The WSJ reports that Milberg, Weiss has offered to share its fees in the prospective KPMG tax shelter settlement with lawyers representing parties that could be class members but who might choose to opt out. The report says Milberg is offering to give away a third of its (presumably requested) $30 million. A lawyer for two opt-outs characterizes this as an inducement to join a bad settlement. Milberg has retained Roy Simon to advise it on ethical aspects of the matter.
This strikes me as a classic case of whether the glass is half empty or half full. One could argue that the fee offer gives counsel for other class members an incentive to advise their clients to take the settlement even if the amount is too low. On this reading, Milberg would benefit by keeping the number of opt-outs low enough so that the settlement would not crater. On the other hand, one could argue that if Milberg does not offer to share fees, then counsel for other class members would have an incentive to opt out in order to get fees even if the settlement is good for the client. Milberg would have the same benefit, but on this reading it would be limiting agency costs among class counsel rather than exacerbating them.
Ideally one would want to know whether the settlement price was good or bad, but in many cases it would be hard to say; there are rarely objective criteria for such judgments. Personally, I doubt that a firm like Milberg got to be a firm like Milberg by leaving lots of money on the table, but this is a touchy situation.