Fees, Incentives and Deterrence: A Reply to Professor Fitzpatrick

University of Pennsylvania Law Review PENNumbra, 2011

Suffolk University Law School Research Paper No. 11-22

10 Pages Posted: 10 May 2011

Date Written: May 5, 2011

Abstract

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.

Suggested Citation

Simard, Linda Sandstrom, Fees, Incentives and Deterrence: A Reply to Professor Fitzpatrick (May 5, 2011). University of Pennsylvania Law Review PENNumbra, 2011, Suffolk University Law School Research Paper No. 11-22, Available at SSRN: https://ssrn.com/abstract=1832828

Linda Sandstrom Simard (Contact Author)

Suffolk University Law School ( email )

120 Tremont Street
Boston, MA 02108-4977
United States

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