New appeal of $626 million Flint water deal in dispute over lawyer fees

• Lawyers who secured a $626 million for Flint residents from the water crisis stand to collect about a quarter of the award 
• A legal group objected, saying the deal gives too much money to the lawyers at a cost to residents 
• Attorney General Dana Nessel cautions that the new appeal will further delay efforts to get money in the hands of residents

Payout to Flint residents from a $626 million legal settlement stemming from the city’s disastrous water crisis could be put on hold amid a dispute over the size of legal fees for the lawyers who led the litigation. 

Under the settlement deal, attorneys representing residents in the class action are to receive about a quarter of the recovery, or more than $150 million in legal fees.

In a petition filed Friday, Flint residents represented by the Center for Class Action Fairness at the Hamilton Lincoln Law Institute asked the U.S. Sixth Circuit Court of Appeals to consider giving it access to detailed accounts of attorney time and costs associated with the Flint settlement. 

Related:

• Judge approves $626 million settlement in Flint water crisis
• Lawyers may get close to $180 million in Flint water crisis settlement
• Appeals court dismisses effort to charge Rick Snyder in Flint water case
• U.S. Judge: Flint has 5 months to finish long-overdue lead pipe replacement

Frank Bednarz, an attorney for the group, which said it represents residents against abusive class-action settlements, said its appeal could pave the way for a new challenge to what his group sees as “excessive” attorney fees.  

Michigan Attorney General Dana Nessel contends the appeal could delay the effort to get settlement checks in the hands of Flint residents. 

“Our priority is to see the victims of the Flint water crisis receive their compensation as soon as is possible,” Nessel said in a statement. “While we are not involved in the settlement pay-outs, our department is encouraged to see the process move forward and, though this most recent appeal may delay the disbursement, we look forward to the settlement being fully implemented.”

Michigan has agreed to pay $600 million toward the settlement, with another $20 million paid by the city of Flint, $5 million from the  McLaren Regional Medical Center, and $1.25 million from Flint-based engineering firm Rowe Professional Services.

The center’s latest effort comes weeks after a three-judge panel at the Sixth Circuit rejected a similar challenge by the institute. Friday’s petition seeks a review by a full panel of Sixth Circuit judges.

Lawyers who sued the state and other parties over the Flint water crisis are expected to get about a quarter of the settlement funds. Their exact cut won’t be known until a host of fees and ​costs are deducted. 

Of the remaining money, 80 percent would go to Flint residents who were children at the onset of the Flint water crisis. Another 18 percent will go to claims from adults, while 2 percent will fund special education services in Genesee County and 1 percent will compensate businesses for their losses.

The crisis began in 2014, when a state-appointed emergency manager approved the switch of Flint’s drinking water from Lake Huron to the Flint River in a cost-cutting measure. The water wasn’t treated to keep lead from leaching out of pipes, which allowed river water to corrode and release the lead into city water. 

State and federal officials initially downplayed residents' concerns about foul-smelling water, prolonging a citywide water crisis that also coincided with a deadly outbreak of Legionnaires’ disease.

While Nessel cast the appeal as a delay to city residents, Bednarz called that misleading given that a court-appointed special master is still reviewing more than 55,000 claims tied to the settlement. 

That process is proceeding “as quickly and efficiently as possible,” Special Master Deborah Greenspan wrote in a Thursday report to the court, but it will take several months to notify residents whether their claims have been approved. 

Payments won’t come until both the claims review process and any court appeals conclude.

Judge Judith Levy of the United States District Court for the Eastern District of Michigan approved the settlement’s terms in 2021. 

It’s not uncommon for lawyers, particularly in class actions, to take a sizable portion of a settlement. They note that they often have to invest thousands of hours developing the case, fighting to get a court to recognize the suit as a class action and covering the cost of the litigation, and only collect if they secure a win or settlement. 

But some Flint residents and legal advocates nevertheless object to the size of the recovery approved for the plaintiffs lawyers.

Bednarz said his group sees its latest appeal as a long shot: The Sixth Circuit only grants one or two petitions of en banc (full court) review each year. In nearly three years between January 2018 and September 2019, the court granted just seven petitions.

“We don’t want to stand in the way of people getting claims,” Bednarz said. But given ongoing delays in the claims review process, he said, “we think there’s still time to give the fees a closer look.”

Separate lawsuits are still in play against the U.S. Environmental Protection Agency and two engineering firms that declined to join the settlement. Efforts to criminally charge public officials including former Gov. Rick Snyder for their role in the crisis have faced repeated setbacks.