Attorney Fees

Chamber of Commerce Takes Aim at Charitable Awards of Unclaimed Class-Action Funds


Cy pres awards in class actions—in which unclaimed settlement funds are awarded to charities—help pump up fees for the plaintiffs’ lawyers, according to the U.S. Chamber of Commerce’s Institute for Legal Reform.

Testifying in a congressional hearing last week, John Beisner of Skadden, Arps, Slate, Meagher & Flom explained the Institute’s viewpoint, according to The BLT: The Blog of Legal Times.

Beisner said cy pres awards help inflate the size of the award and justify higher fees.

Northwestern University law professor Martin Redish also testified about problems with the awards, the story says. All too often, he testified, class members are unaware of the lawsuit or can’t be found, or the award is so small that it doesn’t make sense for them to seek payment.

“What happens in these cases is [that] the lawyers become the real parties of interest,” Redish said. “The charity is not an injured party—the charity has not suffered harm—and this is a symptom of the perversion of the class action process.”

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