Justice or Just Business? The Debate on Legal Counsel’s Heafty Share in Settlements

Class action lawsuits have long been hailed as a powerful tool for holding companies and governments accountable. They empower individuals, enabling them to challenge injustices collectively. However, a critical aspect often overshadowed in these legal battles is the substantial percentage of settlements that find their way into the hands of legal counsel. While lawyers argue that their fees are justified by the exhaustive work they put into these cases, instances of legal bills reaching exorbitant proportions, sometimes up to 40% of a settlement, raise concerns about the efficacy of this system.

A recent case exemplifies this issue: the proposed settlement between Facebook and its Canadian users, amounting to 51 million. Shockingly, legal counsel is seeking a whopping 33% of this settlement, an estimated 17 million, for their services. With around 4.3 million claimants, the potential payout per individual ranges from $7 to $200, while the initiator of the lawsuit is set to receive a $10,000 honorarium. The question arises: Is this distribution fair?

When questioned about the apparent excessiveness of these fees, legal counsel provided the following response: “Yes, Class counsel will seek approval of a fee of up to 33⅓% pursuant to the contingency retainer agreement between counsel and the plaintiff.

As set out in the Notice, the settlement is subject to Court approval. Likewise, class counsel fees and disbursements are also subject to Court approval. The particulars of those fees and disbursements, including a breakdown of Class counsel’s investment and time spent, will be presented to the Court to the extent necessary at the March 13, 2024, hearing. The settlement approval application materials will be uploaded the above referenced website in due course.” Jill Bury, Paralegal, Branch MacMaster LLP

This is not the first time legal counsels have claimed a substantial portion of class action settlements. In the case of First Nation activist Cindy Blackstock’s $23 billion lawsuit against the federal government, legal counsel presented the Indigenous community with an $80 million bill, which was later reduced to $55 million by a federal judge. Similarly, the landmark 1998 case against big tobacco companies resulted in a $206 billion judgment, with legal firms pocketing approximately 2.4 billion US dollars.

In such cases, there is usually a predetermined percentage agreed upon before taking on the lawsuit. The question that arises is whether this system is inherently excessive or simply a reflection of the capitalist framework governing legal proceedings. Perhaps it is time to reevaluate and consider reforms that ensure a more equitable distribution of settlements, with a focus on maximizing compensation for the affected individuals or groups rather than disproportionately benefiting legal counsel.

As we navigate the intricate web of class action lawsuits, the question of excessive legal fees looms large. While acknowledging the undeniable effort invested by legal counsel, there is a growing need to scrutinize the current system. Whether it’s the Facebook settlement or historical cases, the narrative remains consistent – a significant portion of the pie goes to legal counsel. As we strive for justice and accountability, it’s imperative to explore avenues for reform that prioritize the interests of the affected parties over the financial gains of legal representatives. The efficacy and fairness of the class action lawsuit system demand careful examination and, potentially, a shift toward a more balanced and just framework.