The Anthem Class-Action Con

   < < Go Back
from The Wall Street Journal,

Judge Lucy Koh exposes what amounts to legal looting.

Plaintiff attorneys aren’t easily shamed, but they should be after a rebuke by a federal judge in California for trying to con class-action victims.

Four law firms last year negotiated a $115 million settlement with insurer Anthem to cover a 2015 data breach that compromised 79 million birth dates, Social Security numbers, addresses and income data. Yet a mere $51.4 million would go to victims—$0.65 on average per member, including the cost of free-credit monitoring. Attorneys demanded $63.6 million because of what they called their “exceptional results” and the “extremely risky nature” of the case.

“I never would have approved 53 law firms in my case. If I thought eight was too many, what made you think I wanted 53 firms churning on this case?” Judge Koh scolded the attorneys recently. This profit-sharing agreement may be an antitrust violation if they colluded to carve up other cases or raise their rates.

The judge also asked why 100 of the 329 attorneys who performed routine tasks like document review were partners at their firms and a couple dozen were contract attorneys charging $300-$400 an hour. The prevailing wage for contract attorneys is $25 to $50 per hour. “I would like you to find a single paying client that would have approved these type of markups in a contract attorney,” she told the attorneys. “I’m entitled to know how much profit you think you’re entitled to with regard to every one of these people.”

More From The Wall Street Journal (subscription required):