Nature of the Beast: Recurrent Ethical Issues Confronting Attorneys Attempting to Settle Florida Class Actions

Florida’s class action rule allows a named plaintiff to sue on behalf of a group of people with similar claims. This is important because individual lawsuits for small amounts of money are not worth it. When a lawsuit is brought as a class action, it involves more work and ethical issues for all parties. Some common ethical issues in class action settlements are: 1) giving extra money to the named plaintiff, 2) lawyers trying to get a lot of money from the defendant, and 3) agreements that stop the lawyers from representing new plaintiffs against the defendant in the future. Sometimes in class action settlements, the person who started the lawsuit (named plaintiff) gets extra money called an “incentive award.” This extra money can be a lot more than what the named plaintiff actually lost in the lawsuit. It might seem unfair to the other people in the lawsuit who don’t get any of that extra money. The law in Florida allows these extra payments to be made to the named plaintiff, as long as the court thinks it’s okay. In one case, the court said it was okay, but in another case, the court said it wasn’t okay. In the Grosso v. Title Insurance Company case, the plaintiff sued the company for overcharging for insurance. The settlement agreement gave the plaintiff a $5,000 award, which was a lot more than what other class members would get. The court said this wasn’t fair and reversed the decision.

In the Altamonte Springs Imaging, L.C. v. State Farm Mutual Automobile Insurance Company case, the plaintiff got a $10,000 award in a settlement. The court said it was okay because the defendant paid the award and the trial court decided it was reasonable.

In Florida, the courts have to make sure that incentive awards for named plaintiffs in class action settlements are fair and reasonable. There are no specific rules about this, but the courts have to consider the responsibilities of the named plaintiff and their lawyers to protect the other class members. Basically, when lawyers represent a group of people in a lawsuit, they often don’t get paid unless they win. When they do win, they have to negotiate how much money they will get from the settlement. This can be tricky because the lawyers want as much money as possible, but the people in the lawsuit also want to get as much money as they can. In a recent case, a lawyer representing a group of people in a lawsuit against the city of Miami negotiated a settlement that gave the named plaintiffs a lot of money and left out other people in the group. The court found that the lawyer broke ethics rules by putting his own interests ahead of the group and taking too much money for himself. The lawyer was suspended from practicing law for three years. This case shows that lawyers have to be careful and follow the rules when negotiating settlements for large groups of people. Settlement is often the only option for defendants facing a class action lawsuit. They want the settlement to prevent future lawsuits, so they may try to limit the class action lawyers from representing other clients against them. But in Florida, it’s against the rules for lawyers to agree to this kind of restriction. This rule applies to all lawyers, not just in class action lawsuits. However, because class action settlements can involve a lot of money, defendants may still try to limit the class action lawyers’ ability to use their fees to sue them in the future. In 2005, a committee issued a rule saying that lawyers can’t agree to certain restrictions in settlement agreements. They have to consider whether the restriction is broader than what their own client could ask for, whether it limits their ability to represent other clients, and whether it benefits the other party’s client. This rule applies to both the lawyer making the offer and the lawyer accepting it. So, in a class action settlement, neither the lawyer for the group suing nor the lawyer for the defendant can agree to anything that stops the group’s lawyer from representing other clients against the same defendant. The consequences for breaking Rule 4-5.6(b) in Florida can be very serious. In one case, four lawyers were punished by the Florida Supreme Court for making a secret agreement with a defendant in a lawsuit. They were publicly reprimanded, suspended or disbarred, and had to return the money they earned, plus interest. Class action lawsuits in Florida have specific ethical challenges and restrictions that don’t exist in other types of lawsuits. The authors discussed a legal case involving State Farm and the potential conflicts of interest for attorneys in class action lawsuits. They also mentioned the ethical obligations of attorneys and past cases where attorneys were disciplined for unethical behavior. The authors work at a law firm and are experienced in class action lawsuits.

Source: https://www.floridabar.org/the-florida-bar-journal/nature-of-the-beast-recurrent-ethical-issues-confronting-attorneys-attempting-to-settle-florida-class-actions/