A new paper from a powerhouse trio just hit SSRN.  Steve Choi, Adam Pritchard, and Jessica Erickson teamed up to take a look at attorneys’ fees in securities class actions.  Erickson announced it earlier today with some quick summary tweets:

New paper alert! When it comes to securities class actions, we worry a lot about low-value settlements. My paper with Steve Choi and Adam Pritchard looks at the cases on the other end of the spectrum–the largest settlements in securities class actions. https://t.co/1fGRY9wZWd

— Jessica Erickson (@ProfJErickson) July 18, 2019

They collected data on over 1,700 settlements to examine how high and low value settlements differ from each other and whether judges treat the high-value cases differently than the low value ones.   Interestingly, they found some evidence that attorneys may engage in some make-work in high-value cases in order to justify collecting big fees. With all of the data they collected, we’ll likely see many more papers coming out of this set. 

Hopefully, the data will help courts make better decisions when scrutinizing fee requests in mega-settlements.  One challenge will be getting the information before courts reviewing settlements.  The attorneys representing parties generally have little incentive to police lead counsel fees.  Lead counsel wants to get paid.  And the defense doesn’t have as much interest in the allocation of settlement funds so much as the overall number.  Courts may need to be alerted to these settlement issues to protect the class.