How a Wisconsin legal service for the poor came into an unexpected windfall

Milwaukee Journal Sentinel

Funding legal services to the poor is a constant challenge, so for Legal Action of Wisconsin a recent financial windfall from a pair of class-action lawsuits it wasn't even involved in arrived this week like early Christmas gifts.

"We're just happy recipients," said David Pifer, executive director at Legal Action of Wisconsin, which picks up nearly $175,000.

"It's hugely helpful because they are unrestricted funds that allow us to deliver a broad array of services to those in need," Pifer said.

"It provides a tremendous cushion," especially when President Donald Trump has called for the elimination of all funding for the Legal Services Corp., a key source of Legal Action's budget.

The money resulted from a little-known wrinkle of class-action litigation called the cy pres award. Parties to such lawsuits sometimes agree that any money that can't be ultimately distributed to class members should instead go to a charitable purpose that approximates the goals of the underlying suit.

The term “cy pres” comes from French phrase “cy pres comme possible,” which translates to “as near as possible.”

Pifer said his organization has received some cy pres awards before, but not for several years, and never this large.

The funds derived from settlements in two cases from federal court in Madison.

In 2014, some of its members sued the WESTconsin Credit Union because it included their driver's license numbers in public court records that were part of loan collection actions, in violation of the federal Drivers Privacy Protection Act.

Earlier this year, the case settled. The credit union agreed to pay 381 class members $1,159 each, and $5,000 to the two named class representatives. The plaintiffs' attorneys would get $231,000 in fees and about $17,000 in costs.

Before the amount was known, the parties had agreed that the recipient of any such unclaimed award would be Legal Action of Wisconsin. But nearly 100 of the recipients never cashed their checks within the deadline, leaving a $112,245 cy pres award.

"Holy cow, that's a lot of money," said Thomas Lyons, one of the plaintiffs' attorneys, way more than anyone expected when a cy pres was negotiated at the start of the process.

Lyons, whose firm is in Minnesota, said the credit union picked Legal Action for any potential award.

"They're good people," he said of the credit union. "It was just a matter of not paying attention" to what information made it into court records.

Legal Action also got a nearly $60,000 award from a case over improper sales calls in violation of the national Do Not Call Registry and Telephone Consumer Protection Act.

Lyons defends the class action litigation, something that is often attacked by businesses and conservative legal reformers.

"Critics always say (class actions) are bad because class members might get less than the lawyers," he said. "Well, the public should know (the cases) tame the conduct of the violator, benefiting not just the class, but the public at large."

Legal Action has about 55 lawyers plus support staff providing civil legal serves in 39 southern Wisconsin counties It finances draw on public and private sources, including Legal Services Corporation.