Fogbow

If you had a Blue Cross plan from 2008-2020, you can receive part of a settlement. Details are at https://www.bcbssettlement.com/

But check this out -- of the $2.7B settlement, $700M could go to the attorneys! That seems insane, why aren't these amounts capped? What could they possibly be doing for $700M?? Does this seem normal?

Story at AL.com:

People covered by Blue Cross plans between February 2008 and October 2020 could be eligible for part of a historic $2.7 billion settlement approved in Alabama last year as part of a long-running antitrust case.

Attorneys could receive about $700 million from the settlement, which leaves about $1.9 billion for people covered by Blue Cross Blue Shield plans during that time. Subscribers have until November 5, 2021 to make a claim online or by mail. Some of those eligible to file a claim may have received postcards notifying them of filing deadlines.

https://www.al.com/news/2021/04/how-to- ... ement.html

This is par for the course in Class Action Settlements.

I mentioned a few weeks ago that good personal injury lawyers are now charging a 40% contingency fee. The argument goes that the lawyers are taking the risk, could wind up getting nothing for thousands of hours of legal work, etc. The good PI lawyers I know are fabulously rich: numerous private planes, yachts, etc. I suppose if you have a crappy PI lawyer you might well get 0% of nothing, while if you have a good one, you get 60% of a lot.

Look at Ben Crump. As far as I can tell, he does little legal work, is mostly a PR agent, yet I'll bet he got 40% of the $27 million settlement George Floyd's family received.

As the courts have often commented on, there's a clear conflict of interest when it comes to agreeing on attorney fees. The company being sued typically only cares about the total amount of the settlement; they have no financial reason to care how much goes to the class and how much goes to the attorneys. And the attorneys obviously have a strong incentive to maximize their award. So neither side has a direct financial incentive to reduce the attorneys' award.

For that reason, there are some safeguards in place (though their effectiveness is very much up for debate). The court has to review both the settlement and the attorney fee award, and decide whether they're reasonable, using some fairly complicated and rather subjective legal tests. And any member of the class can object to the settlement or the attorney fee award.

Of course, the objection mechanism has problems of its own. Putting together an effective objection requires a lot of legal work, which results in a lot of attorney fees. Members of the class will almost never have a financial incentive to do this; each member of the class is typically getting a very small award -- the fact that each class member's damages are so small is why a class action suit was appropriate in the first place. There are some folks -- notably the Center for Class Action Fairness -- whose objections are truly intended to benefit the class. But there are also "professional objectors" who file objections in the hope of getting one or both sides to pay the objector to withdraw the objection.

But there are two commonly-used settlement clauses that are considered particularly suspect in this regard:

• "Clear sailing" provisions. This is when the company being sued agrees not to contest the attorney fee award. (Normally a company can settle the class action, but still object to the attorneys' fee request.)
• "Kicker" provisions. This is when the two sides agree that, if the attorneys' fee request is reduced by the court, the savings go back to the company being sued, rather than being distributed to the class. This is clearly problematic since it means that class members have no financial incentive to object to the fee award, which heightens the risk of collusion.

Until recently it was not at all uncommon for class action settlements to include both a clear sailing provision and a kicker provision. But this is now considered a glaring red flag for courts reviewing settlements, so it's become somewhat less common (along with other potentially-abusive tactics like "coupon settlements").

Fascinating KickahaOta, thanks for the primer!

Quite welcome! If you go to that Center for Class Action Fairness site you can get some more details.