It’s easy to be critical of Plaintiff class action lawyers:
- They are the Oakland Raiders of the legal profession
- They are more successful than the Raiders, though
- They are “the one percent” of law (or a good part of it)
- Detractors call them “ambulance chasers on steroids.”
- They are aggressive
But this class of lawyers can teach the rest of the legal ecosystem a number of important lessons including:
- How to be efficient
- How to be collaborative
- Performance is tied to reward
- How one practices is often tied to an economic model
- Lawyers can be laser-like when it is in their interest to do so
Let’s examine some of these lessons a bit more closely.
Class Action Lawyers and the ACC Value Challenge
When the Association of Corporate Counsel (“ACC”) launched its “Value Challenge” in Fall, 2008, it sought to goad BigLaw to bridge the widening gap between the value and cost of legal services. This innovative initiative has yielded some solid returns; however, it cannot change BigLaw’s economic model. Embedded in that model are a number of cost escalators that drive little or no value to clients– but considerable benefit to partners. This includes the “firm tax” (a/k/a “PPP”), expensive overhead, notably opulent offices, an eroding pyramidal structure, and the billable hour which rewards inefficiency (from the firm’s perspective) rather than efficiency. Billing friction and an erosion of confidence among legal consumers has escalated, giving rise to discounts, RFP’s, Procurement Department incursion into legal spend, and the rapid expansion of “alternative providers”–law firms and legal service companies whose economic model diverges from BigLaw and generally narrows the “cost: value gap.”
What the ACC Value Challenge might have focused on is one category of lawyers who understand the cost: value correlation: Plaintiff class action counsel. They have practiced with great efficiency for years and have been richly rewarded for their “get-to-the-heart-of-it”, streamlined approach. They do not engage in frivolous motion practice, unnecessary discovery, dilatory pre-trial tactics, or legal “frolics and detours.” Why? Because they are not paid by the hour (or even a fixed-price), and it is in their economic interest–as well as their clients, generally–to find the shortest path to class certification, settlement, and on rare occasions, trial. Plaintiff class action counsel demonstrate that lawyers can be efficient, collaborative, and value driven when it is in their economic interest to do so.
Welcome to the Club
Just as the most elite law firms have a club of sorts, so too do the top Plaintiff class action firms. I know this because for many years I defended the F500 in class action lawsuits, and it seemed that the same ensemble cast of lawyers would be on the other side time after time. I also “joined the club” for two cases and saw this from the inside. Each time a big case came along, one of the firms would be retained and then, inevitably, bring in club members who had either the required expertise, geography (read: knew the judges and jury pool), or resources required to obtain the best result. Imagine if BigLaw were to work that way? Apart from sometimes contentious battles over who would serve as lead class counsel, the firms worked together seamlessly, and the “case manager” ensured that the division of labor was not only clearly articulated from case inception but also that it was rigorously overseen and enforced. No room for extraneous work here.
Detractors say that Plaintiff class action counsel are principally interested in themselves, not their clients, and they point to those (relatively few) settlements where the attorneys’ recovery far eclipses the de minimis client take. Note that:
(1) class counsel invest time and cash into the cases (making case selection critically important) and get nothing if they do not achieve a positive result for the clients; (2) settlements must be approved by the court (i.e., a neutral arbiter must agree that there is a nexus between fee and value); and (3) risk: reward is factored into the process as counsel can receive a multiplier of actual time spent upon demonstrating the existence of such factors as the difficulty of the matter, special expertise required, the result, etc. Put another way, the economic model by which Plaintiff class action counsel is measured resembles the start-up world or, for that matter, the business world generally. That is why class counsel are so efficient, collaborative, and result-driven; they cannot exist if they do not operate that way.
It’s The Economic Model, Stupid!
My purpose here is neither to deliver a panegyric on behalf of Plaintiff class action counsel nor an indictment of everyone else, especially BigLaw which regularly opposes them. Rather, it is to shine a light on a category of lawyers who, for many years, have practiced in a fashion that the ACC is promoting. Ironic that lawyers opposing the ACC membership–not their retained counsel–are the ones embracing the ACC value mantra. But that too is of no moment. The point is that lawyers can work collaboratively, efficiently, transparently, and narrow the cost: value divide when there is economic incentive to do so. Perhaps it is time for large corporate consumers to better reward firms–old and new– who work that way and move their business from those who do not.