Update on Entrepreneurial Claiming, Global Tort Litigation and Contingent Fees
There is renewed interest in and attention to the changes being wrought around the globe by entrepreneurial litigation claiming. I say that for many reasons, one of which is that it was a lively topic of discussion at meetings I attended the last few days in Europe with lawyers from around the world who belong to the International Business Law Consortium, commonly known as the IBLC. (Disclaimer/caveat – my law firm belongs to the group. The group’s website is http://www.iblc.com/, which is here. )The topic also is currently in the news because of some $ 800 million of attorneys’ fees awarded in Enron litigation, as is further described below.
The bottom line, in my view, is that entrepreneurial claiming is clearly growing all around the world and will continue to cause many changes. An interesting summer 2008 article from SJ Berwin LLP (an EU law firm with offices in several cities) explains the latest, claimant friendly ruling on UK “uplift” fees, and notes that Allianz has announced plans to raise a fund to commercial litigation cases. Also educational is a 2002 article by Professor Herbert Kritzer on myths related to contingent fees. In fact, contingent fees are permitted in many countries outside the US (including Luxembourg), as Prof. Kritzer describes in his detailed article, which is online in full text at this link.
Global litigation plainly is being fueled by claim buying, contingent fees and other entrepreneurial activities of trial lawyers. My partner, Karen Borg, and I described some of these developments in a recent article available here. The third and fourth sections include citations to find a German entity which buys antitrust claims, and describes an Illinois law firm which is pursuing tobacco litigation in Nigeria with the Nigerian government.
How well can it pay? This week news is out on attorneys’ fees awards for the lawyers who helped to obtain the over $ 7 billion of recoveries from 3 major banks. A Law.com article by Amanda Bronstad states that the awards include “$688 million in attorney fees to San Diego’s Coughlin, Stoia, Geller, Rudman & Robbins, lead counsel in the case. “The Court finds that in the face of extraordinary obstacles, the skills, expertise, commitment, and tenacity of Lead Counsel in this litigation cannot be overstated,” wrote U.S. District Judge Melinda Harman, for the Southern District of Houston, who, in her ruling on Monday, referred to Coughlin Stoia as “a lion” in the securities bar. “Not to be overlooked are the unparalleled results, $7.2 billion in settlement funds, which demonstrate counsel’s clearly superlative litigating and negotiating skills.” The award gives Coughlin Stoia, which represents the lead plaintiff, the Regents of the University of California, its requested amount, which is about 9.52% of the net recovery of the settlement, the largest ever in a single class action. The firm stated that its lawyers and co-counsel, 13 firms, had spent nearly 290,000 hours on the litigation at a blended rate of $456 per hour. Coughlin Stoia was responsible for more than 85% of the time expended.”
This award is hardly unique. A prior post here reviewed some other recent large awards in contingent fee litigation.
Where will it all end? I am sure I do not know, but plainly there is much more to come in this area.