by Jeff Sovern
My latest, here. Excerpt:
The Wells Fargo case shows the difference between arbitration and class actions: the difference between getting nothing and getting something. * * *
Critics of the rule claim that class actions are just giveaways to lawyers. It’s true that not all class actions work as well as the Wells Fargo one, but the remedy for bad class actions is no more to eliminate them than the remedy for bank misconduct is to eliminate banks. Rather, the remedy is to make sure courts live up to their obligation to approve class action settlements only if they are “fair, reasonable, and adequate.”
0 thoughts on “Fortune Commentary on the CFPB’s Arbitration Rule: How This New Rule Prevents Your Bank From Ripping You Off”
If the prevailing party were entitled to attorney fees and to expert witness costs, the cap would be a moot issue. And if attorney fees were required for each successful claim, without the safe harbor that renders Rule 11 toothless, we would be seeing far fewer frivolous defenses filed by defendants in these kinds of cases.
A 15% cap seems very low, considering the amount of resources and money the plaintiffs’ attorneys have to invest, with costs for expert witness fees, in a class action, contingent fee case.