Saturday, January 21, 2006

Class Action Law Suits

I drove out to PA on Friday with my wife and a truckload of stuff for storage. Along the way we picked up a newscast in which they reported a class action lawsuit against a cigarette manufacturer. That got me to remembering something I had read dealing with class action suits. If the suit is successful, then in almost every case (I’m sure it’s probably more “in every case,” but I digress) the people who benefit the most from these suits are the lawyers who bring the suit. The plaintiffs, the “class” on whose benefit the suit was launched, usually get next to nothing. Maybe they get a few hundred bucks but most of the time, it’s much, much less. (In some cases, they have received coupons for the defendant’s products.)

Many of these suits have one thing in common: the members of the class are never actually identified by name in the complaint. Oh, there may be a few representatives of the class for whom the lawyers have trolled, but the vast majority upon which the settlement is based (and divided) are never identified. The lawyers, however, get their millions off the top. It’s these millions for the lawyers that make such lawsuits attractive to the sharks.

I’m no lawyer (and have little respect for the group involved in most types of lawsuits or who advertise on TV or radio), but I believe it would be more equitable if the lawyers were required to name—and have the signatures of—every member of the class for whom they are bringing the suit. I also believe the amount the lawyers may collect should be limited to 5% to 10% of the final settlement. These two changes might eliminate those suits with questionable merit and would ensure that those who were harmed, and for whom the suit was supposed to be a means of compensation will benefit.

PS: I have nothing against criminal lawyers doing what they are supposed to do or those involved with real estate or contract law—although both of the latter would benefit from a great deal of plain English.

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