CALIFORNIA ATTORNEY'S FEES

Class Action: Class Representative Incentive Agreements That Created Conflicting Interests Required New Consideration Of Fee Award To Objectors And Class Counsel

Ninth Circuit Requires Reexamination of Fee Denial to Objector’s Counsel and Fee Award to Class Counsel.

     For the plaintiff class action practitioners out there which follow our blog, the next decision is must reading. Not only does it highlight the fiduciary and ethical duties involved in the process, but counsels that incentive agreements should not be structured in an attorney-client retainer agreement in such a way that they create conflicts between the class representatives and the rest of the class. That is what happened in the next case, with potentially wide-ranging repercussions. Fortunately, it did not tank the class action settlement. However, the situation did require reconsideration of the fee denial to objectors pointing out the issue and the fee award to class counsel caught up in the conflict.

     Rodriguez v. West Publishing, Case Nos. 07-56643 et al. (9^th Cir. Apr. 23, 2009) (for publication) involved the $49 million class action settlement between BAR/BRI class members and West Publishing/Kaplan Inc. Lawyers for the class were set to collect up to $12.25 million in fees (calculated on a lodestar, enhanced by a 1.75 multiplier, up to 25% of the settlement fund). (BLOG OBSERVATION—In the Ninth Circuit, class counsel can be awarded attorney’s fees under either a lodestar or straight percentage of settlement fund approach. Powers v. Eichen, 229 F.3d 1249, 1256 (9^th Cir. 2000).) However, several objectors challenged the settlement on various grounds. Their objections on the incentive agreements to 5 class representatives hit a receptive chord with the Ninth Circuit.

Out-of-State Attorneys: Don’t Despair—Ninth Circuit Holds You Can Get Paid As A Consultant Even Though You Are Not California Licensed Or Not Admitted Pro Hac Vice

Holding Draws A Sharp Dissent; Opinion Also Discusses Lodestar and Sufficiency of Fee Substantiation.

     The next case should spur the interest of non-California lawyers wishing to do limited consultation or limited co-counseling with California lawyers in California federal courts. Even if you are not licensed in California or do not obtain pro hac vice rights (the latter being the preferable route), can you get attorney’s fees recovery once a case is favorably concluded and there is a basis for fee recoupment? Answer: Maybe, under the right circumstances. Read this post for the Ninth Circuit’s recent view—and, yes—far from being unanimous as to the right circumstances that may countenance this result.

Attorney’s Fee Ethics: Orange County Law Article Covers Wide Range Of Topics

February 2009 Article by Carole Buckner Covers Many Ethical Issues.

     In the February 2009 edition of the Orange County Lawyer, Carole J. Buckner writes an article, “Ethics Opinions Provide Guidance in Resolving Attorneys’ Fee Issues,” covering a wide-ranging array of ethical issues relating to attorney’s fees.

     Here is a synopsis of issues discussed in the article:

Ellen Peck's January 2009 Article In California Bar Journal Has Nice Tips For Recovering Fees in Contingency, Limited Partner, Executor, and Client Fee Sharing Representations

 

Ms. Peck Reviews Stroud, Shimko, Miller, and Strong Decisions.

     Ellen R. Peck, a former State Bar Court judge and Encino solo practitioner, has written a fine article in the January 2009 edition of the California Bar Journal with astute tips of upfront, prophylactic actions that can be taken for successfully recovering fees in diverse client representation situations. We summarize them here:

Sanctions: Attorney and Her Clients Sanctioned Under CCP Section 128.5 For Deliberately Revealing Trade Secret Despite Entry Into A Protective Arrangement

Third District Affirms Sanctions Order of $43,678.42 Against Attorney and Her Clients.

     Our fellow blawg “The Complex Litigator” has an excellent November 25, 2008 post on Wallis v. PHL Associates, Inc., Case No. C056200 (3d Dist. Nov. 25, 2008) (certified for publication). We will not review the facts in-depth, because “The Complex Litigator” post is complete. In essence, both the trial and appellate courts frowned on conduct by an attorney and her clients by which they made sure confidentially-filed court documents with trade secrets were viewed by third parties and copied so as to make an attempt to defeat the opposing party’s claim that the information was protected trade secrets.

     The sanctions order was made pursuant to Code of Civil Procedure section 128.5 because the action was filed before December 31, 1994. (Long-running litigation, to say the least.) Although substantial evidence supported the sanctions against both attorney and her clients, attorney made an interesting argument that her conduct was not frivolous and taken in bad faith given that she contacted the California State Bar’s ethics hotline for guidance on the ethical implications of the appearance of the confidential information in the public court file. Supposedly, the ethics hotline person told attorney that she had a “paramount duty” to do what she did with respect to the trade secrets in order to further her clients’ interests. The Court of Appeal did not find this argument persuasive.

     First, attorney failed to disclose to the ethics hotline the nature of the protective order that might have led to different guidance. This omission bolstered the trial court’s finding of bad faith.

     Second, the “ethics hotline” defense was weak in light of the hotline’s limited nature: the hotline is a “confidential research service,” not a source of legal advice. Besides, the order under review involved section 128.5 sanctions, not the ethical implications arising from attorney’s conduct. Wallis cautions that the “ethics hotline” defense may not shield an attorney from exposure to sanctions for certain conduct during the course of litigation, whether it is ethical or unethical in nature.