A lawyer’s breach of fiduciary duty alleged in a Legal Malpractice case refunds legal fees, or, disgorges fees from the lawyer. Alleging only a legal malpractice claim limits a client to damages for negligence, and that’s if they exist. The difference between the causes of action are clear.
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Judge Hamilton, joined by Judge Rovner and Judge Wood, ruled that the district court erred in requiring evidence of an affirmative statutory violation as a predicate for disgorgement. Instead, based on “long-established principles of equity,” the court concluded that by filing classwide objections to the settlement, ...
The Seventh Circuit held last Thursday that individuals who object to a class action settlement voluntarily assume a limited fiduciary duty to other class members, which they can breach by settling their classwide objections for personal profit. The decision in Frank v. Target Corp., No. 19-3095, 2020 WL 4519053 (7th Cir. Aug. 6, 2020), seeks to put an end to what the court called “objector blackmail.” All attorneys should take heed of this decision when considering how to resolve objections to class action settlements.
Nevertheless, the district court ruled that there was no basis to conclude that the New Objectors’ settlements had harmed class members, as there was no demonstration of any illegal conduct, and it denied Frank’s motion to disgorge (for the benefit of the settlement class) the proceeds of the New Objectors’ private settlements.