Tuesday, January 12, 2016

Conflicts, Costs, Cash and Contentions (In-house to Firm, Screening, Class Actions & More)



Two interesting stories in the news, touching these themes:

"Boston Scientific Can't Get Fees From Blank Rome DQ" --
  • "Boston Scientific will not get attorney fees out of their successful bid to disqualify Blank Rome counsel from the False Claims Act suit against the company, after a New Jersey federal judge ruled Tuesday the firm did not extend the proceedings by failing to drop out."
  • "U.S. District Judge Madeline Cox Arleo wrote that although she had disqualified Blank Rome because of a conflict with one of the firm’s attorneys, Ritu Hasan, her disqualification did not extend to fees because of its unique nature. Hasan was previously employed as in-house corporate and compliance counsel for Boston Scientific and worked on internal investigations directly related to some of the issues in the case, according to court documents."
  • "Blank Rome did not screen her from communicating with the attorneys working in the instant case, the firm did not bar her from collecting any fees associated with the case and it did not give a heads-up to Boston Scientific about the issue, Judge Arleo concluded in the November decision."
  • "'The motion raised a novel conflict of issue not previously addressed by any court,' the judge’s order said. 'Accordingly, Blank Rome’s failure to withdraw did not ‘unreasonably and vexatiously’ prolong the proceedings.'"

"Class Actions, Cash and Conflicts?" -- 
  • "Potential conflicts in lawyers’ fees. A class action suit over Sony’s PlayStation 4 reveals the importance of knowing how your lawyer is being paid. Class action settlements usually attract headlines for their large numbers. But a recent class action settlement involving Sony Corporation and its PlayStation 4 deserves headlines for its small numbers."
  • "The class action litigation was settled with each purchaser to receive $20 as reimbursement for shipping charges, meaning the value of the settlement was a measly $8,000. The settlement also required Sony to pay $4,500 to the two plaintiffs who started the litigation, along with legal fees to be paid to the MLG in an amount to be determined by an Ontario court."
  • "Determining the appropriate level of fees fell to Ontario Superior Court Justice Edward Belobaba. The MLG argued it ought to receive a fee of between $120,000 and $225,000."
  • "Let’s pause here. Under what legal system could any lawyer expect to receive a fee of even $120,000 for achieving a settlement paying out $8,000 to consumers?"
  • "But Belobaba didn’t just reduce the fee sought to $30,000. He also took aim at the unwritten fee arrangement which provided that the MLG would only be paid legal fees by the defendant. No fees were to come out of the settlement or be payable by the class representatives. Belobaba viewed this fee arrangement as creating a potential conflict of interest between the members of the class action and their lawyers. He viewed the fee arrangement as one that might 'encourage premature, sub-optimal settlements negotiated by class counsel, trying to extract an almost risk-fee payment for themselves."

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