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!