Tyson Chicken Settlement Raises Question of Lawyer Compensation

January 20th, 2010. By AbiK

So the Tyson Chicken proposed settlement could give consumers $5 million in refunds and coupons.

The Tyson Chicken proposed settlement could also give the plaintiffs’ attorneys $3 million in fees and court costs. Not.

Not if federal Judge Richard D. Bennett has anything to do with it. And I can’t entirely blame him—but not for the reasons you think.

Before I have a slew of attorneys bashing me, I have previously defended the payments attorneys request as part of settlements. Let’s face it, the attorneys usually put up the money themselves to litigate a case—i.e., there’s zip in cash flow until the case is settled—and won. So all the hours they work, travel they incur, office rent, staff salaries—all of it has to be paid out-of-pocket. Additionally, a case can take years to wind its way through the system—again, while there’s zilch in income. And let’s not forget that there isn’t one attorney pocketing whatever comes their way in a settlement; when we’re talking class actions, we’re talking lots and lots of lawyers, researchers, admin staff…who need to get paid (did I mention the electric bill?).

So when you hear a settlement of $3 million, and think that the first lawsuits in this case were filed in 2008, well, that $3 million starts to sounds a bit meager when spread over close to two years and all of the above.

But the issue Judge Bennett apparently has is summed up in a quote of his, printed in the Baltimore Sun online (1/16/10):

“When the public looks at these class action settlements, there is a general perception that a lot of money goes to lawyers and not enough goes to consumers.”

It’s about things being in proportion—or at least seemingly so.

In this instance, the attorney fees & court costs are close to 40% of the total proposed settlement (i.e., $5 million for consumers + $3 million in fees for a total of $8 million in settlement monies); that’s a pretty high percentage. Contrast with the Expedia settlement a while ago in which the attorney fees and court costs came to roughly 7.5% of the total settlement and I received a comment from one reader stating “Class action lawsuits do nothing to benefit the people who were hurt while the lawyers take in millions. It’s disgusting.” For perspective, that 7.5% came to $10 million on a total settlement of $133.4 million.

My issue isn’t with the lawyer fees, it’s actually on the flip side—with the settlement for the consumers. I don’t doubt it took the $3 million for the attorneys to argue the case. I do doubt that only $5 million dollars worth of Tyson chicken was purchased under the alleged guise of being raised without antibiotics—and keep in mind, this includes purchases of fresh, frozen or deli chicken, as well as Cornish hens or tenders. We’re talking about a company that does over $25 billion in revenue each year. Perhaps if the settlement amount for the consumers were more substantial, the attorneys’ proposed amount really wouldn’t make anybody blink an eye. Regardless, we’ll have to see where Judge Bennett nets out on this one…but with the Baltimore Sun quoting him as saying he “strongly doubts that he will approve the $3 million”, it doesn’t sound too favorable for the lawyers.

Tags: Tyson Chicken, Tyson Foods

This was posted on Wednesday, January 20th, 2010 at 2:50 pm and is filed under Emerging Issues, Settlement . Feel free to respond, or trackback. Read our comments policy.