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July 26, 2012 / Admin

Class Action Fee Changes in New York?

The New York legislature is currently considering a proposal to increase judicial discretion in awarding attorneys’ fees in New York class actions. A bill enacted in 1975 currently only allows judges to award fees to those who represent the entire class, while the new bill would expand that definition to those who benefit the class.

The change would essentially mean that attorneys for those challenging class actions settlements may seek reimbursement. Judge Robert S. Smith’s dissent in a 2010 New York Court of Appeals case provided the catalyst for the drafting of the new law. The case, Fleming v. Barnwell Nursing Home involved an attorney representing one class member’s objection to the original class attorneys’ fees, which amounted to 47% of the total award. The attorney successfully negotiated a decrease of awarded attorneys’ fees to 44%, freeing up a half million dollars for distribution among the 242 plaintiffs, but the 1975 law disallowed the judge to award the objecting lawyer any fees.
Judge Smith argued in his dissent that allowing such awards to objecting attorneys would provide a check on unreasonably high attorneys’ fee awards. He continued by noting that, after this decision, attorneys would have no incentive to object to such specious awards, unless they agree to take the case pro bono or are confident they can collect from the class member they represent.

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