Ethically representing thousands of plaintiffs: conflict problems in mass toxic harm cases.

• Author: Toops, Sarah A.

Multiple representation should be allowed when it is beneficial to do so, but new measures should be implemented to protect against abuses.

IN SOME mass toxic harms cases, such as those involving diethylstilbestrol (DES) or the Dalkon shield, lawyers have represented hundreds of plaintiffs at a time; in asbestos cases, the number of claimants ran to more than 10,000. While mass representation and treatment through class actions, multi-party suits, bankruptcy and other innovative techniques may be needed to provide justice for claimants, an attorney's clients in a mass toxic harms case often will have a range of diseases, exposures, dates of manifestation of injury, jurisdictional interests, and litigation goals. Moreover, the financial and reputational stakes of mass toxic harms litigation are very high for the attorneys involved.

Rule 1.7 of the American Bar Association Model Rules of Professional Conduct provides that in cases of simultaneous representation of parties, such as co-plaintiffs whose interests may conflict, the following provisions govern:

(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:

(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and

(2) each client consents after consultation.

(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's own interests, unless:

(1) the lawyer reasonably believes the representation will not by adversely affected; and

(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.

Under these circumstances, one may wonder if it is possible for lawyers trained to follow ethical rules based on advocacy on behalf of individual clients to deliver justice ethically to each of their thousands of clients in a mass toxic harms case.(1) As toxic harms litigation grows, this dilemma becomes even more pressing. The most viable solution to this problem and the way to deliver justice ethically in mass toxic harms cases is to allow group representation and treatment of mass toxic harms claimants despite facial conflicts of interest in the representation, but at the same time to institute new measures to protect individual clients and their interests.

TYPES OF CONFLICTS

1. Conflicting Clients

   1. Current Claimants

      A violation of Rule 1.7 occurred when the lawyers in the Manville Trust settlement represented new clients whose potential awards were jeopardized by the lawyers' actions to secure full compensation for the clients who had retained them earlier.(2) The Dalkon Shield litigation, another limited fund case, also posed the possibility that there would not be enough money to pay all of the personal injury claimants, which created the potential for intra-plaintiff conflicts.(3) In other asbestos cases, plaintiffs' counsel faced the fact that their clients with advanced cancer wanted their cases pursued first and most strongly, but their other clients, who suffered from less severe injuries, did not want to wait. All of the cases could not be pursued at the same time.(4) Serving one client's interests impaired the interests of another client.

      In mass toxic harms cases, there is a potential for divided loyalty whenever an individual attorney represents several clients in the same litigation.(5) This arises from the fact that even if the attorney reaches some approximation of the interests of the group as a whole, the attorney will not be able to account for all of the desires of the individual clients. It is difficult to have contact with, let alone an understanding of the interests, of thousands of clients in a bankruptcy, large class action or similar proceeding.(6)

      Any number of differences--such as diseases, extent of injury and date of manifestation of injury--may produce conflicts of interest among claimants an attorney represents. Claimants may disagree about their goals in litigating, their willingness to compromise, and their assessment of options, particularly based on individual desires for particular types of relief and desire to avoid risk.(7) The conflicts may impair the attorney's ability to be loyal to all clients. In the breast implant class action, for example, class certification was challenged on the basis that the representative domestic plaintiffs had a conflict with the foreign claimants they purported to represent.(8) Since the settlement proposed was favorable to one part of the class and unfavorable to another, the claimants' lead counsel would not have been able to protect the interests of the each member of the class.

      Comment [7] to ABA Model Rules 1.7 states in part that an "impermissible conflict" may exist by reason of "the fact that there are substantially different possibilities of settlement of the claims or liabilities in question." For example, inventory settlements--that is, an agreement between plaintiff and defendant counsel for a total sum to be allocated for all the plaintiffs' attorney's cases--may be in the interest of some claimants without good claims but may hurt those with strong claims. This practice is explicitly condemned in Comment [4] to the Model Rules, which states, "Loyalty to a client is also impaired when a lawyer cannot consider, recommend or carry out an appropriate course of action for the client because of the lawyer's other responsibilities or interests. The conflict in effect forecloses alternatives that would otherwise be available to the client."

      Most instances of conflicts produced by the diverging interests of an attorney's clients in a mass toxic harms case cannot qualify for the exception set forth in the Model Rules. The attorney usually cannot "reasonably believe" the representation will not be adversely affected, and the client does not consent after consultation. Findley v. Falise,(9) an asbestos case, exemplifies this problem. In this case, if the attorney were successful in getting the earlier claims paid in full, there would be nothing for the later claimants he also represented--a clear adverse affect. The attorney also had not informed his clients that their positions were in conflict and the clients did not know that their interests might be compromised.

   2. Future Claimants

      Invariably, attorneys face a conflict of interest when they represent both present and future claimants. In particular, counsel and their present clients have an interest in reaching settlement, but when defendants will not agree to a settlement without also binding future claimants, counsel may agree to a settlement that is not in the future claimants' interests. Since the courts and defendants will reserve money for future cases, the more future claimants there are, the less money for future claimants and immediate fees. Plaintiffs' attorneys therefore have an incentive to downplay the number of the future claimants and their interests.

      This conflict was faced by some of attorneys in the first Bendectin settlement. While the settlement was in the interests of their current clients, it conflicted with the interests of the future clients they represented who would bear the risk that their numbers and the severity of their injuries would exceed the amount of the settlement proceeds allocated for them.(10)

      Cases binding future claimants lead to the inevitable question of "whether the present clients of plaintiffs' class attorneys received especially beneficial treatment to the detriment of a future class of claimants."(11) The asbestos class action case, Amchem Products Inc. v. Windsor,(12) is an example. The settlements in this case purported to bind unnamed future claimants--persons and their families who had been exposed to asbestos but had not yet manifested any injuries. The present claimants were able to reach settlement in part by binding these future claimants, but the future claimants were disadvantaged by the fact that the settlement did not adjust for inflation, did not have provisions accounting for changes in medical understandings, did not compensate for medical monitoring, and had compensation levels that compared unfavorably to payments received by some other plaintiffs.

      The interests of present and future claimants are particularly likely to conflict when there are long latency periods for injuries and there is only a limited fund that probably will not compensate everyone. "In distributing funds, attorneys generally believe present clients prefer a first-in, first-out (FIFO) approach or one based on the seriousness of the claim, as long as there is enough money to pay all present clients"(13) Without protection, the funds will be depleted before future claimants will have the opportunity to assert their rights.

      The Manville settlement provided that claimants (and their attorneys) would be paid in the order that their claims were filed. This procedure left little for the claimants that would come later. Notably, the committee that devised the Manville claims resolutions procedures "gave priority in timing and processing to the clients of the attorneys who were members of the Committee and who filed suit before Manville's Chapter 11 filing."(14)

      The use of secrecy agreements also may produce conflicts of interest between present and future claimants. A secrecy agreement may be necessary to obtain the best possible settlement or, in some cases, settlement at all for the attorney's currently injured clients. Future claimants have an interest in deterring secrecy agreements since the information, particularly documents revealing dangers or negligent or otherwise wrongful conduct, might not only improve their settlement chances, but also help them succeed in litigation and in some cases to avoid injury...