Few aspects of mass litigation produce more internal conflict within plaintiffs' bar than common benefit fund disputes. When thousands of attorneys and their clients participate in an MDL, the allocation of fees between lead counsel who performed the infrastructure work and individual attorneys who merely settled their clients' cases is a recurring and sometimes bitter controversy. Understanding the doctrinal origins, MDL implementation mechanisms, and current disputes over holdback levels is essential for any attorney entering MDL litigation as either a leadership applicant or an individual case manager.
Origin of the Common Benefit Doctrine
The foundation is Trustees of Internal Improvement Fund v. Greenough, 105 U.S. 527 (1881). The case arose from post-Civil War litigation in which a Florida bondholder, Francis Vose, filed a bill in equity to protect the Internal Improvement Fund of Florida from being wasted by the trustees through fraudulent land sales. Vose bore the entire burden of the litigation for years, at his own expense. He succeeded in bringing the fund under the control of the court, and dividends were distributed to all bondholders who came in and benefited from his efforts.
The Supreme Court upheld an award to Vose of his reasonable costs, counsel fees, and necessary litigation expenses out of the fund — payable before distribution to the other bondholders who had contributed nothing to the litigation. Justice Bradley's opinion established the governing principle: "One jointly interested with others in a common fund who in good faith maintains the necessary litigation to save it from waste and secure its proper application is entitled in equity to the reimbursement of his costs as between solicitor and client, either out of the fund itself or by proportionate contributions from those who receive the benefit of the litigation." 105 U.S. at 532.
Greenough also established an important limitation that remains relevant today: the Court disallowed Vose's claims for his personal services and private expenses (travel fares, hotel bills), holding that "a claim for his private expenses, such as traveling fares and hotel bills or for his own time or personal services, cannot be allowed." The doctrine rewards litigation expenses and counsel fees, not the complainant's personal opportunity cost. This distinction — between compensable common benefit work and non-compensable personal activity — runs through modern MDL fee disputes.
The doctrine was extended in Boeing Co. v. Van Gemert, 444 U.S. 472 (1980), which confirmed that the common fund principle allows a lawyer who creates, preserves, or increases a fund to be compensated from that fund as a matter of equity, with the costs charged to all beneficiaries in proportion to their benefit. Boeing is the foundation for the percentage-of-the-fund method of calculating common benefit fees in modern MDL litigation.
MDL Common Benefit Orders
In multi-district litigation, the common benefit mechanism operates through a court-ordered holdback system rather than a post-hoc equitable assessment. At the outset of an MDL, the presiding judge typically enters a common benefit order — often proposed by lead counsel and adopted with limited initial opposition — that:
- Establishes a percentage holdback to be deducted from all settlements and judgments in MDL cases;
- Requires that the holdback amount be deposited into a common benefit fund administered by the court or a court-appointed trustee;
- Specifies the categories of work that qualify for common benefit compensation (typically work that benefits all plaintiffs, not merely individual client representation);
- Establishes a claims process for leadership counsel to seek compensation from the fund at the conclusion of the MDL.
Typical holdback percentages in pharmaceutical and medical device MDLs have ranged from 4% to 16% of gross recoveries, with 6% to 8% being a common range for the costs component and 11% to 16% for the combined fees and costs assessment. The specific percentage is set by the court's assessment of the likely volume and cost of common benefit work, often before those costs are known with precision.
The Opioid MDL (MDL 2804) provides a recent example: the MDL court entered an ongoing common benefit order imposing a 7.5% holdback assessment on gross recoveries in MDL cases (excluding State Attorney General cases and cases with separately negotiated common benefit structures). The court explicitly characterized the 7.5% as a "back-end, contingent assessment" designed to ensure adequate funds are available for eventual awards, with the actual distribution to be determined at the conclusion of the MDL.
The Jurisdictional Boundary of Holdback Orders
The most significant recent development in common benefit law is the emerging judicial resistance to extending holdback orders beyond the MDL docket to cases filed in state courts or settled without formal litigation.
In In re Hair Relaxer Mktg., Sales Practices & Prods. Liab. Litig., No. 23-cv-818 (N.D. Ill. 2024), MDL leadership counsel sought a common benefit holdback applicable not only to MDL cases but also to "similar cases in state court or that are settled before filing in any court." The court, in a scholarly opinion analyzing the limits of its authority, declined to extend the holdback beyond MDL-enrolled cases. The court held that: (a) the common benefit doctrine, rooted in equity, cannot confer jurisdiction over cases not in the MDL docket; (b) the court's inherent management authority extends only to its own docket; and (c) absent a contractual participation agreement, there is no legal basis to impose holdbacks on attorneys and clients who are not before the court.
The court set the holdback at 11% for MDL-enrolled cases — finding support in comparable MDLs where holdbacks ranged from 8% to 16% — but refused the expansion to non-MDL cases. This decision creates a significant "free rider" problem that MDL courts and plaintiffs' leadership will need to address structurally going forward, either through contractual participation agreements or through modified approaches to coordinating state and federal litigation.
Recent Disputes Over Holdback Levels and Qualifying Work
Holdback levels. Disputes over the appropriate holdback percentage arise both when holdbacks are initially set and when leadership seeks modification. Defendants have argued that high holdback percentages inflate settlements (because plaintiffs must recover more to net the same amount after the holdback deduction) or that they create incentive structures that distort lead counsel's negotiating behavior. Some individual plaintiffs' attorneys have objected to holdback levels that would consume a disproportionate share of their own fee on small settlements.
The Roundup MDL (MDL 2741) presented a dramatic example. MDL Judge Vince Chhabria of the Northern District of California, after conducting a searching analysis of the basis for common benefit holdback authority, declined to extend an 8.25% common benefit holdback to state court cases settled without MDL participation — citing the same jurisdictional and equitable concerns that would surface in Hair Relaxer three years later. Judge Chhabria's opinion is notable for its intellectual candor: he acknowledged the possibility that his analysis was wrong given the prevalence of such orders, but observed that few prior holdback orders had seriously analyzed the legal basis for their authority.
Qualifying work disputes. The question of what work "qualifies" as common benefit work — eligible for compensation from the fund — is a persistent source of intra-leadership conflict at the distribution stage. Generally accepted qualifying categories include:
- Plaintiffs' Steering Committee or Executive Committee work;
- Lead-trial and bellwether trial preparation and trial;
- General causation and expert development applicable to all plaintiffs;
- Consolidated discovery management (depositions, document review, privilege disputes);
- Dispositive motion briefing on common legal issues;
- Coordination of state and federal dockets on common issues.
Non-qualifying work typically includes: individual client counseling on case-specific facts; individual settlement negotiations; case-specific damages discovery; and travel and administrative time not directly attributable to common benefit tasks.
Time-keeping requirements. Most MDL common benefit orders require that attorneys seeking compensation maintain contemporaneous time records in formats approved by the court or a special master. The requirement for contemporaneous records — as opposed to reconstructed records — is strictly enforced at the distribution stage. Attorneys who fail to maintain proper contemporaneous records have been denied common benefit fees even for work that was otherwise compensable in nature. This is one of the most important practice disciplines for any attorney seeking common benefit compensation.
Practice Notes: Documenting Common Benefit Work
Counsel entering MDL litigation with any expectation of common benefit compensation should establish documentation protocols from the date of leadership appointment.
Time records. Maintain contemporaneous billing records with task descriptions sufficiently specific to identify the common benefit nature of the work. Generic descriptions such as "MDL meeting" or "conference call" are routinely challenged; descriptions should identify the subject matter, the parties involved, and the specific common benefit purpose of the task.
Expense documentation. All expenses submitted for common benefit reimbursement must be supported by receipts or other contemporaneous documentation. Per Greenough, only litigation expenses — not personal living costs — are compensable. The distinction between a litigation trip to attend a deposition (compensable) and the incidental dinner with colleagues (not compensable from the fund) must be maintained in the expense records.
Participation agreements. Where coordination with state-court counsel is anticipated and the MDL court may issue a holdback order extending to state cases, counsel should negotiate participation agreements proactively. A binding contractual agreement among counsel to contribute to and share in the common benefit fund is the most legally durable mechanism for extending common benefit obligations beyond the MDL docket — and is specifically recognized as a legitimate basis for such obligations even where judicial authority is limited.
Objection procedures. Where individual attorneys or their clients object to the holdback level or to the allocation of common benefit fees, Rule 23(e) and general due process principles require meaningful notice and opportunity to be heard. Objectors should understand that the 2018 Rule 23(e)(5) provision on objector agreements applies directly to settlement class common benefit structures, and that courts will scrutinize professional objectors' motives.
Open Questions
The Hair Relaxer and Roundup decisions have raised fundamental questions about the jurisdictional basis for common benefit holdback orders affecting non-MDL cases. The extent to which the answer lies in contractual participation agreements rather than judicial orders is likely to shape MDL practice going forward. Courts are also examining the appropriate role of lodestar cross-checks in reviewing common benefit fee awards — whether percentage-of-fund awards that are multiples of the lodestar are justified by the risk and market value of MDL leadership work, or whether they reflect judicial deference to lead counsel's self-interested fee proposals.
Conclusion
The common benefit doctrine reflects a foundational equity principle: those who ride free on others' litigation efforts should bear a proportionate share of the costs. Greenough established that principle in 1881; modern MDL practice implements it through holdback orders, participation agreements, and end-of-litigation fee distributions. The recurring disputes over holdback levels, jurisdictional authority, and qualifying work documentation are not peripheral concerns — they determine how plaintiffs' counsel is compensated for the work that makes mass litigation possible, and how that compensation is allocated equitably within the bar that performs it.
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