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Ontario Court Approves $31.2 Million in Legal Fees for Class-Action Counsel
An Ontario Superior Court judge has approved the payment of $31.2 million in class counsel’s legal fees in the Volkswagen “dieselgate” class action.
The legal fees comprise $26 million in fees, just under $1 million in disbursements and taxes of approximately $3.5 million.
The Canadian class action itself settled with the defendants agreeing to pay the class $2.1 billion. The U.S. class action settled for just over $10 billion.
It is noteworthy that the amount of legal fees agreed upon in the Canadian class action was over and above the amount of the $2.1 billion settlement. In other words, the class members did not have to take a haircut in order for the lawyers to receive their fees.
I am interested by the two-stage settlement approval process used in this case. I had thought that fees for class counsel were typically reviewed as part of the process of reviewing the settlement itself in a single stage. Is two-stage settlement approval now standard in class actions?
I hope Matt is correct that, under two-stage, “the class members did not have to take a haircut in order for the lawyers to receive their fees.” But don’t defendants generally instruct their counsel with “all-in” settlement figures, meaning that each dollar that goes to the to the plaintiff’s firm comes from the pocket of the plaintiff/class?
If I were a defendant making an offer to settle damages, while knowing I would have to pay again to settle class counsel fees, I might deduct my estimate of my maximum possible fee payment from my final offer on the damages negotiation.
In the VW case it doesn’t seem to matter much, because the fees are a rounding error on the enormous damages. However I think bifurcating class action settlement approval into a damages stage and a fees stage could have significant distributional consequences in the more typical class action where counsel fees are quite large relative to damages (e.g. 20%+).