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I'm somewhere between the sentiments expressed here. I'm thankful there's a strong incentive for top-notch law firms to pursue cases like this. I doubt this wou

by abalone 13y ago

I'm somewhere between the sentiments expressed here. I'm thankful there's a strong incentive for top-notch law firms to pursue cases like this. I doubt this would have happened otherwise. My concern is that a ~35% cut may motivate the firms to settle for much less than would be meaningful for the victims. The firm would gross a billion dollars on a $3B settlement, while the victims would get an average of $30K. And considering how expensive a trial is, I can see them settling for much less. I don't know much about this field, but I wonder if it would make more sense for the court to take vote among the class members rather than letting the firm decide themselves. Or is it just up to the judge to decide if it's fair and in the best interests of the class?

judk 13y ago
The settlement was $324million for (64,000 class members and the attorney fees).
- abalone 13y ago
  So the figure leaked. Wow, that ain't sh*t.
dredmorbius 13y ago
It's a form of the principle-agent problem: http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem Freakonomics identified a similar bias in real estate: realtors (earning a percentage of sales) work less hard for clients' home sales than they do their own, where the additional price received is worth more time.
geebee 13y ago
Would it make more sense to have a government agency handle the litigation for class action lawsuits? I'm thinking of something like anti-trust lawsuits, which I believe can be initiated by both state attorneys and private law firms. http://en.wikipedia.org/wiki/United_States_antitrust_law#Remedies_and_enforcement http://en.wikipedia.org/wiki/United_States_antitrust_law#Rem... I'm not necessarily advocating for this, because I suspect there are a lot of implications I haven't thought through... however, I'm leaning toward it as an idea. The big problem I see here is that the real victory for a law firm in a very compelling class action is mainly in gaining the right to represent the class. At this point, the risks become asymmetrical, because the payout for the lawyers on a settlement is so high that it makes no sense to engage in even mildly risky behavior, even if the expected return is far higher with litigation. If you and 10 other lawyers are going to get to split 300 million, would you press for litigation that had an 80% chance of returning a billion, and a 20% chance of returning nothing? That lottery would probably be the basis for extracting a good settlement, but it makes sense that lawyers would be extremely reluctant to take that risk, because the outcomes for them are tons of money for sure and probably tons of money but maybe no money. The order of magnitude gets lost in the gain, so only the risk remains as a consideration. Would state prosecutors, who stand to build a career on this but will be paid "the same" regardless of the outcome, do a far worse job?

by abalone 13y ago

judk 13y ago

The settlement was $324million for (64,000 class members and the attorney fees).

abalone 13y ago
So the figure leaked. Wow, that ain't sh*t.

dredmorbius 13y ago

It's a form of the principle-agent problem: http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem Freakonomics identified a similar bias in real estate: realtors (earning a percentage of sales) work less hard for clients' home sales than they do their own, where the additional price received is worth more time.

geebee 13y ago

Would it make more sense to have a government agency handle the litigation for class action lawsuits? I'm thinking of something like anti-trust lawsuits, which I believe can be initiated by both state attorneys and private law firms. http://en.wikipedia.org/wiki/United_States_antitrust_law#Remedies_and_enforcement http://en.wikipedia.org/wiki/United_States_antitrust_law#Rem... I'm not necessarily advocating for this, because I suspect there are a lot of implications I haven't thought through... however, I'm leaning toward it as an idea. The big problem I see here is that the real victory for a law firm in a very compelling class action is mainly in gaining the right to represent the class. At this point, the risks become asymmetrical, because the payout for the lawyers on a settlement is so high that it makes no sense to engage in even mildly risky behavior, even if the expected return is far higher with litigation. If you and 10 other lawyers are going to get to split 300 million, would you press for litigation that had an 80% chance of returning a billion, and a 20% chance of returning nothing? That lottery would probably be the basis for extracting a good settlement, but it makes sense that lawyers would be extremely reluctant to take that risk, because the outcomes for them are tons of money for sure and probably tons of money but maybe no money. The order of magnitude gets lost in the gain, so only the risk remains as a consideration. Would state prosecutors, who stand to build a career on this but will be paid "the same" regardless of the outcome, do a far worse job?