By: Renee Henderson, Esq.
As a kid I can remember being made to split the last few ounces of soda left in the bottle with my brother. We'd place two glasses side by side and pour a little in each until we were both satisfied that both glasses contained the exact same amount of liquid. Forget that he was two years older and some four inches taller. We both got an equal share and in our hearts we believed it was fair. Unfortunately, this innate sense of fairness does not apply when dividing an aggregate settlement among plaintiffs. You cannot simply divide the total settlement amount by the number of plaintiff equally.
As an example, let's analyze this equal share concept in the context of a pharmaceutical settlement allocation. First, there will be differences among plaintiffs with respect to the drug itself. Some will have used the drug longer and/or in larger doses or quantities than others. Some plaintiffs will have used the drug before a stronger warnings label was issued, some after. Second, there will be a multitude of differences among the individual plaintiffs. They reside in different states with differing laws with respect to damages. There will be differences in age and relative health before drug ingestion. There will also be varying degrees of injury attributed to the drug. Some plaintiff's with similar injuries may make a sparkling recovery. Some will have a markedly reduced quality of life. To simply line the plaintiffs' glasses side by side and pour them all equal amounts given the vast degrees of differences among them is not just unfair. It's unethical.
Recently, the Second Circuit handed down a steep penalty for lawyers who neglected to give "due consideration to plaintiff's differing claims." Johnson v. Nextel Comm., Inc, No 09-1892 (Sept. 26, 2011). Although there were a myriad of ethical debacles committed in this case, at the core was breach of the basic duty owed from the attorney to client during the settlement process. The Second Circuit Appeals Court held that by entering into the settlement agreement, plaintiffs' counsel "violated [their fiduciary] duty to advise and represent each client individually, giving due consideration to differing claims, differing strengths of those claims, and differing interests in one or more proper tribunals in which to assert those claims." Id.
A plaintiff's attorney allocating settlement amounts between own clients does so at his peril. There is but one pot. Giving x + $1 to one client may mean x - $1 to another. A plaintiff's lawyer conducting an allocation is put in the position of choosing among his own clients when he owes each client a duty of loyalty. In this situation, a third party neutral or special master can relieve the pressure upon plaintiff's attorney and conduct the allocation. The third party neutral or special master will consider the differences presented by the individual plaintiff's and apply a set of objective criteria developed by the theory of the case to determine an appropriate settlement amount for each individual plaintiff. This way the third party neutral or special master's judgment serves as a substitute for the judge's gavel and greatly reduces the risk for possible unethical behavior and thus reducing the risk for rescission of the settlement, fee forfeiture or even disciplinary sanctions.
At Corodemus & Corodemus we combine the experience of Judge Corodemus as Mass Tort Judge for over a decade, with her knowledge on ethics, as an advisor on the American Law Institute's Work on "Aggregate Litigation" publication, to assist both plaintiffs and defense throughout the country, whether in Federal or State Court, in resolving the allocation issues in aggregate settlements. We will help you at each step in planning allocating and submit a recommended division consistent with ABA ethical principles, normally WITHIN 30 DAYS from the final submission to us. For more information contact our attorney Renee Henderson at rh@ccesqs.com or call us at 732-603-0005.
