CLEVELAND (Legal Newsline) - The judge overseeing federal opioid litigation capped the contingency fees available to private lawyers representing state and local governments at 15% of a proposed $26 billion settlement fund, saying any more would be unreasonable.
Lawyers working alongside state attorneys general negotiated a $2.3 billion payout for private attorneys in the settlement with Amerisource Bergen, Cardinal Health, McKesson and Johnson & Johnson, but thousands of cities and counties have their own contracts with outside lawyers setting contingency fees at 20%, 30% or more.
In an Aug. 6 order, U.S. District Judge Dan Aaron Polster acknowledged “orders capping fees are often unpopular with the plaintiffs’ bar” but “the proposed settlement amount is so large that customary contingent fee percentages would disproportionately over-compensate attorneys and reflect poorly on the legal profession.” He included a potential exception for lawyers who “present evidence of exceptional work, extraordinary risk, and insufficient compensation.”
The fee order comes after Judge Polster worked hard from the moment he was selected to coordinate pretrial scheduling of opioid cases to instead push through a multibillion-dollar settlement. The national settlement follows closely along the lines of a $1.1 billion settlement the same defendants negotiated with New York, under which a pool of the money is set aside for fees that are available to lawyers if they abandon their contingency-fee agreements. Judge Polster has threatened the nation’s largest pharmacy chains, including Walgreens and CVS, with bankruptcy if they don’t offer up similar settlement amounts.
Early in the litigation, Judge Polster said he would monitor spending closely, ordering lawyers to keep monthly time records, imposing strict rules on who could collect fees and limiting airline expense reimbursements to coach fares. Despite that, the judge celebrated the power of mass tort litigation to “serve an invaluable public good.”
“Aggregation of large numbers of cases can be expensive to administer and prosecute,” the judge wrote, requiring lawyers to invest huge sums up front on what can be a risky endeavor. “Given these factors, the Court must carefully balance appropriate compensation for high-quality attorneys against those same lawyers’ ethical obligation to charge no more than a reasonable fee.”
Lawyers on the Plaintiffs Executive Committee, most of whom have dominated other mass-tort MDLs and have strong political connections with the officials who hired them, will collect 60% of the money in the $2.3 billion settlement fee pool. The judge said they have more than $100 million in out-of-pocket expenses so far. Hundreds or even thousands of other lawyers will split the remainder if they remain in the settlement.
Those lawyers must convince their government clients to join the settlement if they wish to obtain fees from the pool; if they and their clients opt out, they will have to litigate their cases on their own but might also be able to collect higher contingency fees.
In his order, Judge Polster said political subdivisions covering about 75% of the U.S. population have contingency fee contracts with private lawyers. The judge said there might be “deeply inequitable and even absurd results” without a cap, such as lawyers collecting rich fees even though they did no work on the case.