Getting With the Program: The Vioxx Settlement Agreement
By ANTHONY SEBOK AND BENJAMIN ZIPURSKY
|Tuesday, Nov. 20, 2007|
Is the proposed $4.85 billion settlement of Merck's Vioxx litigation a cause for gloom or cheer? A major settlement agreement often gives a quick psychological profile of lawyers, law professors and pundits' optimism level. The Vioxx Settlement Agreement announced ten days ago is no exception. Hyper-critical tort reformers and progressives see a corporate bilking, or a trial lawyers' payday at the expense of their clients. Reflexively moderate pragmatists see in the "program" offered to plaintiffs a pretty good compromise, sooner than expected. Merck and plaintiffs' counsel seem pretty happy. They should be; it's their deal.
For our part, however, we are not sure. The issues surrounding Merck's alleged culpable conduct and the causal links between that conduct and the tens of thousands of persons who may have taken Vioxx are far too complex for us to evaluate here. Thus, in this column we are not going to speculate on whether $4.85 billion is too much or too little for the aggregation of these plaintiffs' claims. Instead, we want to examine the process by which the agreement was reached, the process by which the payment-and-release program will come into effect (if it does), and the process by which the settlement agreement and the program will be "enforced."
The questions we want to raise are therefore more structural than substantive --that is, even if somehow the lawyers for Merck and the plaintiffs lawyers have hit on the right result, is there anything wrong with the road by which they are getting there?
Why the Process that Led to the Settlement Matters: The Remaining Unclarity About the Actual Settlement Amount for Each Plaintiff and Case
The reasons these questions matter is that the plaintiffs who must decide whether to accept the settlement offer are likely to be just as unsure as we are, regarding whether the amounts offered to them are "the right amount" to settle.
On one hand, those who really took Vioxx and suffered a heart attack or a stroke are now likely to receive at least some compensation, perhaps over $200,000, even after attorneys' fees, and probably within 2-3 years. Merck's recent trial record gave it better than 3-1 odds of winning completely at trial. And the rate of cases tried suggested that 5 years would have been wildly optimistic.
On the other hand, no one really knows what compensation will be calculated in any case under the program, and no one will know that until well after they have made a decision to release their rights against Merck.
It is entirely possible that a case brought by a genuine Vioxx user who really suffered a heart attack will be worth far less than $50,000, even before attorneys' fees are taken out. And many plaintiffs will likely get nothing, or next to nothing.
Granted, each plaintiff can use the mock calculator that plaintiffs' steering committee has placed on the Internet to guesstimate how many points his or her claim will be worth, but no one knows how many dollars each point is worth, from below $1,000 to above $2,500. A non-smoker in his late fifties who had his first heart attack after taking Vioxx for 1 year might score 74 points (assuming some risk factors), but 74 points could translate to anywhere from less than $74,000 (before subtracting attorneys' fees) to more than more than $185,000 (before subtracting attorneys fees). And, of course, the rigorous system of claims administration may yield an entirely different point evaluation.
So is enrolling a good bet? There is just too little information for an ordinary person to know. And so it seems that this plaintiff would be wise to ask his lawyer's advice. Traditionally, the hallmark of what made lawyers special among other business people was their unique role--sanctioned by their special status and license--as counselor to their client. This role was sometimes romantically described as a duty of loyalty to the client, but in any case, it embraced a duty to exercise judgment independently, so as to facilitate the client's own informed decisionmaking on matters of fundamental legal importance to her.
The Vioxx settlement, however, raises a red flag precisely because it seems designed to shrink these aspects of a lawyer's duty to the client. Indeed, for reasons we shall indicate, the Vioxx settlement appears to raise the red flag even higher than usual in aggregate settlements.
Why the Vioxx Settlement May Raise a Red Flag Regarding Attorneys' Special Duties to Their Clients
Two features of the settlement agreement are especially striking. The first is that if a client were genuinely undecided and in need of guidance about whether to accept Merck's offer, it would be of little help to consult his attorney. Indeed, every plaintiff already knows what his lawyer will advise even before he asks: His lawyer will urge that he enroll in the program because his lawyer is legally obligated to recommend it.
That is because the settlement agreement, like many mass tort settlement agreements, is a settlement agreement with the lawyers themselves and it obligates the lawyers to recommend enrollment in the program to 100% of their clients. It would therefore not be surprising if the clients became somewhat mistrustful of their lawyer's recommendations. Moreover, this mistrust might be amplified by the awareness that the lawyers' probable recovery of (presumably) over one billion dollars in fees is contingent on their successfully enrolling 85% of the products liability claimants.
And now we come to the second point, apparently not so common in mass tort settlement agreements. Let's assume that a client has decided that the settlement was not a good deal, and therefore exercises her "right" to decline from enrolling in the program. What will her lawyer say? The settlement agreement tells us what will happen: The lawyer will fire the client. Subject to an ambiguous reference to the ABA Model Rules, the Settlement Agreement obligates the lawyers to withdraw from representing any client who does not enroll in the program.
State legal ethics rules require, as a basic norm respecting the client's autonomy, that a lawyer treat the decision to settle a lawsuit as the client's decision to make, and that the lawyer provide the client with independent legal advice to enable her to make that decision herself. Yet lawyers for these Vioxx plaintiffs will likely be saying the following to each of their clients: Whether to accept the offer to settle your claim by enrolling in this program is your decision to make. However, I promised the defendant I would recommend that you accept and I do recommend that; I will drop you as a client unless you accept it; and most of the best Vioxx plaintiffs lawyers are now out of the business of going to trial against Merck on Vioxx claims, leaving you little chance of finding another lawyer who is very talented and right for your case.
At a minimum, then, there is great tension between this fundamental norm of lawyering and the lawyer/client conversation that is envisioned by the Vioxx settlement agreement.
The Response to Criticisms of the Agreement: Compromise Is Always Necessary
It is a powerful response of many settlement advocates to say that every mass torts settlement involves some kind of compromise. The nature of a mass tort is that it is literally impossible to replicate the kind of attorney/client relationship that existed in the day of the horse and buggy.
Mass torts--especially when whether they involve mass personal injuries, including latent ones, such as asbestos, or quickly discovered injuries, such as Vioxx--require the development of new techniques to efficiently determine the price of compensation. And typically, that involves diminishing the role of the client and, as special rules regarding aggregate settlement contemplate, being flexible about potential conflicts of interest.
Clients cannot develop an intuitive sense of how "things are done." They do not need to compromise today, in order to insure that tomorrow another deal will get done. They cannot trade between different classes of cases to pay with one kind of settlement the cost of securing another, unrelated settlement.
Even beyond this - as we have learned and continue to learn with asbestos - there is simply no way to wrap things up and remain true to the old fashioned model of the attorney/client relationship.
The Problem with this Argument in the Vioxx Case: It's Not a Class Action
We recognize the force of these concerns. Indeed, these concerns lay behind both the development of class actions and the Supreme Court's recent holdings in the past decade regarding the limitations of class actions. But the Vioxx settlement does not settle a class action; it is the settlement of tens of thousands of individual cases.
In a class action, there is a moment, written into the law, when in theory (if not in practice) the interests of the client are raised and tested against the settlement worked out by the lawyers. There must be a "fairness hearing," and at this hearing not only may the judge object to the terms of the settlement, but so can outside objectors, who, because of their own self-interest, might argue that they, and not the current set of lawyers, can represent some of the clients best.
And so we come to our final process reason for discomfort with the Vioxx settlement. Not only will there never be a fairness hearing in this settlement (since no class action is being settled), but there seems to be no one interested and able to take the clients' side against their own lawyers.
The judges who are supervising the thousands of cases that have been concentrated in four courts around the country were apparently part of the process that created the settlement. They have every reason to remove any impediment to its completion The last thing any of these judges want is to actually supervise the trials of the individual plaintiffs. The cases are fact-intensive and could take years, if not decades, to try. Moreover, their judicial colleagues likely regard a settlement as a great accomplishment, and the absence of a settlement as an embarrassing failure that contains its own punishment.
No one knows whether the Vioxx settlement will ever come to fruition. It depends on 85% enrollment, which is a pretty high number. For all we have said, a ripening of the agreement of the lawyers into a fully-funded program that compensates tens of thousands of plaintiffs may be the best thing that could happen for the plaintiffs, for their lawyers, for Merck, and for the court system.
If that is so, then maybe everyone should get with the program. Perhaps. But if that should turn out to be the case, this would not be a testament to how well our lawyer/client relationship is working and how capably we are adjusting that relationship to the times. Rather, it would be an indication that sometimes a wink and a nod works out for the best.