Case in California would base attorneys’ compensation on hours, not a percentage
by Sara Randazzo | The Wall Street Jounrnal
A case before California’s highest court could fundamentally change the way class action attorneys are paid—and cut lawyers’ fees in the process.
Typically, attorneys who represent plaintiffs in class actions—like employees accusing a company of discrimination, or customers claiming a product misled them—are paid a percentage of any money recovered for their clients. The payouts, which nationally average about 25% of the collected funds, can be substantial.
But a Berkeley, Calif., lawyer who has waged a decadeslong crusade to reduce class-action fees is pushing to pay lawyers based only on the hours they put into a case.
Paying lawyers a percentage of the ultimate recovery is seen by some as an incentive to work harder for clients, in some ways akin to compensating corporate executives with shares of stock. When a class action fails, “the firms just have to eat all that money,” says Kathryn Honecker, an Arizona plaintiffs’ lawyer who co-chairs a class-action committee for the American Bar Association.