The Ethical Challenges of Lawyers Involved in Class Actions and Their Claims Distribution Practices

This paper will examine the ethical dilemmas arising in the class action litigation and settlement contexts, specifically relative to claims administration and class recovery. Empirical data is scarce and it is accordingly difficult to know what are the participation and claims rates in class actions, how attorney fees are calculated, what the incentives are within the class and between class action actors, or how settlements are structured. Class lawyers are protectors and fiduciaries of the class. But how can they reconcile these duties with their economic interest in the case and in class recovery? Many class action settlements provide no class recovery and disproportionally important attorney fees. Is this acceptable? Ethical? Theodore Eisenberg and Geoffrey Miller did find in 2010 a remarkable relationship between attorney fees and class recovery size. Should attorneys be viewed as protectors, businessmen, or true hypocrites whose ethical misconduct must be sanctioned? Should there be a duty to maximize class recovery? How must attorneys treat residual amounts to be distributed when they may have an interest in the outcome? What should attorneys do when participation and/or claims rates are too low? What are their relative duties to the class? For our purposes, we will use information relative to a pending empirical class action project on class recovery practices, conducted at the University of Montreal Class Actions Lab.

This content has been updated on September 17, 2015 at 3:04 pm.