In Part 1 of this series, I explained the role of defense counsel in class action settlements. In this Part 2, I will explore the role of class counsel.
I embark on this journey with some trepidation, because as a defense counsel myself I have always been on the outside looking in to the plaintiff’s side of the class action settlement process. However, I have settled enough class actions that I believe I can speak with some authority on the issues, even if a few of the details might get a bit blurred in the process.
As a starting point, class counsel must tackle the same tasks I described in Part 1 — negotiating the key terms, drafting the agreement, and seeking court approval — but has the lead role with respect to the latter. Like defense counsel, class counsel need to seek the best deal they can extract from the other side and that, at a minimum, will pass muster when the court reviews its fairness, adequacy, and reasonableness for the class.
Unlike defense counsel, class counsel’s role is complicated by the multi-faceted interests they represent, including their own interest in being paid. They will file not only a motion for approval of the settlement, but also a motion for approval of their attorneys’ fees and expenses. The court will want to be satisfied that counsel did not compromise the interests of the class by using money that would otherwise have been available to the class to cover their own fees. For that reason, class counsel ordinarily will complete the negotiation of class relief before negotiating their fees. By keeping these two aspects of the negotiation separate, and pressing for the best deal they can accomplish for the class before discussing their fees with defense counsel, they can demonstrate to the court that they acted in class members’ best interests.
Before seeking court approval of the settlement, class counsel also must get the named plaintiffs that they represent to approve it. Although I have only represented defendants in class action litigation, I have represented plaintiffs in other types of cases, including a pro bono matter I handled for several years on behalf of dozens of residents of a low income neighborhood who suffered property damage from a common source. Ultimately, we settled that matter on a non-class basis, working closely with a client leadership group and communicating major developments to the rest of our clients before arriving at final settlement terms. In the class action context, counsel’s job dealing with a single class representative or a small group of class representatives should be more or less the same, requiring close connections and good relationships with the named plaintiffs through meaningful and appropriately timed communications.
In addition to working with named plaintiffs to arrive at fair settlement terms, class counsel may have to communicate with class members who have questions about or objections to the proposed settlement. Class counsel’s role in communicating with such class members is largely the same as a defendant’s role when the defendant seeks to communicate with members of a not-yet-certified class, namely, to provide information truthfully, in a manner that is neither misleading nor coercive. Indeed, class counsel has a heightened responsibility to such persons because of the fiduciary relationship that will arise from their attorney-client relationship with class members once the class is certified.
Where more than one settlement class is proposed, class counsel also must ensure that each class is properly represented. In some cases, that may require designating separate class counsel for each class or subclass, which will help avoid any questions about the adequacy of representation for purposes of Rule 23(a)(4). Many class actions are brought by teams of lawyers and law firms, and negotiations among the members of such teams regarding the allocation of class relief and attorneys’ fees can be as critical and potentially as challenging as the negotiations between lead counsel and the defendants.
Class counsel’s ultimate responsibility is to seek approval of the proposed settlement in order to obtain relief for the class. In my cases, I expect class counsel to take the lead in moving both for preliminary and final approval of the settlement, and of course class counsel are solely responsible for getting the court to approve their fees and expenses. In most cases, class counsel also bear primary responsibility for handling any appeals from the court’s final approval order, especially if the appeal challenges the fee award.
In sum, the multi-faceted nature of class counsel’s responsibilities makes their role in the settlement process more complex than the role of defense counsel. Class counsel who bring experience and professionalism to bear on the various tasks are most likely to succeed at navigating the shifting currents of the class settlement process.