Opinion

Alison Frankel

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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Comments
3 comments so far | RSS Comments RSS

Avandia case file in 2003, now in 2013, Still no money. Allot of false promises by: R&Pllp. At this juncture my AMI “Widow maker” has gained me nothing but more bills and little recourse. The law firms are being handed blood money and see nothing wrong in taking it, and 46.5% too boot off the people who hired THEM. Without us, they would still be chasing ambulances. Not becoming Millionaire’s of the people who suffered the effects from Avandia.

Posted by IAMAD | Report as abusive
 

I am in the class action suite against GSK/Avandia. A large percentage of the awards are being held back in a separate action by the health providers like Humana. The hold back of payments due, are to ensure those with liens against them for services rendered pay their bills. The problem I have, not having any liens, is that I will not get paid until this lien delay is settled. How can it be legal that everyone is affected and under the same constraints, regardless of circumstance. I believe the money pot is still full of unpaid funds for two reasons. The loner this goes on the richer the lawyers become and every day the funds collect interest that the plaintiffs will never see.

Posted by taetum6203 | Report as abusive
 

My husband is getting the same run around as the others are. He has suffered the effects of Avandia and received 1 check of 5000 dollars however there is no known date of when the rest of the money will be received. Glaxo Smith Kline lost the case and was ordered to pay out alot of money. GSK lost and yet they are the ones being treated like the victims and they are not. He also has R&P as his attorney. How is it that gsk has so much control over the money that they were ordered by the courts to pay. How is it that Medicare Part C or anything else can hold up our checks especially when people like my husband did not have Medicare at the time of his injury. He is not able to work and support me which depresses him a great deal. Please let me know if further information is needed.

Posted by pog225 | Report as abusive
 

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