$8 Million in Fees Schwab Action. Zero Dollars for Victims
Lawyers seeking millions in fees for a “win” that nets plaintiffs nothing seems a tough call for the client, but that’s the legal firestorm swirling around the Charles Schwab–TD Ameritrade class action, where plaintiffs’ counsel is asking for over $8.4 million in fees despite a proposed settlement that offers no cash compensation to affected investors.
The case, filed in the aftermath of Schwab’s $26 billion acquisition of TD Ameritrade, alleged antitrust violations that supposedly harmed 36 million retail customers.
A promise by Schwab to maintain a compliance program without admitting wrongdoing, and without cutting a single check to class members is the proposed resolution.
Instead, the big payout would go to the attorneys behind the suit who are Bathaee Dunne, Burke LLC and Korein Tillery who have asked the court to award them more than $8 million in their legal fees.
Regulatory Blowback
Federal and state regulators, along with prominent legal ethics organizations, aren’t buying it. The Department of Justice’s antitrust division, the Securities and Exchange Commission, and attorneys general from multiple states have filed objections.
Their central argument is that awarding substantial fees for intangible, unquantified relief is“inappropriate and disproportionate.”
The SEC went further, calling the fee request “unmoored from any measurable benefit.” Ethics groups point out that allowing such settlements risks turning class actions into lawyer-centric deals that sideline the interests of actual plaintiffs.
The Compliance-Only Settlement
This case isn’t the first time a compliance-only settlement has raised eyebrows, however the sheer scale of an action involving millions of class members and no direct benefit has put the case in a league of its own.
Lawyers argue that the value of compliance programs can’t be understated, but that’s a tough pitch when there’s no transparency about what changes will be made—or how long they’ll stick.
Newsweek reported financial expert Michael Ryan: “Schwab’s antitrust compliance settlement isn’t about customer restitution. It’s all about damage control for a merger that created a 70-percent market share behemoth.”
“Why would they agree to this? Because implementing compliance protocols costs far less than unwinding a $26-billion acquisition. For customers, this means absolutely nothing in the short term. No checks in the mail, just confusing legal notices and business as usual.”
The controversy highlights some uncomfortable truths in modern litigation where class actions can settle without trial and attorney fees may not reflect anything like what plaintiffs actually receive.
Courts have typically granted fees based on a “percentage-of-recovery” model or “lodestar” hours worked. But in this case, there’s no recovery to speak of.
So what is the proposal worth? And who really benefits from it?
