Louis Judge Hands Lawyers $21 Million For Coupons
Forbes discusses why Ted Frank challened the A.G. Edwards settlement.
As Ted Frank of the Center for Class Action Fairness describes it, the settlement probably has a real-world value of $8 million — $6 million in cash and a blizzard of coupons that might be redeemed to the tune of $2 million. We’ll probably never know, since class-action lawyers fight efforts to publicize the actual rate at which their clients redeem the coupons they negotiate for them. The RAND Institute described it as a “veil of secrecy” that falls over class actions after judges sign off on the settlement in this 2008 report.
Frank objected to the settlement, and asked in open court for the redemption rate on coupons in a similar settlement the lawyers negotiated against Edward D. Jones earlier. Silence. More importantly, silence from Judge Quigless, who apparently didn’t see fit to inquire into the fundamental issue of how much money the lawyers had actually obtained for their clients before approving their fee. That’s the job of a judge in a class action, by the way.
Frank continues to challenge the settlement, but opponents are facing a demand by the class-action attorneys that they place a $325,000 bond with the court before they proceed. This, presumably, to make sure clients aren’t delayed in receiving their three annual coupons of $8.22 each to defray the management fees on mutual funds they bought through A.G. Edwards. The plaintiff lawyers and Judge Quigless paint this as a $60 million settlement. But $21 million of the $26 million in cash will go to the lawyers, Frank notes in his objection, and the rest of the purported value is only realized if more than 1 million customers dutifully mail in their $8.22 coupons each year for three years. I wonder if Quigless included the price of a stamp in her calculations.
Read the full article at Forbes.