Source: Wall Street Journal
Vioxx Plaintiffs' Choice:
Settle or Lose Their Lawyer
By NATHAN KOPPEL
Plaintiffs in litigation over the painkiller Vioxx are supposed to be able to decide whether to enroll in the übersettlement announced last week or take their cases to court. But due in part to what lawyers say is an unusual provision in the settlement agreement, many plaintiffs in effect may have little choice but to accept the deal.
The provision, agreed to by Merck & Co. and the lead lawyers in the case, requires that if one client of an attorney enrolls in the settlement, then the attorney must recommend the deal to all other clients. If a client decides not to take part in the settlement, then the lawyer, according to the deal, must take "all necessary steps" to withdraw from representing that client. It is relatively rare for a settlement to require lawyers to cut ties with clients, but it appears to be happening more often, lawyers say.
Some find the development problematic. The provision improperly "stacks the choice for the client," says Deborah Rhode, an ethics professor at Stanford Law School. "If the price of exercising what should be their right to reject the settlement means they have to forfeit their representation from the lawyer actually familiar with the case, it's not exactly an uncoerced choice."
Merck pulled the widely used painkiller Vioxx from the market in September 2004 because it was tied to a higher risk of heart attack and stroke. Thousands of lawsuits ensued, and after three years, Merck and the lead plaintiffs lawyers negotiated a $4.85 billion settlement, announced Friday.
The way the deal is structured, Merck has a huge incentive to get as many plaintiffs enrolled as possible. The company has agreed to a set $4.85 billion payout, so the more people who are included, the better for Merck. To make sure its liability beyond that sum is limited, Merck has maintained the right to back out if less than 85% of eligible claims are enrolled.
The requirement that lawyers must cut ties with unwilling clients also helps to limit the number of potentially lucrative cases still percolating in court, and it aims to ensure that lawyers well versed in Vioxx litigation are locked in to the settlement and won't keep litigating against the company.
"We want to make this settlement as complete as possible," says Kent Jarrell, Merck's spokesman for the litigation.
Plaintiffs lawyers note that payments in the settlement will vary based on the severity of the injury and the strength of the claim, and that plaintiffs in some of the cases that went to trial had trouble proving that Vioxx -- and not a health problem such as diabetes -- was responsible for their heart attacks or strokes. Also, attorneys have invested millions of dollars and thousands of hours in their Vioxx cases, and the settlement, if it goes forward, will help ensure that they are paid back.
Some experts see the provision on lawyer withdrawal as a reasonable part of a global settlement solution. "In mass torts, pure notions of individualized justice are totally unrealistic," says Richard Nagareda, a Vanderbilt University Law School professor who studies these kinds of cases. Companies will be reluctant to offer a huge pool of settlement money if they can't compel most of the plaintiffs -- and their lawyers -- to go along with the deal, he says.
Wyeth, for example, in 1999 allotted $3.75 billion for a class-action settlement to resolve litigation over former diet drugs that were linked to heart-valve damage. But Wyeth's ultimate costs have ballooned to more than $21 billion because some people opted out of the settlement and continued with litigation. That situation loomed in the backdrop of the Vioxx negotiations, say representatives for both sides.
The settlement of a 2005 lawsuit that alleges Purdue Pharma L.P. dishonestly marketed OxyContin by failing to disclose the painkiller's addictive qualities also said plaintiffs lawyers had to agree to take steps to withdraw from representing clients who didn't want to participate.
Paul Hanly Jr., one of the plaintiffs lawyers in the OxyContin case, says he is in the process of ending his relationship with some clients who have declined to participate in the settlement. "If we truly believe it is in a client's best interest to settle and a client refuses, there is a perfectly appropriate legal basis to ask a court to be relieved of that representation," says Mr. Hanly. A New York attorney who is also handling more than 200 Vioxx cases, Mr. Hanly says he plans to recommend the Vioxx settlement to his clients.
Tim Bannon, a special counsel for Purdue, says that while settlements are confidential, "the obligations of counsel under all of our settlement agreements are expressly conditioned on compliance with applicable ethical rules." He denies the marketing claims raised in the OxyContin suit.
The lawyer-withdrawal rule was a negotiated point between Merck and the lead plaintiffs lawyers, and it was vetted by ethics professors, according to people involved in the discussions. Ultimately, Merck included language saying that lawyers should withdraw from representing clients only to the extent allowed by applicable ethical rules. Whether essentially firing a client under these circumstances violates ethics rules is unclear, lawyers say. Withdrawals will be supervised by judges.
There are a number of cases that indicate "clients are entitled to counsel but not necessarily to a particular counsel," says Arnold Levin of Philadelphia, one of the plaintiffs negotiators. Yet, if experienced counsel are unavailable because other lawyers steeped in the case are tied to the settlement, then the client may in effect be losing the right to counsel.
"If it would be difficult for a client to get another lawyer and take a lot of work for that other lawyer to get up to speed on a case, then you can't just drop and leave the client high and dry unless you have a good justification," says George Cohen, an ethics professor at the University of Virginia School of Law. Adds Kathryn Snapka, a Texas lawyer who is handling about 200 Vioxx cases, "It may be difficult to find a lawyer with the financial capability and background sufficient to handle complex pharmaceutical litigation, which is Merck's goal." She's still studying the settlement.
What lawyers will actually do remains to be seen. Some maintain they will stick with the deal even if it means losing clients. "As they go through the settlement process one by one, it will not be difficult at all to recommend this to 100% of their clients," says Andy Birchfield, who represents thousands of Vioxx plaintiffs and helped craft the final settlement. "If a client chooses not to follow our advice" to accept the settlement, he adds, "we will let the client know that we are terminating our representation."
W. Mark Lanier, who has more than 1,000 Vioxx cases, plans to follow a similar course of action. "If a client says, 'Lanier, I don't want to take the settlement,' " he says, "I'll say, 'You need to find another lawyer to represent you.' "
But Perry Weitz of Weitz & Luxenberg, a New York firm with about 4,000 Vioxx cases, says he will stick with clients who reasonably oppose the settlement. "My personal representation of each client and the ethical duty I owe to them is my priority," he wrote in an email. "If Merck doesn't accept that, then I'll see them at trial!"