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Source: Janet Walker and Lorne Sossin. Civil Litigation (Feb. 2010). p. 158 Bottom - 159 Top.

The Ontario Law Reform Commission anticipated the concerns raised by the potential for collusion between class counsel and counsel for the defendants:

[Tlhere is a real possibility that, without the benefit of appropriate safeguards, parties and their counsel might be tempted to abuse the class action procedure in reaching a settlement. For example ... class members' interests could be sacrificed for lawyers' fees ... in the con- text of a settlement negotiated on behalf of the entire class, the agree- ment reached could be inadequate or unfair to the class members.
  ...[I]t has also been suggested that the interests of the class law- yet and the class members might diverge; this would occur where the lawyer negotiates a settlement that maximizes the lawyer's compensa-tion at the expense of the ultimate recovery achieved for class mem-bers. The most obvious manner in which such a result might occur is where the defendant offers to absorb the fees of the class lawyer, calculated at a premium rate, in return for the acceptance of an inad-equate class award and discontinuance of the class action. Such a re-

sult might also occur, however, through indirect financial pressures, without any conscious misbehaviour on the part of the lawyer.

What exactly does the bolded signify? 1. How'd the defendant 'absorb'? By paying the class lawyer her demanded fees?

  1. Why'd the class lawyer's fees be 'calculated at a premium rate'? Can't the class lawyer demand any befitting amount, without basing the amount on any calculation?
  • I would read this as implying a hypothetical collusive agreement. – Stackstuck Feb 28 '18 at 9:24
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  1. How'd the defendant 'absorb'? By paying the class lawyer her demanded fees?

The defendant offers, as part of the settlement, to pay the legal costs of the other part (the class lawyer fees)1. The class lawyer may be tempted to accept a settlement that pays $1000 to his clients and $200 to him instead of a settlement that pays $2000 to his clients and $100 to him.

Why'd the class lawyer's fees be 'calculated at a premium rate'? Can't the class lawyer demand any befitting amount, without basing the amount on any calculation?

The class lawyer has a duty to his clients. Otherwise, he could just agree to a settlement that pays $500 to him and $50 to his customers. He has to produce a bill, specifying billable items (number of hours spent in the lawsuit, expenses, etc.) If he asks for an unreasonably high rate for his hours his customers could sue him, specially if there is reason to believe that this has made him accept/advise an unfair settlement.

But the defendant could offer to pay his bill at the highest rate that the lawyer uses (e.g., like for corporate services) instead of a more average rate.

This could be particularly tempting in those cases when lawyers are to be paid only if the lawsuit succeeds, as the payments are less visible to the clients.


1In fact, at least in Spain it is pretty standard for judges in civil cases to force the party at fault with the legal costs of the other side. I understand that this happens often in the USA, too.

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