The Class Action Avenger: Ted Frank’s Cool New Job
Some class action settlements are highly questionable. Think of a case where, say, the victimized consumers get a stupid coupon, so they can purchase even more goods or services from the company that victimized them — while the lawyers representing the plaintiffs walk away with a big payday.
One man is out to change all that. Ted Frank — lawyer and blogger extraordinaire, from Overlawyered and Point of Law (and also Above the Law) — has left his perch as a resident fellow at the American Enterprise Institute (AEI). He’s starting a new public interest law firm that specializes in pro bono representation of consumers unhappy with class action settlements. Ted is already handling two class actions in California.
We caught up with Ted to discuss his new gig. Read more, after the jump.
ATL: How did you get started with this new venture? What was your inspiration?
TF: It all started with my Grand Theft Auto objection last summer. It really showed me how easy it is for a bad class action settlement to get rubber-stamped. I ended up spending several hundred dollars of my own money on that case, and I understood right away why judges see so few objections to bad settlements. After the New York Times article came out about my objection, I got many phone calls and emails from people wanting my help in objecting to settlements, and I had to turn them away because it wasn’t part of the work I was doing at AEI.
Last October, I gave a talk to the University of Chicago Law School Federalist Society where the students wondered how the problem of bad settlements could be addressed if no one had the economic incentive to object. At the time, I supposed that my class action objection could be scaled up if there was someone crazy enough to do the same thing pro bono. Seeing noone else crazy enough to do it, I figured it might as well be me.
ATL: Given the turmoil over in Biglaw, many lawyers are exploring the possibility of striking out on their own. How is your new firm being financed? Are you funding it out of your savings?
TF: The project is designed to run on a shoestring. I’ve done a couple of pilot cases out of my savings, but I’ve been approaching a variety of philanthropists and philanthropic organizations, and I so far have received a very generous grant that should provide funding for the first few months. Of course, I’m happy to hear from anyone wanting to make a tax-deductible contribution. Or from anyone wanting to hire me out as an expert to opine on the fairness of their class action settlement.
ATL: You mentioned you have two cases that you’re already working on. Can you tell us how you came to be involved in them?
TF: In both cases, someone came to me and pointed out a bad settlement where the attorneys got far more than the members of the class did. I offered to represent the person who pointed out the settlement, and filed a brief on his behalf. In the other case, I wrote about the settlement on Overlawyered, and was showered with class members who wanted to object. So as not to bore Overlawyered readers with class action settlement after class action settlement, I’ve started a new blog. There’s also a Facebook page.
That’s not to say that I’m knee-jerk objecting. A couple of people wrote in about a recent Costco class settlement, and I didn’t see anything in it to object to.
ATL: This sounds like very worthwile work. But don’t you sometimes feel like the skunk at the garden party, frustrating hardworking plaintiffs’ lawyers in their efforts to make a buck? This won’t make you very popular in the bar, will it?
TF: Plaintiffs’ lawyers, nothing, I have to think it’s the defense attorneys who have to explain what has happened to their clients who really have it in for me. But they can’t get any madder at me than the Above the Law commenters who were upset at me last year because I suggested that Obama was going to raise taxes. And hey, I’m technically a plaintiffs’ lawyer myself now. Anyway, lawyers negotiating settlements that comply with federal standards have no reason to fear me; we’re going to be picking and choosing our cases.
ATL: True — although I suspect that the settlements in cases you’re involved in might end up being less lucrative for the plaintiffs’ lawyers, even if the plaintiffs themselves end up with more substantive recovery. Would that be your prediction? And what about the matter of your fees — when you referred to this work (supra) as “pro bono,” does that mean you’re not sharing in any recovery yourself?
TF: Depends on the case. Some cases (like Grand Theft Auto) just aren’t going to settle if they can’t settle by giving the class next to nothing. Perhaps there will be an opportunity to ask for fees when the objection improves the settlement, but that is going to be a fraction of the number of cases where we object.
ATL: For all the unemployed ATL readers out there, I have to ask: Are you hiring?
TF: We actually have a recent graduate from the class of ‘09 who may get to work with us as part of his postponed BigLaw career if we can get the non-profit status fast enough, but, alas, we can’t afford to hire anyone who isn’t coming with their own pot of money.
ATL: Any closing thoughts you’d like to add?
TF: If you run across a bad settlement, send it my way!
ATL: Thanks for taking the time to speak with us, Ted. Good luck!
(53) Comments
Comments
First I was afraid, I was petrified; kept thinking I could never live without you by my side………
So when I get a coupon for redeuced BARBRI tuition from the BARBRI settlement, I should call this guy?
How or why is this cool? Representing idiots in court for free who already had their day in court once before and screwed it up?
Yes, whatever happened to the Bar/Bri settlement from a few years ago?
Any other offer rate news coming in? All programs should be over by now.
When 3 says "idiots," are we talking attorneys or clients? Because I see this guy as cleaning up some of the mess shortsighted lawyers create. Does it go to far to suggest perhaps he is even restoring some credibility with a public who thinks we do little more than manipulate legal mumbo-jumbo and "technicalities" while overbilling our time? I mean, that is basically what's going on, but it's good that a few people still make an effort to convince the world otherwise.
Good for him.
Funny how we need lawyers to counteract the deleterious effect of other lawyers.
It's like venom and antivenom...
6 here, admitting my to/too typo. Somebody's gotta cover for Elie.
3 - Frank's clients haven't had their day in court yet. He is representing people who are OBJECTING to crappy proposed settlements.
Right? Whatever happened with the BARBRI settlement?
6, without wasting my time, most of these settlements are necessary for any recovery in federal court (and forget state class actions which often face removal thanks to CAFA). Some circuit courts (e.g., Third) have made the standard so burdensome that federal judges are expected to spend as much time on pro forma opinions as litigants spent researching and preparing briefs. It might make sense if there were an army of judges in every federal courthouse, but with limited resources (and budgets), the high demands of certifying class action settlements are spelling doom for recovery of most parties. We've replaced a view that once allowed recovery by a large number of injured persons by efficient means with a system that allows a few stragglers to object and complain because they were shorted a couple hundred bucks. Meanwhile, care of their successful objection, tens of thousands face get nothing.
Comment removed by moderator.
BarBri? Where is my $?
The American Enterprise Institute? I knew some nutty winger fruitcake fringe group was behind this lawyer bashing innovation.
Class action members will always complain about attorneys' fees. Assume a class action settles for $1M. There are one million class members. If the attorneys carve out $325,000 in fees, each class action member will receive a voucher for 67 cents. And of course, they will complain. According to the attorney featured in the article, every class action settlement will qualify as a bad settlement. If I were a judge, I would sanction this attorney for wasting judicial resources and for trying to disturb fair settlements. At that point, this lawyer will go after the class action attorneys for malpractice whereupon he will be ostracized from the profession.
Notice how everyone bitches about Elie, but when he's off, there are barely any comments? And most of the comments that are being made are about Elie. Obsess much?
16 - That's because half the comments are pointing out his typos.
That said, Elie is a good blogger - he knows how to get a rise out of people. A good blogger should be provocative.
16 = Elie.
Get back to your "vay-cay," as the children that post on this blog would say.
"The project is designed to run on a shoestring. I've done a couple of pilot cases out of my savings, but I've been approaching a variety of philanthropists and philanthropic organizations, and I so far have received a very generous grant that should provide funding for the first few months."
In other words, more wingnut welfare. When is this guy ever going to get a real job?
Kash
Surprised that Lat didn't have "Roxana" take this interview.
http://twitter.com/PartnerEmeritus
First, the person who is always bitching about Elie is either Elie himself or someone who wishes they were Elie.
As for this story, this should come as a surprise to no one. I remember exactly where i was (just about to start my first year of LS actually) when I got a letter in the mail stating that the NationsBank (this is the bank that BofA purchased to put it over the top) class action had finally settled, that I was a member of the class, and, that if I was willing to sign all my rights away, I could collect my $50. Perhaps this was a sign that LS was indeed the right place for me, because in exchange for promising never to sue NB or any related company for any related type of claim, I got $50. I was pissed. Oh, and what were they being sued for? Well, in essence, theft. Without notifying customers, they had been reorganizing customers' transactions from lowest to highest at the end of each day, which could result in a person who just barely overdrafted their account by making a big purchase accumulating several (at the time) $30 overdrafts if they had also made several smaller purchases that day--$30 for each transaction that contributed to the overdraft after they reorganized the transactions. BofA still does this and 'tells' their customers in very fine print. Anyway, I majorly digress. $50 to sign away might right to sue the pants off BofA???? I think not. And I expect that shortly someone will figure out how to get those bastards for theft.
People who complain about Class Action Settlements are morons.
Why?
Because anyone can opt-out and pursue a lawsuit on their own.
So if you don't like the services of your no-hassle, arms length lawyer--GET YOUR OWN.
But if you choose to be a free-rider, you get what you get.
Moreover, class action settlements are approved by federal judgments for fairness.
Lastly, Lat's example with Coupons shows that he is a terrible, terrible lawyer that knows nothing about the law. Under the Class Action Fairness Act, lawyers do not get paid in cash when the class gets coupons.
As much as it pains me to agree with PE, he hit the nail on the head.
Here is the formula for class actions:
Incredibly difficult to win+tremendous risk/liability for all parties (including the plaintiffs' lawyers that take on huge risk and cost to prosecute)=Strong likelihood of settlement for only a portion of total maximum liability.
Most of the time, the defendant is simply incapable of paying anything close to the total liability because they simply don't have the money, what then??
Jerks like these guys are essentially "professional objectors" who 9/10 are extortionists who are just looking to get paid off to go away. If you think classes deserve more money, why not become a class action lawyer and do it yourself? But to show up at the end of 4 years of litigation and say "umm, i think I could've gotten more money out of the defendants" is just a sham.
24, you're totally right, people can (and should) opt out when the settlement is bad. But what your analysis does not take into account is the time members of the class who are actually actively involved or following the proceedings have already spent waiting (like us still waiting for our Barbri check, which i've totally given up on frankly). So after all that time, they get some paltry sum? Irritating. Again, think of the Barbri suit. I spent $2000 out of pocket to get, I bet, $20 after aaaalllllllll this time while watching the lawyers and lead plaintiff's make bank. There's something just not right there.
Ironically, the same right-wing putzs who complain about the size of class action awards were the fools that made it virtually impossible to win a class action.
It doesn't take a wizard to figure out why settlements are so low--the law is heavily, heavily stacked against class actions.
If you want more money, push to repeal the PSLRA or CAFA, which would give the plaintiffs more leverage.
This is what I don't understand:
The fees for class action are the same for all other contingency litigation:
The lawyers get a maximum of 33%, but in practice get 8-15%.
All of this "the lawyer's are getting rich while I get nothing" stuff makes very little sense to me. Are you railing against the entire contingency system? Do you not realize that lawyers put up millions of dollars to prosecute these cases in both cash and time?
Since they get paid on a percentage basis, class action lawyers have a huge incentive to get every dollar they can. Ever wonder why they may settle for less just to get the case over? It's because even with good facts you can lose your investment over a small, dumb procedural decision.
It's just hilarious that there has been a movement in the law to make it more and more difficult to win a class action and now people cry that the lawyers can't get their money back and BLAME THE LAWYERS not the law? How stupid can you be?
Google Ted Frank and you will quickly learn he's a right-wing nut that has always sought to replace investor lawsuits with criminal liability as means to deter criminal conduct.
The short of it is that Ted Frank does not object to settlements because he's on the side of investors and trying to get them every dollar. He does not have special knowledge or experience in litigation that would make him particularly suited to deciding when a complex federal lawsuit should settle vs. when it should continue in an attempt to get more money. The fact that he pretends to is sort of a joke.
The saddest part about this is Lat--who utterly failed in doing his pre-interview research. Reading any of this guy's articles would make it clear he isn't the "friend of the investor" he pretends to be.
Shame on you, Lat.
Here is the solution:
Require members of the class to put up their own money to prosecute the class action.
The reason the lawyers settle early is because they invest millions into these cases and need to settle to make sure they don't lose the money.
Make sure it is the investors that gamble with these lawsuits and not the lawyers and the lawyers will take on the extra risk it requires to get more money (particularly considering they get paid as a percentage of what they get).
But you cannot both force the lawyers to put up the millions to prosecute the suit and then fault them when they make the sound business decision to settle earlier, take less money, but insure they don't lose.
14=27=29:
Challenge for the day: use a sentence without "wing" in it.
Your challenge begins..........now
Lat, you make me ashamed to be gay.
31-
Replace "right-wing" with "conservative." Happy? Or would you rather cry about it some more?
-27 (not 14, 29)
Wow, this guy makes the slimiest plaintiffs lawyer seem like a god send. Who are those “philanthropists and philanthropic organizations” financing this venture? DO they really care about compensating the injured? Maybe, just maybe, these are the same business interests working tireless to undermine the civil justice system – and the jury system -- on the theory that it’s the only branch of government their money can’t buy or lease. There is irony in the fact that this guy works for an outfit called the American Enterprise Institute but yet can’t understand the simple concept of risk = reward. The lawyers who start these cases get compensated for the risk involved. Once you take the compensation incentive out, who would file these suits? Yes, if you’re a “Chamber of Commerce” type, you would “good riddance!” But if you’re a consumer whose car rolls over, or who gets screwed by the telecoms or water company without remorse or recourse, you might think twice about the service being provided by these “greedy” Plaintiffs lawyers.
One upside? At least we may get fewer of those right wing diatribes up on those board (“law firms are infested with foreign lawyers!” “Obama was born in Indonesia!” “woman on man violence is epidemic!”) because at least one of those idiots is busy challenging class action settlements.
34 -
Nailed it. Frank isn't just an ideologue--he's a moron.
"Last October, I gave a talk to the University of Chicago Law School Federalist Society where the students wondered how the problem of bad settlements could be addressed if no one had the economic incentive to object. At the time, I supposed that my class action objection could be scaled up if there was someone crazy enough to do the same thing pro bono. Seeing noone else crazy enough to do it, I figured it might as well be me."
The fact is that the vast majority of objectors are professional objectors that DO object so they will be bought out by the lawyers. The fact that he supposes he needs to do what he does because no one has a financial incentive to do it is not just wrong, it displays a woeful ignorance of the process he seeks to undermine.
BTW, Congress got rid of coupon settlements in the Class Action Fairness Act of 2003.
This guy sounds like a schmuck.
Could we just take a minute to acknowledge how ugly Ted Frank is? I mean, is he the ugliest man alive? It's debatable. . .
"BTW, Congress got rid of coupon settlements in the Class Action Fairness Act of 2003."
ROFL
Question: What is the endgame here? How is he going to get the class more money?
There are two possible scenarios: 1) The plaintiffs lawyer's legitimately think they fought the good fight and got every dollar they could out of defendants in settlement. In such a case, defendants won't give out more money--the case now has to take years more, experts, and millions more in investment. Who is going to pay for that? Who is going to take on the risk of a trial? Frank?
2) The settlement is low because the lawyers decided the case is a loser/has serious problems that would make recovery at trial very difficult. So they settle for a low amount just to get any money at all/recoup their costs. Clearly the plaintiffs' lawyers won't take a case like that to trial.
Who is supposed to fund/prosecute this litigation after Frank is done objecting? This seems like a recipe to get the plaintiffs nothing at all.
40's comment implicates 34's comment.
Conspicuously missing from this article is any evidence, whatsoever, that Frank has ever gotten a dollar more for investors. More likely, he's an ideologue just trying to throw a monkey wrench in the whole system.
Sounds like number 38 has some jackass issues to address. Is this a legal blog or a junior high sleepover?
42--first time reading ATL comments, eh?
You're right to feel taken advantage of, 23, having had those $50.00 rammed down your throat in return for sitting around on your fat lazy complaining ass.
It's not like you could have opted out or anything.
Good for him. Fuck the plaintiff's lawyers.
Gee, he won't be able to get more money for "investors"? What the hell are you guys talking about? Surely this is one troll--there can't be a half dozen people so dense.
Did you "invest" in your copy of Grand Theft Auto?
His shtick is taking meritless cases where the class gets almost nothing because they deserve to get nothing. He wants reporters to write cute articles about absurd cases in the New York Times. Ridiculous cases are settled because it costs more to fight them (especially given the catastrophic risk of certification).
It's a tort reform shtick, and has nothing to do with professional objectors, "investors" or anything like that. He wants bad suits killed, which will theoretically benefit the class (and everyone) through some supply side crap. Failing that he wants a story about them so that he can bemoan the sad state of American law.
46- Don't betray your ignorance, son. While it may be true that in this case some of the parties at issue were "consumers" and not "investors," for the purposes of class action economics it's a distinction without a difference. Investor class actions and consumer class actions share near identical economics.
You essentially just admitted you have no idea what you're talking about and then wrote your opinion for three paragraphs. You are a moron.
47=Ted Frank
AEI
Aren't they all AIPAC neo-con shills?
What a feather to stick in your cap.
PE
Have a class action suit against class-action attorneys
for ripping off calss-action plaintiffs...
38 bravo/a
Sometimes you have to call a Rose a Rose,
the AEI groups is ugly indeed Perle, Wolfowitz....
Ted Frank is indeed a very ugly and stupid man riding the wingnut welfare gravy train at AEI.
He does, however, have a much younger lawyer girlfriend who blogs at bamber.blogspot.com who got dumped by her long-term law school boyfriend when she told him she absolutely would never want any kids.
Actually, I think Ted was pretty recently dumped by said blogger.