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Lawyers' fees from $26 bln opioid settlement capped at 15%, judge rules

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REUTERS/George Frey

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  • U.S. District Judge Dan Polster calls any fee above 15% 'presumptively unreasonable'
  • More than $2 billion already set aside from $26 billion settlement for fees and expenses

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(Reuters) - Plaintiffs' lawyers eyeing big paydays from the $26 billion settlement resolving claims that the three largest U.S. drug distributors and Johnson & Johnson fueled the opioid epidemic were delivered a reality check after a federal judge capped their contingency fees at 15%.

U.S. District Judge Dan Polster, the Cleveland, Ohio-based judge tasked with overseeing thousands of federal lawsuits over the epidemic, in a decision on Friday acknowledged that "orders capping fees are often unpopular with the plaintiffs' bar."

But Polster said a cap on how much lawyers could earn if they enforce their fee contracts against the counties and cities that hired them was necessary to ensure money meant to help address the drug crisis was used for that purpose.

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The proposed deal, announced on July 21, calls for the distributors McKesson Corp, Cardinal Health and AmerisourceBergen to pay a combined $21 billion while the drugmaker J&J would pay another $5 billion.

Of that amount, $2.3 billion is reserved for paying attorneys' fees and expenses. Those fee provisions were the subject of long-running negotiations that prompted the companies to agree to pay more than they first proposed in 2019.

But in his 16-page ruling, Polster noted that instead of tapping those funds, attorneys could simply enforce their contingency fee contracts and collect a share of what their clients are paid.

That, the judge held, could result in them being paid more than the lawyers who shouldered the most work litigating cases and negotiating the settlement. They are entitled to more money for bestowing a common benefit for all plaintiffs, but Polster said those lawyers would likely earn a fee of less than 10%.

Allowing contingency fees above 15% Polster would also result in a city or county receiving a smaller amounts to address the crisis and lawyers earning "enormous" paydays, the judge said.

"A contingent fee in excess of 15% of the client's total award under the Settlement Agreements is presumptively unreasonable," Polster wrote.

The ruling came as the state attorneys general and plaintiffs' lawyers who negotiated the landmark settlement push to secure support from states and their political subdivisions in order to ensure maximum payouts.

The decision could impact the willingness of some lawyers to participate in the settlement, though not necessarily, said Elizabeth Chamblee Burch, a University of Georgia law professor who studies mass torts.

"For some, a dollar today is worth ten tomorrow," she said. "Others who are financially sound may be willing to roll the dice, depending on their contingency arrangements."

Paul Geller, a lawyer at Robbins Geller Rudman & Dowd who helped negotiate the settlement, said that while Polster correctly noted fee caps are unpopular, "if there ever were a case where a lawyer should agree to a fee cap, this is it."

"At some point we all have to ask ourselves where we fall on the continuum between altruism and avarice; I think one's reaction to this order answers that question," he said.

The case is In re National Prescription Opiate Litigation, U.S. District Court, Northern District of Ohio, No. 17-md-02804.

For plaintiffs: Joe Rice of Motley Rice, Elizabeth Cabraser of Lieff Cabraser Heimann & Bernstein, Peter Mougey of Levin Papantonio Rafferty, Paul Geller of Robbins Geller Rudman & Dowd, Chris Seeger of Seeger Weiss and others

For McKesson: Thomas Perrelli of Jenner & Block, Paul Schmidt and Andrew Stanner of Covington & Burling

For Cardinal: Jeffrey Wintner of Wachtell, Lipton, Rosen & Katz, Steven Pyser and Enu Mainigi of Williams & Connolly

For AmerisourceBergen: Michael Reynolds of Cravath, Swaine & Moore, Michael Salimbene and Robert Nichols of Reed Smith

For J&J: Charles Lifland, Mike Yoder and Amy Lucas of O'Melveny & Myers

Read more:

U.S. state officials urge support for landmark $26 bln opioid settlement

Plaintiffs' lawyers could get nearly $2 bln in landmark opioid deal

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Our Standards: The Thomson Reuters Trust Principles.

Nate Raymond reports on the federal judiciary and litigation. He can be reached at nate.raymond@thomsonreuters.com.

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