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How Not to Manage a Common Benefit Fund: Allocating Attorneys’ Fees in Vioxx Litigation


Kline & Specter, P.C. was significantly involved in the multidistrict Vioxx litigation and the resulting disputes concerning the allocation of common benefit fees among the plaintiffs’ counsel. Based on this experience, the authors discuss how the allocation of fees in Vioxx provides lessons in how not to manage a common benefit fund. This Article first reviews the Vioxx litigation and the basic principles of common benefit fee allocation, including the lodestar approach. This Article then discusses how the Vioxx Fee Allocation Committee abandoned the lodestar approach in favor of a “point” system through which insiders sought to award themselves a lion’s share of the common benefit fund. This Article reviews a deal between insiders and certain law firms that resulted in an unauthorized distribution from the settlement fund to resolve objections over the size of the Vioxx common benefit fund. The Article argues that common benefit fees should be distributed according to the well-accepted lodestar approach, rather than an ad hoc “point” system created by self-interested parties, and that common benefit money should not be distributed through unauthorized deals. It concludes that Multidistrict Litigation judges should closely supervise the actions of court-appointed counsel to make sure that decisions around the size and distribution of common-benefit funds are transparent, jurisprudentially sound, and fundamentally fair.