A fresh disclosure about outside money flowing into the blockbuster Henry v. Brown University lawsuit has thrown a wrench into one of the biggest college financial aid cases in the country, putting hundreds of millions of dollars in settlements and relief for more than 200,000 students in a precarious spot.
In new court filings, attorneys at Berger Montague PC and Freedman Normand Friedland admitted they failed to tell the court that a third firm working with the plaintiffs had a financial arrangement with an outside litigation funder. As reported by Reuters, defense lawyers are now arguing that the undisclosed deal raises red flags about conflicts of interest and the independence of class counsel, potentially undercutting efforts to certify the class. The firms also told the court they have already poured more than 68,500 combined hours into the case.
What the filings say
The case, Henry et al. v. Brown University, No. 1:22-cv-00125, is playing out in the U.S. District Court for the Northern District of Illinois before Judge Matthew F. Kennelly, according to filings from Brown University. Settlement papers name Berger Montague, Freedman Normand, and Gilbert Litigators as Settlement Class Counsel and spell out how escrow accounts and distributions to class members are supposed to work. Berger Montague says the proposed class sweeps in roughly 200,000 current and former students.
Why the funding matters
Litigation funders typically buy a stake in a case and can influence how hard, how long, and in what direction a lawsuit is fought. Judges in big class actions keep a close eye on those arrangements to make sure the interests of absent class members are not pushed aside by outside investors looking for a payoff.
This case has already generated a series of settlements. The claims site and related notices put the total near $319 million, including about $284 million tied to ten , according to OpenClassActions. If the court decides that key financial ties involving class counsel were not properly disclosed, it could order new disclosures, swap out the lawyers running the settlements, or even reopen previously approved deals, which would almost certainly stall any payments.
What happens next in court
Judge Kennelly is now deciding whether to formally certify the case as a class action, and the newly revealed funding deal is suddenly front and center in that fight. As Reuters reports, defendants have seized on the disclosure and filed motions urging the court to probe both class counsel and the structure of the proposed class before letting the case move forward.
Legal implications
If Judge Kennelly finds that the plaintiffs’ lawyers failed to come clean about material financial relationships, potential remedies could include additional notice to class members, replacing Settlement Class Counsel, or even stripping class status from parts of the case. Any of those moves would slow the litigation and tangle the path to payouts.
Berger Montague has stood by the existing record and has said the evidence backs up the students’ antitrust claims and the need for a trial, according to the firm’s statement.
For students waiting to see real money, the fallout likely means more waiting, even if the settlement funds themselves stay put. Settlement administrators filed a motion on March 9 asking the court to approve pro rata distributions, but those checks are on hold until the judge decides how to handle the funding revelation, according to the Financial Aid Antitrust Settlement website.
