LIT COMMENTARY
We’re always interested in good lawyers and firms that question the status quo. Yet many times there can be conflicts of interest and this seems to be true of Ted Frank. He came under LIT’s bright lights when we noticed he’d blocked our twitter social media profile.
It seemed odd, so we did some investigation and while he and his firm do great service, outing the CFPB and class action lawyers for stealing settlements instead of paying victims, his association with the Federalist Society appears to have made his decision to block LIT on Twitter. We’re taking that view based on the fact Ted Frank is a “Chicago Cub”.
The Chicago Uni. Law Professor Baude and the Illinois State Bar also decided to block us on Twitter. That was again most likely due to our article about Professor William Baude’s incoherent defense of the Federalist Society.
Well there’s no hard feelings towards Ted. Everyone is entitled to their opinions and who they follow or block on twitter. That said, when you have a partisan society taking at least $250 million dollars in donations (per Sen. Whitehouse at Andrew Basher’s congressional nomination for a seat on the 11th Cir., in May 2020) from people who remain undisclosed – a secret – and in order to influence judicial decisions (e.g. corruption) it seems rather inapposite to be shouting from the rooftops about lawyers stealing class action settlements for financial avarice and considering the definition of Ted’s work. Here’s what Google search came up with as the top answer to the query about:
“good faith objectors in class actions”
Professional objectors are attorneys who, on behalf of nonnamed class members, file specious objections to class action settlements and threaten to file frivolous appeals of district court approvals merely to extract a payoff. Their behavior amounts to a kind of lawful extortion.
Ted Frank, Director of Litigation and Senior Attorney
Theodore H. Frank is director at the Hamilton Lincoln Law Institute and the Center for Class Action Fairness. Frank founded and ran CCAF as a non-profit, public interest law firm in 2009.
Frank has won several landmark appeals and tens of millions of dollars for consumers and other plaintiffs through his class action work. Adam Liptak of The New York Times calls Frank “the leading critic of abusive class action settlements” and the American Lawyer Litigation Daily referred to him as “the indefatigable scourge of underwhelming class action settlements.”
Previously, Frank clerked for the Honorable Frank H. Easterbrook on the Seventh Circuit Court of Appeals, and was a litigator at firms in Washington and Los Angeles and a resident fellow at the American Enterprise Institute.
Frank is a frequent public speaker and has testified before Congress multiple times on legal issues. He has been profiled by The Wall Street Journal, Forbes, GQ, and the ABA Journal, among other publications.
In 2008, Frank was elected to membership in the American Law Institute.
He also serves on the Executive Committee of the Federalist Society Litigation Practice Group.
Frank graduated from The University of Chicago Law School in 1994 with high honors and as a member of the Order of the Coif and the Law Review. He is a member of the District of Columbia Bar and the state bars of California and Illinois.
He is played by a much more handsome Gentile in a HBO docudrama based on a book that mentions Mr. Frank once on page 362.
Email; ted.frank@hlli.org
WSJ: Congress Can Rescind the CFPB’s Gift to Trial Lawyers
Do Americans need more lawsuits?
They’ll get them if the Consumer Financial Protection Bureau has its way. The CFPB—created by the Dodd-Frank Act of 2010 and still run by an Obama appointee—issued a rule in July barring financial institutions from including arbitration clauses in their contracts with customers.
That means disputes would have to be settled by class-action lawsuits, which mostly benefit lawyers.
The agency justifies its rule by claiming it found that 79% of money paid in class-action settlements goes to consumers. The statistic is bogus. Lawyers publicize the handful of settlements in which cash actually goes to consumers but hide the overwhelming majority of settlement results from public view.
A Florida federal district court, for example, has in recent years approved several settlements with banks concerning mortgage-insurance practices.
Lawyers collected tens of millions of dollars.
But the claims process for mortgage-holder class members was so arduous that consumers were certain to receive only a fraction of that.
Class members, who have no say over who is appointed as their attorney, objected repeatedly. The court refused to consider how much class members would actually receive in the settlements—or even require its disclosure.
How did the CFPB study treat settlements like these, in which there is no public information about how much the class received?
It assumed every class member got paid, then calculated its ratio based on that fictional “gross relief” number. The agency also calculated a “net relief” ratio based on actual payments—but that ratio ignored all settlements in which the actual payments were not disclosed, as well as those in which the class received no cash at all and the attorneys got 100% of the proceeds.
My legal team at the Competitive Enterprise Institute got involved in a recent class-action settlement involving Duracell batteries. (The CFPB rule only applies to financial businesses, but the rules for what lawyers can take from class-action settlements are the same for batteries as for banks.)
The plaintiffs attorneys in the Duracell case received more than 16 times as much as their clients. They countered that since the majority of class-action settlements fail to compensate more than 99.7% of the class, their 0.5% compensation rate was above average. We regularly litigate against settlements with even worse ratios than that.
Class-action attorneys fees often total thousands of dollars an hour. And even that number understates the windfall to lawyers because, as The Wall Street Journal reported in 2013, many cases involve $25-an-hour temps with law degrees doing menial tasks that are billed to class members at over $500 an hour.
The CFPB’s study also ignored the millions of dollars spent on lawyers to defend against lawsuits even when the defendants prevail—costs eventually passed to consumers.
Congress has a chance to undo this CFPB regulation, thanks to the Congressional Review Act of 1996.
The law requires federal agencies to submit new rules to Congress, which then has 60 “session days” to disapprove such rules with a simple majority vote and presidential signature. The House voted in July to repeal the CFPB rule.
The Senate can save consumers billions by following suit.
Trial lawyers are a major source of Democratic funding and can expect lockstep Democratic opposition to efforts to repeal the rule, as happened in the House. Senate Republicans need to unify and get the 50 votes required to perform the consumer-protection role the CFPB has abdicated.
Originally published to The Wall Street Journal.
