Monopolies in Multidistrict Litigation – Part III – Ethical Problems in Settlements

In my first post on Monopolies in Multidistrict Litigation, I noted that lead lawyers and defendants seem to benefit in tandem from the settlements they design. The second post, Part II, explained how repeat players on both plaintiff and defense sides have perfected a fundamental shift in settlement design.  This post, Part III, points out some specifically troubling settlement practices and identifies the ethical quandaries they raise.

1) Attorney-recommendation provisions, which require participating attorneys to recommend the deal to all of their clients.

2) Attorney-withdrawal provisions, which instruct attorneys to withdraw from representing non settling clients.

3) Walkaway, withdrawal, or “blow” provisions, which release the defendant from its contractual obligations if too few claimants settle

4) Latecomer reductions, which reduce settlement payouts to claimants without counsel on the settlement date.

5) Reverter clauses, which allow the defendant to retain unclaimed settlement funds.