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Incentive Payments Nixed From $49 Million BAR/BRI SettlementJudge approves settlement in suit against legal test-prep providers, but is not OK with class representatives' payment
A federal judge approved a roughly $49 million settlement in the BAR/BRI class action Monday -- but only after rejecting incentive payments to five class representatives, claiming they had a conflict of interest. The judge also delivered lower attorney fees than previously suggested for the class action, which alleged that West Publishing and Kaplan Inc. cut a secret deal to give West's BAR/BRI a virtual monopoly over bar review courses, and Kaplan less competition in LSAT preparation classes.
The Recorder2007-07-10 12:00:00 AM
U.S. District Judge Manuel Real approved a roughly $49 million settlement in the BAR/BRI class action Monday -- but only after rejecting incentive payments to five class representatives, claiming they had a conflict of interest.
The judge also delivered lower attorney fees than previously suggested for the class action, which alleged that West Publishing and Kaplan Inc., both major players in the legal test prep market, cut a secret deal to give West's BAR/BRI a virtual monopoly over bar review courses, and Kaplan less competition in LSAT preparation classes. The proposed settlement called for the class of about 300,000 current and former law students to collect about $125 each.
Lisa Gintz, one named plaintiff who said she worked about 480 hours on the case, was "befuddled" by the decision.
"If you're saying all your class representatives had conflicts, how can you approve the settlement? Logically, I just don't understand that," the Louisiana-based attorney said.
Three weeks ago, Real asked named plaintiffs to file records showing how much time they put into the case. But Gintz said that Real rejected the incentive payments on Monday without hearing any arguments about them.
Gintz said the judge instructed class representatives and their lawyers to work out incentive payments among themselves.
"He said it's not going to be a judge issue. It's going to be a client-attorney issue," she said.
Gintz and two other class representatives stood to receive $75,000 each if the incentive payments had been approved. Another two class representatives would have received $25,000 apiece.
A McGuireWoods spokesman, partner William Allcott, said Monday that he was pleased with the judge's decision, even though it included a smaller attorney fee award than the firm requested.
The judge's decision lets McGuireWoods bill an extra 75 percent above its normal hourly rate, instead of the extra 125 percent requested, according to three of the attorneys who attended Monday's hearing.
It's unclear how much that will reduce McGuireWoods fees -- a number previously estimated by class representative Loredana Nesci at $12 million.
C. Benjamin Nutley, a Pasadena, Calif., attorney with clients who had opposed the incentive payments and attorney fees, said a written agreement between McGuireWoods and five class representatives created a conflict of interest by tying incentive payments to the total recovery in the case.
That agreement, he said, took away an incentive for the class representatives to push the case to trial. "If they lose at trial, their incentive award is gone," he said.
Though according to Gintz the judge said class representatives could try to claim incentive payments directly from their lawyers, she and Nesci, a Southern California lawyer, weren't optimistic about that prospect.
They were among three class representatives who had opposed the BAR/BRI settlement, claiming the recovery was too modest; McGuireWoods at one point tried to drop them as clients.
Nesci said Monday that she's been talking to an attorney about bringing a case of legal malpractice against McGuireWoods.
Monday's hearing was also a disappointment to former McGuireWoods partner Eliot Disner, who started the litigation at a different firm and lost control of it when his strategy conflicted with that of McGuireWoods.
In the days leading up to Monday's hearing in the U.S. District Court for the Central District of California, Disner filed briefs raising new arguments against the settlement. He said he wasn't allowed to speak Monday and got no indication of whether the judge had considered his arguments.
McGuireWoods has previously said Disner will collect 30 percent of any attorney fees it collects from the case. Disner said an appeal is possible.
"There's a lot of people mulling over the record inch by inch, line by line," he said.