Whistleblower Awards Are Not Too High
Yesterday the Wall Street Journal's Law Blog posted another piece on the awards paid out to corporate whistleblowers. They ask if these awards are too high and quote a Skadden partner, Mike Loucks, who thinks it is time to cap these awards.
Skadden is a corporate law firm so naturally its partners espouse a reduction in payouts to employees. I am on the other side of the fence. My firm represents individuals and I see what people go through when they challenge a corporation.
You have to be daring and tough to be a whistleblower. Blowing the whistle can have an adverse impact on a person's career and surviving years of litigation is taxing.
Those people who have the guts to bring a whistleblower claim and who survive the process and win, deserve everything they get. Reducing the awards paid out to whistleblowers is not a good idea because the tattletales will stop telling.
Also, MIke Louck of Skadden suggests that whistleblower awards should be capped at $2M. Lets do the math. If a whistleblower gets a $2M award, the whistleblower will only see a fraction of that amount. First, the whistleblower will have to pay his lawyer at least half of that amount to cover the contingency fee and expenses. That leaves $1M left. But now taxes must be paid to the federal, state and local governments and this will leave the whistleblower with about $500,000 - about 25% of the award. Whistleblower awards are taxable - see here.
