Proposed class action settlements often bring out two types of objectors representing individual class members who would be affected by the settlement. The first argues the settlement terms are themselves unreasonable and seek modification of those terms. Where those objections result in a higher overall recovery for the class, they seek attorneys’ fees from the increased value of the settlement fund. See e.g., Duhaine v. John Hancock Mut. Life Ins. Co., 2 F.Supp.2d 175 (D.Mass. 1998) (allocating a portion of the fee award to counsel for successful objectors who improved the settlement fund). The second type of objectors do not necessarily challenge the overall settlement amount per se, but rather object to the size of the award of counsel fees. In that instance, they argue the amount of requested fees are excessive relative to the value of the settlement to the class members and seek a reduction of the award or an increase in the size of the fund. Last year, in Fleming v. Barnwell Nursing Home and Health Facilities, Inc., 15 N.Y.3d 375 (2010), a majority of New York’s Court of Appeals held that counsel for a successful objector to the size of a fee request by class counsel was not entitled to recover attorneys fees from the increased value of the settlement fund. The majority reached this decision based on a New York rule which it read to limit fee awards to “representatives of the class” and that such did not include counsel for individual class members even if their objections increased the award to the class.
Driven in part of the Fleming decision and the disincentive it created for class members to retain counsel to object to fee requests (since the cost of a successful objection would still be borne solely by the objector or her counsel even though the entire class benefited from the objection), the New York legislature passed a new version of the rule which would permit a court to award fees to “representatives of the class and/or to any other person that the court finds has acted to benefit the class.” N.Y. Senate Bill 4577. On September 12, that bill was sent to Governor Cuomo for consideration and on September 23, Governor Cuomo signed the bill. http://www.law.com/jsp/lawtechnologynews/PubArticleLTN.jsp?id=1202517053062&slreturn=1 .