Aggregate settlements are becoming increasingly common, particularly in class actions and multi-district litigations (MDLs). Pursuant to ABA Model Rule 1.8(g), as well as Model Rule 1.6(a), counsel involved in negotiating an aggregate settlement have particular ethical obligations. Once an aggregate settlement is reached, counsel should consider retaining a third-party neutral/special master for the job of allocating settlement funds.
Inherent in any aggregate settlement of claims is the concern that an individual plaintiff’s claim will not receive an equitable allocation. Given there is only one settlement pot, a lawyer allocating a larger amount to one individual client over another faces a potential conflict of interest challenge. To avoid this scenario, a third-party neutral/special master/adjudicator can substitute their Independent, neutral judgment as to a fair and equitable allocation for all plaintiffs to allay questions of unethical behavior in allocations.