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Can Common Benefit Fee Disputes be Avoided?

Can Common Benefit Fee Disputes be Avoided?

Recent headlines involving disputes over distribution of the common benefit fund in the pelvic mesh MDL highlight a recurring issue in mass tort litigation. Too often fights erupt when it comes time to distribute common benefit fees, and these fights spill out into public view to the benefit of no one. While the lawyers who take the risks to lead in these complex, years long mass torts deserve to do well for the resulting public good derived from their hard work, these fee disputes serve to feed a defense narrative that plaintiff attorneys are only driven by greed and naked self-interest.  It is worth taking a step back to examine the root causes of these fee controversies and have an open dialog about practices that can address those causes and ensure that every lawyer contributing to the common benefit of all litigants is fairly and well served at the end of the litigation.

In our view, there are several underlying causes that individually can each lead to future fee disputes, and when combined almost guarantee controversy. Those root causes and the suggested practices to address them are:

Problem:    
Lack of agreed-upon standards for time and expense billing to the Common Benefit Fund. CMOs regarding billing guidelines can be ambiguous – leading to inconsistent billing practices which lead directly to misunderstandings and thus disputes when it comes time to award fees.

Solution:  
Consider adopting detailed CMOs or guidelines from leadership which lay out detailed billing guidelines with specifics regarding tasks, rates, and allowable expenses. Clear, concise standards head off misinterpretation and provide an independent standard to reference in resolving any discrepancies that are brought to light.

Problem:    
Records are not submitted contemporaneously. Billing details submitted months and sometimes years after the fact often contain information that has been “forensically” recreated, and may lead to time and expenses being missed or possibly being submitted without adequate support.

Solution:   
CMOs or fee committees could require that time and expenses be submitted on a regular basis, and possibly discount any billings submitted past agreed upon deadlines. This allows the court and leadership to compare those billing records with case calendars and determine if the submissions are in line with expectations while the work described in such invoices is fresh in everyone’s mind.

Problem:     
Lack of independent oversight. When MLD leadership collects, reviews, and approves common benefit fund billings, they open themselves up to accusations of self-dealing and conflicts of interest.

Solution:   
Appoint a neutral to oversee time and expense submissions to the common benefit fund. This neutral should be empowered to enforce deadlines, to clarify time and expenses that appear excessive, and resolve discrepancies as soon as they are identified while memories and records are well preserved.

Problem:   
Lack of transparency. Most fee disputes are exacerbated because firms that are not in leadership positions have no visibility into the nature and extent of fees and expenses as they are incurred, and therefore feel surprised when fee applications are eventually submitted.

Solution:     
Provide all firms paying assessments into the common benefit fund with regular reports which clearly explain time and expense submissions, and provide them with a “seat at the table” to ask questions of the oversight authority. Lawyers whose questions are heard and answered early in the process are far less likely to question fee allocations at the end.

These suggestions are really just the distillation of good governance practices that have proven to yield better results in all manner of collective endeavors. If you want to learn more about this important topic and happen to be in New Jersey, the Honorable Marina Corodemus (ret.), Wendy Fleischman, and my colleague Deb Zonies will be presenting a panel discussion on ethical issues in common benefit funds at the annual convention of the New Jersey Association for Justice at 1:30 pm on May 9. For more details and to register for the conference, click here.

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