New study proves class-action court awards are not skyrocketing

With a bill before Congress to curb large awards in class-action court settlements again, U.S. Sen. Orrin Hatch (R-Utah) recently attacked such awards as "jackpot justice." But are the fees meted out by the courts really skyrocketing?

A new study by two law professors proves they are not. Both the average price of class-action settlements and the average fee to attorneys in such settlements have held steady for the past 10 years, with "no real dollar increase," the study shows. The findings challenge the bill's assumptions and refute commonly held views inspired by a handful of high-profile cases.

"We were as surprised as anyone at the results," said Theodore Eisenberg, a professor at Cornell University Law School who co-authored the study, in a story about it in The New York Times Jan. 14. The study – the first to offer real empirical data on class-action settlements– highlights the need for more good data about the U.S. legal system that is helpful to policymakers, he said

Eisenberg and Geoffrey P. Miller, a professor at New York University Law School, analyzed data on all state and federal class actions between 1993 and 2002 in which both the attorney fees and the class-action recovery amounts reasonably could be ascertained. They spent several months reading about 400 cases and federal court opinions – ranging from antitrust to consumer to securities law violations – and applied regression-analysis techniques to produce their findings. The study, just published in the new The Journal of Empirical Legal Studies, was done independently and not financed by corporations or trial lawyers. It is available online at .

"The relation between fees and recovery is remarkably regular," wrote the law professors. "Contrary to popular belief, we find no solid evidence that attorney fees increased during the period studied." The study, "Attorney Fees in Class Action Settlements," also describes how courts help judges apportion fees and finds that reasonable methods for doing this are in place. "There is no compelling evidence that the class-action system is broken," said Eisenberg.

Other findings: The percent of the recovery fee that goes to attorneys decreases as the size of the recovery increases. Fees tend to be higher in federal than in state court cases. And fees as a percentage of recovery tend to be higher in high-risk cases.

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