University of Pennsylvania Law Review PENNumbra
In his recent article, Protection of Investors in the Wake of the 2008-2009 Financial Crisis: Do Class Action Lawyers Make Too Little?, 158 U. Penn. L. Rev. 2043 (2010), Professor Brian Fitzpatrick asserts that "the optimal award of fees to class action lawyers in small-stakes actions is 100% of the judgment." The premise of Fitzpatrick’s proposal is that deterrence is the sole purpose of small-stakes class actions and an increase in fees will incentivize lawyers to file more small-stakes class actions which in turn will result in more class awards and more deterrence. This paper addresses two fundamental questions relating to Fitzpatrick’s proposal: (1) how much more deterrence can we expect to derive from an increase in fees to class action lawyers?; and (2) what are the costs associated with a significant increase in small-stakes class actions? The paper suggests that the increase in deterrence may be far outweighed by the increase in cost associated with the proposal.
160 U. PA. L. REV. PENNumbra 10 (2011)