On The Case

VW judge dares plaintiffs’ lawyers to go after clients for fees

(Reuters) - It’s obvious from a ruling Monday by U.S. District Judge Charles Breyer of San Francisco that the judge does not think owners of Volkswagen "clean diesel" cars needed individual counsel. The judge denied motions by 244 plaintiffs' lawyers who wanted VW to pay them for the time they spent drafting filings for individual car owners, suggesting edits to classwide filings and advising their clients about developments in the case, including advice about whether to participate in the $10 billion class action settlement.

Judge Breyer said none of that work benefited the class. Nor was it covered by VW’s agreement to pay fees to class counsel Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein, lawyers on the plaintiffs’ steering committee and other plaintiffs’ lawyers who assisted Cabraser and her team.

Judge Breyer previously awarded the lawyers who led the case $175 million in fees and costs, “recognizing that counsel had achieved an extraordinary result for the class and the public as a whole.” By contrast, the judge said, non-class counsel either duplicated the work of Cabraser and her team or sought fees for work that didn’t advance the class action.

So if VW doesn’t have to pay these 244 non-class lawyers for their time, will the 3,642 VW owners who signed individual contingency fee agreements with them be on the hook?

Judge Breyer has made clear in previous orders that he does not want VW plaintiffs' lawyers to go after their clients for contingency fees. In November, after VW informed the judge that it had received attorney lien notifications from a handful of plaintiffs' firms, the judge instructed Volkswagen to pay class members directly, rather than recognizing liens against their settlements by their lawyers.

“A lien reduces class members’ compensation and places them in a position where they must purchase another vehicle but lack the funds to do so,” the judge said in the November order. “Put another way, attorneys — notably, attorneys who did not have a hand in negotiating the Settlement — stand to profit while their clients are left with inadequate compensation.”

In a followup order in December, Judge Breyer enjoined any state court action, under the All Writs Act, by plaintiffs' lawyers attempting to collect fees from class members.

But in Monday’s ruling, the judge grudgingly conceded he does not have authority over contingency fee agreements between VW car owners and their individual lawyers. Those agreements, Judge Breyer said, may entitle plaintiffs’ lawyers to collect a share of their clients’ recovery. “This is a matter of contract law, subject to the codes of professional conduct, and such disputes should be resolved in the appropriate forum,” he wrote. “To that end, the court vacates the injunction on state court actions, to the extent those actions are brought to enforce an attorney-client fee agreement.”

Judge Breyer did his best to dissuade lawyers from bringing actions against their clients, though. He said VW must continue to pay class members directly, without diverting any part of their compensation to plaintiffs’ lawyers. He also said that if any plaintiffs’ lawyer does bring an action against a client or otherwise demand enforcement of a contingency fee contract, the lawyer must first provide the client with a copy of Monday’s order – and must certify to Judge Breyer that the client has been served.

The point? It seems like the judge wants to be sure class members – and, presumably, state judges presiding over any disputes between them and their individual lawyers – to know that Breyer doesn’t attribute the VW settlement to the work of these lawyers.

I left phone messages for lawyers at the five plaintiffs’ firms that notified VW of attorneys’ liens against their clients’ settlements – Aylstock Witkin Kreis & Overholtz, Davis Law Firm, Lashly & Baer, the Driscoll Firm and Wayne Wright – but none of them got back to me.