Last Laugh For Merck

Thursday, November 15th 2007
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No need to rehash, but I will.

Merck recently anounced one of the biggest settlements in American civil history for those plantiffs suing it over the infamous COX-2 inhibitor Vioxx. When Merck first got sued their liability was estimated as high as $25 or 30 billion dollars, but Merck did surprisingly well with its promise to fight each suit individually.

Take that back - stunningly well.

But the legal fees and the uncertainty factor weighing on its stock and earnings made settling (finally) in Merck’s best interest. A few days ago I was sympathetic to their decision from a financial standpoint but bemoaned it based on the job they had done showing looney-bin plantiffs out to make a buck what life is all about.

But now, the Los Angeles Times has a story saying Merck may have gotten an even bigger last laugh than I initially suspected. On the surface, $5 billion dollars is a lot of money, but probably chump change when you consider the decades of legal fees they’re facing (and the occasional award charged to them). And of course its pocket change compared to what some suspected would be Merck’s original liability for Vioxx.

On top of the money though, could the plantiffs be getting an even shriller deal than originally reported?

The highly unusual agreement not only requires 85% of plaintiffs to agree before it can be finalized but also might unduly force some claimants to settle or risk losing their lawyer.

That’s because the deal includes highly unusual restrictions on plaintiffs’ lawyers. The settlement requires them to recommend the deal to all of their clients or none. In addition, lawyers must stop representing any clients who turn it down as long as they don’t violate ethics rules.

Settle or lose your lawyer.

“It’s always the clients’ decision to accept a settlement or not, and lawyers aren’t going to do anything that’s unethical,” he said. But “those considering this should know these are not easy cases to try in court.”

The emphasis is my own for the funniest line in the entire story. That’s not the point though. The point is, there is no major plantiff lawfirm who is going to let their clients walk away from this deal.

“Look The Settlement Is Just Like Cotton Candy. You Like Cotton Candy, Right?”

The biggest plantiff attorneys are going to be selling this settlement to their clients, like pie to a fat kid. You’re either going to take the deal or you’re going to end up some shaftball attorney representing you when you go to trial. Good luck getting a dime out of Merck represented by some guy working out the warehouse district.