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Jocelyn Larkin is mad. She’s been hearing reports for the past few months — even from opposing counsel — that lawyers around the country are soliciting clients in a discrimination class action against Wal-Mart. The problem, Larkin says, is that her firm, the Berkeley-based nonprofit Impact Fund, and five others are the court-named class counsel; any other firms retaining clients as class members, she said, are ostensibly providing duplicative services for additional fees that will come out of class members’ own pockets. “Everybody’s automatically in the class. They don’t have to do anything affirmative. They don’t need to get a lawyer,” said Larkin, litigation counsel at the Impact Fund. “If they wanted to talk to a lawyer, they could call any one of the class counsel, who are essentially providing this service for free.” The Impact Fund has posted a notice to that effect on its Web site www.walmartclass.com, but Larkin said she has received calls from about a dozen women who have retained other firms thinking they were signing on with the class. And she worries the practice is still going on. She has found several Web sites offering representation in the Wal-Mart case. For instance, under the subhead of “Wal-Mart and/or Sam’s Club Class Action,” www.clayburgess.com invites visitors to its Cases and Class Action page to “give us a call at 1-877-234-7573 to sign on and become part of the class.” Louisiana solo L. Clayton Burgess declined to discuss his solicitation of Wal-Mart claimants. “It’s an area that’s ripe for abuse by greedy lawyers,” said Richard Zitrin, an ethics specialist and partner with Zitrin & Mastromonaco who represents plaintiff firms. He and other lawyers say that firms are increasingly using the Internet and TV advertising to grab a share of the mass tort/class action pie without doing the litigating. And they worry that such arrangements can leave clients vulnerable to additional costs and misleading claims that they have secured legal services, when in fact they may only have reached a clearinghouse for referring names to class counsel or bigger firms. “People around the world smell what they think is easy money,” said Mari Mayeda, a Berkeley solo who in 1994 found that a Southern California auto repair shop had been selling signup paperwork for a class action against the Denny’s restaurant chain for $25 to $50. Mayeda’s firm at the time, Saperstein, Mayeda & Goldstein, had settled the discrimination case with Denny’s and was able to secure a court order to end the repair-shop signups. In a retainer agreement from one of the firms offering representation against Wal-Mart, Thomas Schultz, a partner with Lopez, Hodes, Restaino, Milman & Skikos in Newport Beach, proposes that the firm take a sizeable chunk of a client’s potential award. “The legal fees to be paid for us representing you and prosecuting your claim against Wal-Mart Stores Inc. for gender discrimination in employment will be calculated as forty percent (40%) of any gross recovery, which is calculated before the costs,” the agreement states. This gross recovery, though, would already be reduced by fees for the class counsel. “A concern is that you don’t want to have class members pay twice for attorney fees,” said Joshua Thorpe, a partner with Bondurant Mixson & Elmore in Atlanta who specializes in discrimination class actions. Thorpe fended off lawyers trying to win away class members in a 2000 discrimination case he settled with Coca Cola. But it is not necessarily unethical for outside firms to sign up clients for a class action, since class members maintain a right to individual representation, said Sean SeLegue, an adviser to the California State Bar’s Committee on Professional Responsibility and Conduct. In some cases it might make sense to have a legal adviser, said the Rogers Joseph O’Donnell & Phillips partner, although he questioned why such an arrangement would be made on contingency. Zitrin also had doubts. “The issue is whether those individuals who are signing up for 40 percent are going to have an individual recovery or class recovery. If they’re only getting a class recovery, [the lawyers] should be paid by order of the court, not by contingency.” Since the Lopez, Hodes retainer agreement makes no mention of an individual recovery, Larkin said, she questions the purpose of the retainer. Partner Daniel Hodes said the retainer is “probably” related to the Wal-Mart class action, but directed questions to Schultz and partner Ramon Lopez as the attorneys handling those claims. Schultz and Lopez did not respond to repeated phone calls requesting comment. While the Impact Fund is actively discouraging referrals to the Wal-Mart class action, some bigger plaintiff firms seek out referrals to mass torts, and smaller firms appreciate the opportunity to get a piece of big suits with only a relatively modest up-front investment in advertising. “It’s a way for smaller firms like my own to get involved in these suits,” said Alameda-based William Berg. His six-lawyer firm, Berg & Associates, advertises heavily on TV and has paired up with several large plaintiff firms to share class action work. Berg said his firm always does some work in cases he refers, but would not say how much. Heather Foster, a partner with Lieff Cabraser Heimann & Bernstein working on several Vioxx suits, said her firm recently sent a mass e-mail to lawyers requesting Vioxx referrals. She said the firm has received more referrals from Vioxx than from any prior mass tort. Andy Birchfield Jr., a partner with Alabama-based Beasley, Allen, Crow, Methvin, Portis & Miles, confirmed that his and other firms rely on referrals. “There are firms that advertise � and a lot of times work with firms like ours,” he said. Most of the 10,000 or so Vioxx claims his firm is investigating came from referring attorneys, many of whom do intake and local document collection, leaving the actual litigation to Beasley, Allen. He and Foster said referral arrangements vary based on how much work each firm does. In some cases, Foster said, the referring firm will take as little as 10 percent of fees. A Nov. 30 referral agreement with an out-of-state firm has Lieff Cabraser receiving “70 percent of any attorneys fees received,” with the smaller firm taking the remaining 30 percent. “It is expected that work shall be performed by each firm in rough approximation to its relative percentage of any fee award,” the document states. Zitrin and legal ethics specialist Carol Langford said growing numbers of small firms are acting more as referral services than litigation houses, a phenomenon that, they say, may cross an ethical line. “You can’t be a brokerage house,” Langford said. While it seems that every plaintiff attorney knows of firms that do nothing but refer — “I know of a firm that’s a guy with a license who just runs a call center,” said Berg — no one will name names. The big firms are afraid of losing business, while the solos worry about embarrassing other lawyers. “I have a problem with any law firm that is saying ‘Call us, we can help you,’ and all they’re doing is forwarding you onto another law firm,” said Zitrin. “That seems to me to be a pretty thin version of help.” Jennifer Stanich-Banmiller, president of Wingtip Communications Inc., a law firm marketing company, said the symbiosis between small referring firms willing to advertise and larger firms that do the heavy lifting is relatively new and has gained steam since the mid-1990s. “Large mass tort firms with good name recognition are trying to gather up as many referrals from smaller firms as they can,” she wrote in an e-mail. But, she added, there remain small litigation houses that continue to pursue these cases. A plaintiff attorney who specializes in asbestos suits said his firm gets clients from small firms that make much of their money on referrals but are largely unwilling to admit this. “They’re in the business of attracting business and passing the clients on. Some do some work on the case, some are nothing but a clearinghouse,” said the partner, who requested anonymity. “That’s how we’ve gotten a lot of our business over the years.”

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