A Thomson Reuters News story, “Cuomo Considering Law Change on Class Action Attorneys’ Fees”, reports that lawyers in New York who successful challenge class action settlements on behalf of individual plaintiffs could be entitled to attorneys’ fees, if Gov. Andrew Cuomo signs a bill currently before him.  The measure, which would reverse a 1975 law, would allow courts to award fees to anyone whose work benefits an entire class – for example, a lawyer who negotiates an increase in the total amount of a settlement.  The current law reserves attorneys’ fees only for “representatives of a class,” which courts have interpreted to exclude lawyers who represent “fee objectors,” those class members who disagree with specific terms of the settlement, such as the amount of the settlement or attorneys’ fees.

A 2010 ruling by the Court of Appeals highlighted the issue and generated the push for the proposed legislation.  In the case, Fleming v. Barnwell Nursing Home, which involved a class of 242 plaintiffs with claims of wrongful death, the defendant nursing home settled for $950,000, $448,000 of which was pegged for attorney fees and expenses.  After the executor of one class member’s estate objected to the fees, an appellate court reduced them to $425,000.  But when the fee objector applied for fees for negotiating the reduction, the Court of Appeals denied him fees, citing the 1975 law.  (For more information on this case visit NALFA Attorney Fees Blog story “Class Action Fee Objectors Face Set Back in New York Courts”)

Proponents say the new law would encourage members of the class to raise objections, and thus make it harder for class action defendants to craft “coupon settlements,” in which they provide plaintiffs with a token award, such gift coupon, without addressing their grievances.  There is some concern that the new legislation, if passed could clog up the courts with spurious objections, particularly in high-profile class action suits.  “There could be more [fee] objectors coming out of the woodwork and trying to muck up a settlement process,” said Terry Jesse, the executive director of the Chicago-based National Association of Legal Fee Analysis.  But Jesse also noted that because the measure would preserve the discretion of judges in doling out awards, it could keep unreasonable objections to settlements in check.