• March 16, 2010

Over an objection by a member of the plaintiffs’ class, U.S. District Court Judge Richard Kyle, Sr. (D. Minn.) issued an order approving attorneys fees in Yarrington v. Solvay Pharmaceuticals to the class action plaintiffs’ counsel (Gustafson Gluek, PLLC, Lieff Cabraser)– $5.445 million for about 5,450 hours of work over six years.  That’s awfully close to $1,000/hour.

Seem high?  To some, it undoubtedly does (see earlier post regarding “the Minnesota haircut.”)  To others, it’s “all in an hour’s work.”

The number is somewhat misleading, however.  First, the lawyers involved will have worked considerably more hours on the case when it is finally concluded than they had when the fee application was made.  Second, these lawyers have worked for six years without pay for their time on this case.  They (their offices, their families) have had the need for money over that time.   Thus, some percentage of the recovery presumably goes toward “the float,” the interest charged on borrowed money pending the payout.

Finally, on a related point, plaintiffs’ class action lawyers take on considerable risk.  Litigation is never “a lock.” (See below re denial of class certification in Jani-King.)  How many lawyers would forego pay on 5,000 hours of work over six years based on a roll of the dice?  Class action plaintiffs’ wins have to pay for class action plaintiffs’ losses or at least offer some prospect of premium.  Otherwise, the judicial system would be at cross-purposes.

The judicial system implicitly recognizes that class actions confer a social benefit — giving an incentive to bring claims and vindicate legal rights that, absent the class action procedure, might be economically impossible.  If “wins” did not come with premiums, too few lawyers would submit to the substantial risks of losing, the system would be under-used, and plaintiffs’ rights would be violated without remedy.

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