Cy Pres and Its Predators

When an area of the law involves enormous judicial discretion over an ever-increasing amount of money, the conditions are created for remarkable— and sometimes unseemly—attempts by attorneys to influence that discretion. In the following, I analyze a small data set of recent cy pres distributions by courts of unclaimed funds arising from class actions. Although these funds generally went to “nonprofit” institutions and activities, they were predominantly directed to law-related entities such as law schools, pro bono advocacy organizations, and the like. These are the sort of preferences one expects from lawyers and judges, but not from the preferences of the plaintiffs to whom unclaimed funds are owed. It was the plaintiff preferences that once guided application of cy pres, and the transformation to lawyer preference required a series of legal innovations in the cy pres doctrine that I trace below. More speculatively, this phenomenon helps fuel increases in the underlying rate of litigation, because it is reasonable to assume that now that class action funds can underwrite the desires of judges and lawyers, the courts have an incentive to permit more class litigation. I close with some brief suggestions on how one could legislatively rein in this phenomenon, and restore cy pres to its role of implementing preferences of injured consumers rather t ha n the preferences of lawyers and judges.