That's the offensive part about class action lawsuits like this. The lawyers MAKE A FORTUNE. The class victims get a decent check, but nothing great, and probably less than they lost due to the crime.
If the former, then you probably need to re-think what would happen if the system was set up a different way (i.e. something other than a order-unity fraction of the total amount). The defendants in a case like this are always going to willing to pay a significant fraction (e.g. 20%) of the potential settlement in lawyer fees in order to fight the suit. If the plaintiffs can't spend a similar amount, they will be at a serious disadvantage in court. These fees are merely a symptom of the (alleged) problem that court outcomes depend so much on lawyer fees. If you want to fix the problem, you need to change the court process; attempts to limit class-action fees will just aid the large corporations.
If the latter, then you just want the court to pay out more money to the plaintiffs. But remember: having the plaintiff lawyer fees directly proportional to the settlement is an excellent motivation for the lawyers to win the biggest settlement they can for their class-action clients.
The lawyers have to show a benefit for the class, and it can be as small as getting the company to promise to stop doing whatever was a problem and hiring one outside firm to verify compliance. Then then lawyers can get a settlement of $500/hour for all the time they spent on the case with an inflated number of hours.
I have seen cases where the lawyers on both sides are basically conspiring against the class, and the judge is okay with it because he wants to get back to the golf course. The plaintiff's laywers basically say, "hey you agree to the smallest thing the judge will accept as a benefit to the class, and you don't bitch about paying us $500/hr. Deal?"
Problem: The legal system is expensive and inefficient. If a lot of people are wronged by the same defendant, it is impractical for them to pursue their claim.
Solution: Let's have class action lawsuits where the lawyers make a fortune!
In this example, the defendants get a decent bonus check. I'm really offended by "class action" lawsuits where the lawyers make millions and the victims get a coupon for $10 off their next purchase.
Also, in this case, THE LAWYERS WERE TAKING NO RISK. There already was a ton of evidence from the justice department case. What actually happens is several groups of lawyers rush to file, each with a different lead plaintiff, and then the judge picks which group of lawyers get the big cash windfall.
Me too. But the only good solution to this is no class action lawsuits (which i'm actually fine with, but let's be real that anything else won't work in all cases).
"Also, in this case, THE LAWYERS WERE TAKING NO RISK. There already was a ton of evidence from the justice department case. What actually happens is several groups of lawyers rush to file, each with a different lead plaintiff, and then the judge picks which group of lawyers get the big cash windfall. "
This is so wrong i don't even know where to start.
So if i wanted to, say, create a new version of facebook, you'd say i wasn't taking any risk because i can already see what facebook did?
Making a Facebook clone is risky, you could spend the money and get no users.
Suing these defendants is almost risk-free, there already was a ton of evidence due to the Justice department investigation.
This is identical to the facebook case in terms of risk.
The lawyers outlay a lot of money (many millions) up front. Clients pay basically nothing. The lawyer could lose all of it due to things outside of their control. Actually winning, even with a good start, requires a large amount of time, energy, and expense.
The idea they can't lose because the justice department got some evidence is completely irrelevant to anything. It saves a small amount in discovery costs. That's it. It doesn't even save the plaintiffs money, it saves the defendants money because the discovery they produce is near identical
The plaintiffs still need to go through all the discovery. They still have to take depositions, go through all the documents, etc.
You seem to have literally no idea what is involved in a lawsuit. I would be more than happy to walk you through what actually happens.
What is a better alternative? (Other than preventing stuff like this in the first place.)
The other argument in favor of class action contingency structure is the alignment of interest between plaintiffs and attorneys. Although as already pointed out in other parts of this thread, perhaps the incentives begin to mis-align when settlements reach a certain size?
Except for being the ones who were actually harmed in the matter.
Edit: Despite my snarky reply, I'm with toomuchtodo - I upvoted your post even if I felt annoyed by it at first, because you make a very good and valid point and it gave me food for thought.
Why was I annoyed by your post, then? Probably my Borland check.
It must have been about 20 years ago, but there was some class action suit on Borland stock. I was in the class and from the numbers they sent out, it looked like I might actually get some real money out of it, at least a thousand bucks or so.
Then my check came. $17.
I pored through the documents to see what had gone wrong, and I found it: there was a limited settlement fund, I think around $12 million, only a tiny fraction of the hundreds of millions that the original class action notification had talked about.
Out of the $12 million settlement fund, the lawyers got $7.5 million.
I'm going to quit software development and get into that business.
People think startup life of "80 hour weeks" is bad. Try a large lawsuit sometime ;)
Not that i think they aren't overpaid, or sometimes reach settlements that don't benefit anyone but lawyers, but that's a different problem, and in fact, why a lot of countries really don't do class action lawsuits like the US.
The problem is people want the result they want, without having to do any of the work. If you want that result, you should be the lead plaintiff. Or opt out and sue yourself.
Honestly I bet the lawyers weren't happy with the result either and their part of the settlement mostly just covered their costs.
What did the engineers risk with this lawsuit? Nothing. What did the law firm risk? Getting paid peanuts for hundreds of hours they spend on the case if they lose.
The fact that there is risk upfront doesnt make any payoff reasonable. Otherwise, you wouldnt find layers keeping 99% abusive.
The biggest question for me is, with so much money ats take, why dont several lawfirms compete to each other for a lower cut? at 2 billion profits potential profit, why dont they offer a lower comission to get the client?
It's the same reason that you don't see a lot of price competition for real estate brokers (though this is changing some).
I'm not saying this is a great reason, but I do thin it is the reason.