May Class Counsel Also Represent Lead Plaintiffs?
Forthcoming, Florida Law Review (2020)
51 Pages Posted: 10 Mar 2020 Last revised: 2 Apr 2020
Date Written: March 4, 2020
For decades, courts and commentators have been aware that the potential for conflicting interests among the class representatives, class counsel, and absent class members is inherent in the class action device. Notwithstanding this realization and a substantial amount of scholarly and judicial commentary on class conflicts, one kind of conflict has not received due attention: the conflict that inevitably arises when class counsel also represents class members as individuals. We demonstrate that this conflict—so common to be almost invisible—arises from the very beginning of a putative class representation, and may create a fraught situation for a lawyer concurrently representing both the class (or putative class) and the class representative individually. We examine three situations in which these conflicts are most acute: holdouts (where the class representative holds out against a settlement that would benefit the class as a whole), sellouts (where the class representative could benefit personally by settling individual claims only), and payouts (where the class representative could use class action procedures to benefit personally at the expense of the class). We canvas potential solutions and conclude that radical ones—for instance, banning concurrent representation of a class and a class member individually—would do more harm than good. We therefore recommend more measured responses, primarily:
(1) greater disclosure of risks to individual clients by their attorneys,
(2) greater judicial oversight, and
(3) an amendment to Rule 23 of the Federal Rules of Civil Procedure, or its advisory committee notes, calling on courts to police the types of conflict we identify.
Keywords: class actions, Fed R Civ P 23, conflicts of interest, Model Rules of Professional Conduct, class counsel, lead plaintiffs
Suggested Citation: Suggested Citation