The End of Incentive Agreements for Plaintiffs?

Recently, the Ninth Circuit Court of Appeals issued a decision that calls to task the unethical behavior of class counsel. As a result, class counsel was denied some of its fees and a serious blow to the legitimacy of incentive agreements was dealt.

In the consolidated case of Rodriguez vs. Disner, case no. 10-55309 (9th Cir.), the court held that due to the inherent conflict of interest created by the incentive agreement in place between the McGuireWoods law firm as class counsel and select class members, it would award neither incentive compensation to the select class members nor incentive fees to McGuireWoods.

The case arose out of an antitrust class action law suit brought by the plaintiffs against West Publishing (owner of BAR/BRI) and Kaplan. The plaintiffs alleged that these two defendants conspired to prevent competition and wrongfully monopolize the full-service bar review course market, all in violation of applicable federal law. Shortly before trial, the allegations were resolved and the case was settled. West Publishing and Kaplan agreed to pay $49 million into a settlement fund, with 25 percent of that amount set aside for attorneys’ fees.

The twist here is that the original class counsel, Van Etten Suzumoto & Becket LLP (which later merged with McGuireWoods LLP), had entered into incentive agreements with five of the plaintiffs. Pursuant to these agreements, the law firm would apply for additional compensation for these plaintiffs, together with the concomitant attorneys’ fees. Per the terms of the agreement, the law firm would seek incentive awards upwards of $75,000 per plaintiff.

For more, read the full article.

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