Follow up with Prof. Miller

From: RDShatt
To: geoffrey.miller@nyu.edu
Sent: 2/9/2009 8:06:44 A.M. Central Standard Time
Subj: Your articles regarding class action attorney' fees

Dear Professor Miller,

In follow up to my email of January 30th to you, I wish to indicate I am interested in some of your articles about class action attorneys' fees, such as "Attorney Fees in Class Action Settlements: An Empirical Study", 1 Journal of Empirical Legal Studies 27-78 (2004). I would like to read the entire article but thus far have accessed only this abstract:

Abstract: Study of two comprehensive class action case
data sets covering 1993-2002 shows that the amount of client recovery is
overwhelmingly the most important determinant of the attorneys' fee award. Even
in cases in which the courts engage in the lodestar calculation (the product of
reasonable hours and a reasonable hourly rate), the client's recovery generally
explains the pattern of awards better than the lodestar. Thus, the time and
expense of a lodestar calculation may be wasteful. We also find no robust
evidence that either recoveries for plaintiffs or fees of their attorneys
increased over time. The mean fee award in common fund cases is well below the
widely-quoted one-third figure, constituting 21.9 percent of the recovery across
all cases for a comprehensive data set of published cases. A scaling effect
exists: fees constitute a lower percent of the client's recovery as the client's
recovery increases. Fees are also correlated with risk: the presence of high
risk is associated with a higher fee, while low risk cases generate
below-average fees. Fees as a percent of class recovery were found to be higher
in federal than state court. The presence of "soft" relief (such as injunctive
relief or coupons) has no material effect on the fee, whether or not the soft
relief was calculated in the quantified benefit for the class used as the basis
for computing the attorney's fee. The study also addressed costs and expenses.
Like fees, these displayed significant scale effects. The paper proposes a
simple methodology by which courts can evaluate the reasonableness of fee
requests.

It seems to me it is one thing to investigate and determine what the facts show about amounts of attorneys' fees historically and whether fees in a particular case currently are in line or not in line with precedent, but it is also even more important to evaluate the benefits and detriments of the litigation to not only the plaintiffs but also to members of the public who are not parties to the litigation but for whom the litigation has consequences, in order to reach a determination of whether the litigation justifies the amount of the attorneys' fees.

My blog goes on ad nauseum why I think the amount of attorneys' fees is not justified.

Have you written an article, or can you cite me to an article, that does the kind of evaluation I am talking about and concludes that the amount of attorneys' fees is justified?

Thank you very much.

Sincerely,
Robert Shattuck


From: millerg@exchange.law.nyu.edu
To: RDShatt@aol.com
Sent: 2/9/2009 3:51:31 P.M. Central Standard Time
Subj: RE: Your articles regarding class action attorneys' fees

our paper was not normative in the sense of what fees should be but rather just asked what they are.
[Message delivered by NotifyLink]

Email to Professor Geoffrey Miller

From: RDShatt
To: geoffrey.miller@nyu.edu
Sent: 1/30/2009 6:18:52 P.M. Central Standard Time
Subj: Papadakis v. Northwestern Mutual Life

Dear Professor Miller,

I was a non-professional objector in the above case. I have strong anti-plaintiffs' lawyers views that I have expounded in this blog. My particular objection in the above case (which includes as Exhibits other class action objections I have made) is appended below.

I have read your affidavit.

I am writing to inquire what single book or single article you would refer me to as being the best statement of the case in defense of plaintiffs' lawyers and that is responsive to the various arguments made against plaintiffs lawyers, such as by Walter Olson and Philip Howard, and by myself.

Thank you.

Sincerely,
Robert Shattuck

Papadakis v. Northwestern Mutual Life

Objections of Robert & ______ Shattuck in Papadakis v.The Northwestern Mutual Life Insurance Company.

Our names, addresses and telephone numbers are Robert and ______ Shattuck, 3812 Spring Valley Circle, Birmingham, AL 35223, (205) 967-5586. We do not have an attorney. All or some of the policy numbers are: _______________________. Our objections are stated below. We do not intend to appear in the Final Settlement Hearing.

Statement of objections and reasons

In exercising its discretion as to approval of the settlement and attorney fees, the court is obligated under the law to be reasonable and not to approve something that has no reasonableness.

Reasonableness is properly determined with reference to a standard based on social utility and cost benefit principles. If there is little or no social utility of the litigation or if it has disutility, attorney fees that are approved should not greatly exceed the social utility. Social utility is not subject to hard and fast quantification, and a subjective evaluation and weighing of factors and considerations is unavoidable.

The basic question is what is the social utility of this litigation and how does that compare to the cost of the litigation in terms of legal fees of all the plaintiffs' and defense attorneys and the time burden on non-attorneys, such as defendant's employees, who are called on to participate in the litigation.

It is contended that this litigation has little or no social utility and, in fact, has a significant component of negative disutility.

First, this litigation does not promote an objective of the law to lessen corporate wrongdoing, and this litigation is in fact is counterproductive to that end and it undermines the fostering and inculcation of ethical business conduct. Extensive argumentation in support of this contention is set out in Exhibit A hereto, entitled "Does the Law Undermine Business Ethics?"

Further this litigation is very questionable in serving the social utility of "doing justice." The main reason it is questionable is that it is likely there has been insufficient attention paid to the extent to which this litigation is about making transfers of amounts by and among parties in interest who are not culpable of any wrongdoing. It is possible there has been wrongdoing by corporate employees or other individuals, and as a result some innocent parties have received a benefit from the wrongdoing and other innocent parties have had a loss or cost imposed on them. Whether or not there has been wrongdoing, the case should be considered as an unjust enrichment case, and nothing more. The facts and circumstances of all the persons who have been unjustly enriched and at whose expense they have been unjustly enriched are likely highly variable and somewhat indeterminate, and it is likely there has not been adequate investigation, or opportunity for argument, as to persons who are contended to have been unjustly enriched, the particular facts about whether or not he was unjustly enriched or, if he was unjustly enriched, about whether more is being taken from him in the litigation than the amount by which he was unjustly enriched.

The below objectors have been in the plaintiff class in several class action lawsuits in which there has been wrongdoing or alleged wrongdoing and in which the litigation resulted mainly in transfers by and among innocent parties in interest who were not culpable of any wrongdoing and in which little or no attention was paid to which of the innocent parties were unjustly enriched, the amount of their respective unjust enrichments, and whether there was any correlation between the amount required to be borne by an innocent party in interest and the amount by which the party was unjustly enriched. These class action lawsuits had no or negative social utility on balance and various objections were made to them. Because these objections are illustrative about the lack of social utility, and may serve as enlightenment about the lack of social utility of this litigation, these objections relative to these other class action lawsuits are appended below as Exhibit B (a credit card currency conversion fee class action lawsuit), Exhibit C (a Charter cable TV internal wire maintenance fee), Exhibit D (a Xerox securities class action), and Exhibit E (Middlesex County Retirement System) and also as Exhibit F an analysis of a Tyco securities class action for which there was not status as a member of the plaintiff class and as Exhibit G an analysis of certain Enron litigation for which there was not status as a member of the plaintiff class .

If the social utility of this litigation is to be evaluated and judged under the foregoing criteria of (i) does it tend to lessen or tend to promote corporate wrongdoing, and (ii) to what extent does it serve justice by having innocent parties in interest who have been unjustly enriched to pay over their unjust enrichment, it is probably the case that more factual development is needed as to clause (ii). Defendant's counsel would be an appropriate attorney to do that factual development.

Absent such further factual development showing that more plaintiffs' fees are warranted based on social utility, we contend that the social utility of this litigation does not warrant plaintiffs attorneys fees in excess of $1,000,000.

Robert Shattuck
_____ Shattuck