Duhaime's Law Dictionary


Common Fund Definition:

A fund recovered by a litigant or lawyer for the benefit of persons other than himself or his client, and that litigant or lawyer then entitled to a reasonable attorney's fee from the fund as a whole.

In Re Chewning, Justice Mullins wrote:

"(The) common fund doctrine (is) an exception to the ... rule that each party bears its own legal fees and expenses. [T]he doctrine holds that a litigant or lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole. Thus, the party who labors to create, preserve, protect, or increase a fund receives compensation for its efforts directly from the fund, thereby spreading the cost of litigation proportionately among all beneficiaries of such litigation.

"This is an equitable doctrine, and is usually justified on the ground that it prevents unjust enrichment of the non-litigants, who have taken a free ride on the trailblazer's efforts."

The term common fund is also a term of law in the context of a class action.

In Chun, Justice Levinston of the Supreme Court of Hawaii wrote:

"The term common fund refers to the total amount recovered by virtue of the class action judgment."

REFERENCES:

  • Chun v. Board of Trustees, 106 P. 3d 339 (2005)
  • In re Chewning & Frey Security, Inc., 328 B.R. 899 (United States Bankruptcy Court, 2005)
  • Trustees v. Greenough, 105 U.S. 527 (1881)

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