Signature Bank’s Failure Prompts Alarm Bells for Law Firms: The Morning Minute
BAD SIGN – Law firms will face significant challenges, both practical and existential, after Signature Bank in New York became the second U.S. bank failure in three days and the third-largest bank failure in U.S. history. For one, Law.com’s Andrew Maloney reports, the bank’s clientele included many midsize law firms, and it catered to plenty of personal injury firms and those with significant real estate practices, said industry observers and lawyers knowledgeable about the bank’s work. Those law firms could still see delays or other disruptions in accessing capital, though government takeovers of both Signature and Silicon Valley Bank, which failed last week, were swift and were aimed to protect account holders’ assets. More broadly though, observers said, law firms and other companies now have another risk to contemplate and plan for in an environment that was already awash in uncertainty.
OUT OF SERVICE? – Judges on the U.S. Court of Appeals for the Second Circuit cast doubt on the use of service awards in class action settlements this week, saying the basis for such fees for class representatives is “at best dubious” under U.S. Supreme Court precedent, Law.com’s Avalon Zoppo reports. In the underlying case, Judges Dennis Jacobs, Pierre Leval and Michael Park upheld a $5.6 settlement between Visa and Mastercard and a class of 12 million U.S. merchants who challenged the way the credit card companies set and collect interchange fees. The deal included $900,000 for the eight lead plaintiffs. The judges said service awards are “likely impermissible” under an 1881 ruling by the high court, but ultimately noted that binding Second Circuit decisions required them to affirm the award. The panel ordered the district court to lower the service award, but upheld the 2012 settlement, which is believed to be the largest antitrust class action settlement in history, as well as $523 million in attorneys fees.
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