Ethical Dilemma

Sep 29, 2016 | 0 comments

“Lawyers Want Over $300 Million from Volkswagen After $10 Billion Emissions Settlement”

http://fortune.com/2016/08/11/lawyers-volkswagen-10-billion-settlement/

Note: In addition to the article, please see the accompanying video, also included at the above-referenced internet site.

According to the article, plaintiffs’ lawyers will seek up to $332.5 million in fees and costs for their work in a $10 billion settlement over claims Volkswagen outfitted vehicles with software to cheat on emissions testing, according to a court filing.

The filing recently in a federal court in California said Volkswagen and the plaintiffs’ lawyers had not yet agreed on how much the attorneys will be paid for their work. Volkswagen has agreed to pay reasonable costs and fees in connection with the settlement announced in June, which covers vehicles with 2.0-liter engines.

In the filing, plaintiffs’ lawyers said they will request no more than $324 million in fees and up to $8.5 million to cover other legal costs, for a total of $332.5 million. The lead lawyer, Elizabeth Cabraser, said the amount was far less than the “judicially established benchmark” for class action settlements, which is approximately 25% of the settlement amount.

“But this is not an ordinary case, this is not an ordinary settlement, and this will not be an ordinary fee request,” the filing said.

A final fee request will require approval from the judge overseeing the litigation, according to the settlement papers. Any fee amount will be paid separately by Volkswagen, and not deducted from the settlement fund, the settlement papers said.

Volkswagen spokeswoman Jeannine Ginivan said the automaker “is prepared to pay attorneys’ fees that reasonably reflect the work the plaintiffs’ steering committee has undertaken in connection with the 2.0L TDI settlement program. Ultimately, it will be for the Court to decide what is reasonable.”

Discussion Questions

1. Does an attorney have an ethical obligation to charge a client a “fair” fee? If so, who (or what) determines whether the fee is “fair?”

This is an opinion question, so student responses may vary. In a settlement (such as the one in the Volkswagen case), the court does have the right to review the terms of the settlement, including attorney’s fees, to determine whether the settlement is consistent with essential notions of justice.

2. In your reasoned opinion, are the attorneys’ fees requested in the Volkswagen case reasonable?

This is an opinion question, so student responses may vary. In the Volkswagen case, the attorneys’ fees requested ($332.5 million) represent approximately three (3) percent of the overall settlement amount ($10 billion). Compare that to a standard automobile case, where it is customary for an attorney to request 1/3 (33 and 1/3 percent) of the overall recovery as attorneys’ fees.

3. In your reasoned opinion, should the state bar organization in each state more closely monitor attorneys’ fees? Why or why not?

This is an opinion question, so student responses may vary. In practice, the contract of representation between attorney and client dictates the amount charged for attorney’s fees, subject to review by the court. Usually, the state bar organization does not “weigh in” on the issue.