Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. Today, we profile a law professor who’s been hired by Boies Schiller Flexner and other big firms to vouch for their most important fee requests. Sign up to receive this column in your Inbox on Thursday mornings.
Starting out as a law professor more than a decade ago, Brian Fitzpatrick turned his empirical research efforts to the federal class action system, where he found surprisingly sparse data had been collected.
He’s still working to answer what might seem like simple questions: How much money do companies pay from federal class action settlements in any given year? And how much money goes to the lawyers who bring those cases?
The short answer to those questions: nobody knows. The best answers, Fitzpatrick said, might come this summer when he expects a group of his research assistants will be done wrangling the data from 2005 to 2014.
“It is really painstaking work, and it takes a long time,” Fitzpatrick, a Vanderbilt University Law School professor, told me this week. “That is why I feel like I’m always behind.”
Fitzpatrick in 2010 first published data on class action payments. Back then, he developed what he says is the most comprehensive list of class-action settlements during a two-year period, 2006 to 2007.
He found that judges approved 688 class action settlements during the two-year period involving nearly $33 billion. Roughly $5 billion was awarded to class action lawyers—about 15% of the total.
The problem with the data is nobody is keeping track of it, and the federal court system wasn’t built to easily catalog class action settlements. There is no centralized “list” of class-actions.
And there are false positives. Some cases may be flagged as class actions after they are initially filed with class claims, but the tag doesn’t go away after the class claims are whittled away.
“The real challenge is to try and wade through the federal court docket to try and find all the class actions,” Fitzpatrick said.
The grunt work has led to the professional reward of being commonly cited by lawyers and judges.
The data has also led to another source of income for Fitzpatrick. He is a go-to expert for class-action lawyers when they are asking judges to grant them giant fee awards, like the request for nearly $670 million in fees and expenses made this week by David Boies and Michael Hausfeld.
Those lawyers hired Fitzpatrick to argue the reasonableness of their fee request related to a $2.7 billion antitrust settlement the lawyers forged with health insurer Blue Cross Blue Shield.
Fitzpatrick’s 81-page declaration highlighted that the lawyers’ fee worked out to be 23.47% of the cash settlement—neatly below a 25% benchmark he says is largely adhered to by the Eleventh Circuit Court of Appeals.
He worked on another behemoth case last year. Lawyers at Quinn Emanuel Urquhart & Sullivan hired him to vouch for their request of nearly $185 million in fees in a case that resulted in $3.7 billion in payments from the federal government to health insurers who were stiffed under a neglected Obamacare program.
Fitzpatrick’s data showed Quinn Emanuel’s request, which equaled 5% of the judgment’s cash value, was in the ballpark of what lawyers earned for their work obtaining other awards worth around $3 billion.
Fitzpatrick’s opinions cost roughly $30,000 each. He charges $950 an hour and his expert reports on average take about 30 hours to prepare, he said. He does as many as four cases a year, making upwards of a six-figure side gig.
He competes in a small market for work with other professors who have their own reputations as fee experts.
These include Charles Silver, a University of Texas School of Law professor who was also hired by Boies and Hausfeld for the fee request they filed this week. There’s also Robert Klonoff, a professor at Lewis & Clark Law School, who vouched for the reasonableness of fees related to a $380 million settlement Equifax reached for a 2017 data breach. And Harvard Law School Professor William Rubenstein and New York University Law School’s Geoffrey Miller have written frequently cited works in the area.
Fitzpatrick could have been on the way to a Big Law partnership, but he turned to academia, seeking the freedom to choose the topics he studied.
He has a chemical engineering degree from Notre Dame, which made him a fan of numbers and spurred his interest in empirical research. He graduated top of his class in 2000 from Harvard Law School and clerked for U.S. Supreme Court Justice Antonin Scalia and Ninth Circuit Court of Appeals Judge Diarmuid O’Scannlain. From 2002 to 2005, he practiced as an associate at Sidley Austin.
He holds pro-capitalism, limited government, conservative views. He authored a book, “The Conservative Case for Class Actions,” that argues class actions should be celebrated as a private sector solution that holds companies accountable for bad actions.
“The alternative is either no accountability for market participants who do bad things or the government will do it for us,” he said. “I’m a conservative. I don’t want the government doing everything.”
But the same profit motive that can drive corporations to bad behavior exists in the class-action market, where lawyers are often criticized for self-enriching settlements that do little to repay aggrieved customers. That is one of the reasons Fitzpatrick said he regularly turns down lawyers who ask him to vouch for their fee requests.
In particular, he is a critic of lawyer fees that are based on a settlement’s potential value if all the class members were to claim the award. Lawyer fees should be based instead on the amount a defendant ultimately pays, he said. For instance, if a settlement has the potential to be worth $10 million, but only $1 million in claims are paid out, the lawyer fee should be based on $1 million.
“The reasoning is the whole point of these fee awards is to incentivize the lawyers to create compensation [to the class] or deterrence or both,” Fitzpatrick said. “And if the defendant is getting the money back, there’s not compensation and there’s not deterrence. It inflates the fee without doing anything good for the class or for society.”
In his reports vouching for legal fees, Fitzpatrick says the data he collected for his 2010 paper remains “the most comprehensive examination of class action settlements and attorneys’ fees that has ever been published.”
In an effort to capture more recent data more quickly, Fitzpatrick has been working over the last two years with the Vanderbilt Data Science Institute to build a program that could automate the research process. They’ve had little success, in part because the algorithms they’ve set to reading legal documents were trained on general language sources. He is optimistic a recently released algorithm trained on legal documents will work better.
Until then, his summer staff of about 10 law students will be downloading PACER documents and parsing out the data the old-school way.
When it’s the best data around, it still pays.
Worth Your Time
On Big Law Associates: Some of the top 50 law firms are hiring lawyers from regional firms in the most sought-after corporate practice areas, Meghan Tribe reports, creating a market for students beyond the vaunted “T14” pedigree.
On Big Law Offices: Perkins Coie is cutting more than 70,000 square feet of office space across four offices, moving toward a “hoteling” setup where individuals whose work schedules don’t align share offices, Rebekah Mintzer writes. The shift comes as Big Law is catching up to other industries in the way it considers its use of office space.
On Big Deals: Former Haynes & Boone lawyer turned 7-Eleven Inc. senior counsel, 38-year-old Dawud Crooms, took the helm on the chain’s recent $21 billion acquisition of convenience retail competitor Speedway, reports Elizabeth Olson. The deal is a rare instance of a young Black attorney leading a major transaction in a legal industry where White lawyers wind up with the lion’s share of deals.
On Football and Legal Fees: The National Football League Players Association paid nearly $5.2 million to outside law firms, including $3.5 million to Winston & Strawn, Brian Baxter reports. Winston’s co-executive chairman Jeffrey Kessler took the lead representing the NFLPA in a collective bargaining agreement reached in March last year.
That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.