Avandia case: the new normal for plaintiffs’ fees in mass torts?

By Alison Frankel
January 23, 2013

Last week, the court-appointed mediator in the consolidated Avandia marketing and product liability litigation against GlaxoSmithKline informed U.S. District Judge Cynthia Rufe of Philadelphia that 58 plaintiffs’ firms in the case have agreed to an allocation plan for $143.75 million in common-fund fees. As mediator Bruce Merensteinof Schnader Harrison Segal & Lewis described the process, nine law firms objected to the initial allocation plan proposed by a Rufe-appointed fee committee. After a dozen phone calls and 15 in-person sessions over the last few months, members of the fee committee adjusted their own take to bring the objectors on board. In the final allocation outlined in Merenstein’s report, the biggest share of the common fees, $22.6 million, will go to Reilly Pozner. Wagstaff & Cartmell is in line for $17.2 million; Andrus Hood & Wagstaff for $14.7 million; and Miller & Associates and Heard Robins Cloud & Black for more than $10 million. The Miller firm was an objector to the original allocation plan, but all of the other firms looking at eight-figure awards from the common fund were on the fee committee.

Keep in mind that the common-fund fees are on top of whatever contingency fees the plaintiffs’ firms will receive as a share of their clients’ settlements with GSK over the diabetes drug. Rufe ordered last October that all of the plaintiffs in thousands of settled (and later-settled) cases must pay 6.25 percent of their settlements into a common fund to compensate the lawyers who worked on behalf of all Avandia plaintiffs in the consolidated litigation. If you do the math, that reflects a total of $2.3 billion in Avandia settlements by GSK (Rufe doesn’t cite the total but based her order on an aggregated estimate calculated by a plaintiffs’ expert.)

So what, you may be wondering, is the total percentage of that $2.3 billion that will go to plaintiffs’ lawyers? We don’t know. And that’s why the Avandia litigation model, which GSK previously employed in the Paxil litigation, could be a boon to plaintiffs lawyers.

Unlike defendants in the $4.85 billion Vioxx litigation or the megabillions fen-phen diet drug litigation, GSK did not reach a global settlement with Avandia claimants via a class action. Instead, according to the MDL steering committee’s memo in support of its common-fund fee request, the pharmaceutical company reached thousands of individual settlements, typically settling en masse with plaintiffs’ firms that had large portfolios of cases.

Individual settlements, unlike class deals, don’t have to be approved by the court. Nor do the fees associated with them, which are typically the subject of contingency contracts between lawyers and their clients. So, unlike the federal judges in the Vioxx and fen-phen class settlements, Rufe is not overseeing all fee awards to the lawyers who brought and settled Avandia cases, just the common-fund fees for lawyers. That’s icing on the fee cake for the 58 firms that will receive common-share money for taking 220 depositions, working with more than 20 expert witnesses, reviewing millions of pages of documents and writing and arguing briefs for the benefit of all Avandia plaintiffs. I’m sure mediator Merenstein and representatives of the 58 common-share firms deserve a lot of credit for resolving their differences and reaching a consensual allocation plan — unlike the lawyers in the Vioxx case, in which the judge had to step in to decide distribution of the $350 million common fund – but it was also in the interest of the plaintiffs’ firms.

I called lawyers at several of the firms on the fee committee, including Reilly Pozner, Andrus Hood, Wagstaff & Cartmell and Dianne M. Nast. None of them got back to me.

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