Money matters: judicial market interventions creating subsidies and awarding fees and costs in individual and aggregate litigation.

• Author: Resnik, Judith
• Position: Mass Torts Symposium

1. MONEY AND THE "ETIQUETTE" OF THE CIVIL JUSTICE SYSTEM

   The topic of this symposium is mass torts. My focus is on fees, costs, and subsidies. Given that my co-participants are judges, lawyers, and academics steeped in current practices (indeed creating them), I have no need to rehearse the arguments about the different methods used for paying lawyers or the insufficiency of current law. The law of attorneys' fees is the subject of dozens of law review articles, and both academic and popular literature evidence a shared sense that "something" needs to be done.

   But I do need to explain why figuring out what to do is difficult. As I begin to discuss a) judicial intervention into the market for legal services; b)judicial allocation of lawyers' fees that turn judges into purchasers of legal services; c) the challenges of determining whether and how to subsidize which litigants; and d) the effects of such decision making on the judicial role, I am conscious that I am engaging in a breach of etiquette. I am talking about judges directing the flow of money in civil litigation. But the discourse of civil justice has tried to avoid that topic; the phrase--judges as market-makers--is not regularly deployed.

   While the relationship between judges and money is not much discussed, that money itself abounds in many mass torts is, of course, a focus of attention. Because of the stunning amounts at issue, commentators call repeatedly for courts to permit only "reasonable" attorneys' fees and to increase monitoring of payments. Yet despite a good deal of such discussion, what constitutes a "reasonable" fee and how courts (or legislatures, for that matter) should regulate attorneys' fees and costs have not been elaborated in the many proposals about how to revise the processes of mass tort litigation.(1)

   Similarly, while hundreds of reported decisions address attorneys' fees, most of that case law is not tailored to mass torts, with its layers of lawyers, some of whom are individually retained plaintiffs' lawyers and do work solely for specific clients and others of whom are authorized to speak for the group, either as "class action" lawyers or as members of "plaintiffs' steering committees."(2) Further, in the small but growing case law on fee awards specifically in mass torts, judges appear reluctant to delve too deeply into the relationships among the various lawyers and the way they allocate and spend the moneys paid to them. Despite a legal and popular press filled with stories about large sums paid,(3) collusion,(4) the possibility of kickbacks or payoffs, and entrepreneurial excesses, judges--in general--do little to superintend how lawyers divide money among themselves, which lawyers are paid for what services, or what "side settlements" (made either between lawyers or between defendants and subsets of litigants) are permissible.(5)

   Judges are not the only ones reluctant to confront these issues. While members of Congress have been complaining about class action "abuses" and have translated some of these concerns into law, the statutes enacted or proposed provide only general guidelines, leaving much to judicial discretion.(6) Further, those statutes and bills do not directly address cases in which many co-venturing and/or conflicting lawyers are before courts on behalf of a collective of claimants.(7) While a few non-governmental organizations, such as the Manhattan Institute, have argued for greater regulation of contingent fees(8) and some academics (myself included) have made proposals to alter either the means of paying fees or the reasons for paying fees,(9) the institutional voices of lawyers and judges (tile American Law Institute, the American Bar Association, and court-based rule drafting committees) have not yet worked out details about how to handle and distribute the fees and expenses of mass tort litigation.

   Hence, I need to explain why regulation that seems so obviously needed has not been much developed. To understand the problem posed by money in mass torts requires exploring yet larger topics: the role of the civil justice system in the United States and the work of judges within it. Aggregate litigation--including but not limited to class actions--is a site of conflict about the purposes of the civil justice system because aggregation can serve as a means of reallocating resources among litigants.(10) By authorizing or presiding over aggregate litigation, judges become allocators and purchasers of legal services. In order to decide whether and how to allocate legal services (what to buy, whether to subsidize, and when to transfer costs from one participant to another), one needs to know what one wants to achieve. Lacking a theory of the goals of civil justice, or more accurately, living within a system replete with conflicting and changing goals, judges and legislators are understandably unclear about what to do.

   Thus, guidance requires excavating the assumptions about the role of government interventions that affect the economic capacity of litigants to seek relief from the civil justice system and about the purposes of the civil justice system itself. To do so, in turn, demands identifying the background premises (formed in the context of individual litigation) about the respective roles of litigants, lawyers, and judges in the civil justice system.

   Below, in Part II, I provide a brief history of subsidies for civil litigants in individual litigation. That review identifies what I term unaided access as a basic tenet of the civil justice system, committed to litigant self-sufficiency rather than judicial assistance for those seeking to come into court. On the rare occasion when judges rule that state subsidies must be provided, opinions provide remarkably thin discussion of why intervention is required in the category of cases selected for funding but not required in other instances when poor litigants seek court assistance to make their claims. I turn then to an interrelated and second premise, laissez-faire lawyering, which requires me to provide less by way of elaboration because it refers to the familiar and pervasive presumption that attorneys are free within an adversary system to manage their relationships with clients, opponents, and courts and to pursue their goals with minimal regulation.

   But such assumptions are neither static nor uncontested. For some, the civil justice system is predicated on individual entrepreneurial effort. For others, because civil justice is a special service that offers a unique outcome--a court's power of judgement--government should ease access (in at least some contexts) either by government subsidies or by requiring economic transfers among litigants. Further, while unfettered lawyering still has its proponents, over the past several decades judges have adopted a series of regulatory measures, aimed at curbing perceived excesses of adversarialism. Hence, unaided access and laissez-faire lawyering are in tension with state-enabled litigation and regulated advocacy.

   Not only are there conflicting and changing impulses within the civil justice system towards lawyers and money. Conflict and change also mark the modes of processing cases within the civil justice system, as is explicated in Part III. The paradigm of individualized adjudication has been displaced in certain arenas with a presumption in favor of aggregate processing, whether by class action or by other means, such as bankruptcy, multi-district litigation, consolidation, informal collective devices, or agency-based processing. The adjudicatory model is itself yielding to processes aimed at settling, rather than trying, cases. And judges, formerly identified as solo actors rendering judgments, now have a wider array of roles (manager, settler, conciliator),(11) assisted by a staff of adjuncts, offering a range of dispute resolution services.

   Within the phrase "mass torts" lies evidence of both the causes and effects of changes in civil justice processing. Judicial superintendence over torts ranging from mass accidents to defective products has provided insight that similarly situated litigants are not always treated alike, that despite aspirations for inter-litigant equity, the civil justice system has had little means of implementing that aspiration. Moreover, as aggregate mass tort processing occurs through legislative devices such as the multi-district litigation statute, judges intervene in attorney-client relationships by appointing lawyers to speak on behalf of individuals with whom they have not contracted. Injuries allegedly suffered by large numbers of persons also prompt a large volume of cases--evidence of what I term civil docket excess. Mass torts thus make attractive both the aggregate processing of and the settlement of disputes.

   Yet that very combination--mass torts, aggregation, and settlement--offers new strategic opportunities for both plaintiffs' and defendants' lawyers to pool resources, to shop for claimants or opponents, to amass warehouses of clients (often with substantial diversity among claimants) and to develop repeat-player relationships with adversaries, all of which enhances the appeal (if not the value) of closure for the many participants, including litigants, lawyers, judges, insurance companies, and others. Aggregation not only can lower the price of entry to the civil justice system, it also serves as a means of changing the packet of services the civil justice system provides. Aggregation thus creates new incentives for use of the system.

   The alteration in opportunities and the strategic interactions made available have attracted the attention of lawyers, who have reorganized their practices, and of commentators and judges, who have become concerned that the civil justice system itself looks malleable, shielding if not enabling misuse of its potential. These problems reached the United States Supreme Court, which, in two recent opinions on mass...