In about 30 consumer lawsuits over the past decade, Chicago lawyer Daniel Edelman has won millions of dollars in settlements by accusing corporations of overcharges, misrepresentations and outright fraud.

For his efforts, Edelman has collected handsome legal fees. Thousands of the consumers he has represented have walked away with less: paper coupons offering them discounts on future purchases redeemable through the very companies named in the lawsuits.

Edelman is one of the scores of lawyers nationwide who have entered into "coupon settlements," an increasingly popular device used by class action lawyers to resolve complaints.

Edelman sees himself as a consumer champion who holds companies accountable. "The easiest way to steal a million dollars is $5 at a time," he said in an interview. "But that doesn't mean the lawyers should get $5."

Some consumer advocates say Edelman and other lawyers are benefiting from a process that sometimes smacks of collusion. Edelman "is the Darth Vader of class action settlements," said Stephen Gardner, a lawyer battling Edelman in a pending case and the co-chairman of the National Association of Consumer Advocates.

"He's the poster child for how to rip off consumers under the guise of helping them," said Sally Saltzberg, another Edelman foe who is a former chief of consumer protection for the Illinois attorney general's office.

"He should be thrown out of the bar," said Susan Koniak, a class action expert at Boston University School of Law.

Even some judges have questioned Edelman's consumer advocacy. One stopped an action against ITT Residential Capital Corp., criticizing Edelman's "record of behavior."

In a lawsuit against Citibank, another judge said in a hearing, "I can think of no plague worse than to have a court impose the likes of Daniel Edelman . . . on absent and unsuspecting members of a class."

Some of Edelman's more memorable cases:

* Edelman and his colleagues sued General Electric Capital Auto Lease in 1994, alleging overly complex lease terminology. A settlement offered customers coupons good for a $100 new car discount or up to $50 off the cost of terminating a lease.

Some consumers called the coupons a "joke" and complained that the lawyers were "getting rich while accomplishing little." But a federal judge dismissed the complaints and directed the company to pay $600,000 to the lawyers.

* Three years later, Edelman's firm offered to drop a similar lawsuit against American Honda Finance Corp. if it mailed customers $75 and $150 coupons. The company agreed, and Edelman and other lawyers stood to collect $140,000 in cash.

"The coupons are essentially worthless," a federal judge wrote in rejecting the settlement. "A $140,000 attorneys' fee award . . . is more than just suspect. It is wholly inappropriate."

* Edelman and other lawyers sued BancBoston Mortgage Corp. in 1991 for allegedly over-collecting on escrow accounts used to pay real estate insurance and taxes. The bank agreed to recalculate its escrow formula and issued customers interest refunds ranging from zero to $8.76.

The bank then automatically deducted attorney's fees from customer accounts--in many cases more than the interest refunded. A federal judge later described the outcome in an article as "Kafkaesque."

Despite such criticism, consumer advocates said Edelman's settlements resemble hundreds of others hammered out in recent years that have generated coupons for computer equipment, orange juice and airline tickets.

Such settlements, they say, can erode support for all class actions, which have been an effective tool in desegregating schools, fighting job discrimination and compensating victims of defective products.

"Abuse threatens to sour the public and harm the very people that the class action tool is supposed to help," Brian Wolfman of the consumer group Public Citizen told a House committee last summer.

Class actions open the civil justice system to otherwise defenseless consumers. One person cheated out of $10 cannot justify hiring a lawyer; 100,000 who band together can.

Edelman argues that he and other class action lawyers are like bounty hunters, riding the range in search of outlaw corporations and collecting fees for the service. When they find wrongdoing, they expose it and force change, he said.

Most consumer advocates agree that class actions have value beyond the amounts recovered by individuals--as long as the total corporate payout is large enough to deter future wrongdoing. A new Rand Corp. study suggests that class actions have effectively forced companies to be more attentive to consumers.

As one judge explained in approving a coupon settlement negotiated by Edelman, "Through the accumulation of small claims, class actions can effect reform of improper practices and thereby benefit consumers."

Edelman said in some cases, he seeks coupons because consumers might get nothing if the suits went to trial. Coupons, he explained, "bridge the gap."

Coupons are less popular in Congress. In September, House Republicans cited coupon settlements in passing a bill that would move most class actions into federal rather than state courts. Democrats countered that such action would harm legitimate cases and still fail to stem the coupon flow.

Increasingly, consumer advocates call on judges to draw the line.

"You have to rely on the courts to ensure that members of the class are not getting ripped off," said Sally Greenberg of Consumers Union.

Reform groups, such as Trial Lawyers for Public Justice and the National Association of Consumer Advocates, believe coupon settlements are multiplying because everyone in the courtroom is protecting his own interests. Some lawyers favor coupons because they produce quick, easy deals while generating big fees, said Beverly Moore, editor of Class Action Reports newsletter.

If a company issues 100,000 coupons worth $100 each, he said, lawyers may claim a $10 million victory and request 20 percent or 30 percent as legal fees.

Companies also like the deals, he said, because they generate sales and cost far less than cash.

Redemption rates are hard to determine because companies routinely demand that settlements be confidential. The record in one case, against ITT Financial Corp., showed that consumers redeemed only two of 96,754 coupons issued, a redemption rate of 0.002 percent.

For judges, the settlements help clear dockets by resolving thousands of claims with a pen stroke, consumer advocates said. There is little downside because few consumers complain.

"It's such a club between the corporations and the lawyers," said Bruce Marks, who has fought coupon settlements for the Neighborhood Assistance Corp. of America. "A club that leaves out the victims."

The Rand study, to be published early next year, suggests that lawyers' fees drive many settlement negotiations.

Lawyers told Rand researchers they had been approached by opposing attorneys offering "an early settlement in exchange for minimal discovery, modest recoveries for class members and attractive fees," according to a preliminary report on the book-length study.

Lawyers who rejected the offers reported getting condescending lectures: "The defense counsel told them that they 'didn't understand how the game is played.' "

In 1993, lawyer Derek Casey tape-recorded a General Motors attorney who tried to persuade him to drop a Kansas lawsuit against the automaker and join a coupon settlement in Philadelphia. In return, the attorney said, GM might be willing to discuss "some way to deal with your fees in a modest way."

Casey complained to a federal judge that the offer was "purely and simply a bribe," but the judge ruled there was "no merit" in Casey's charge.

Two years later, an appeals court rejected the Philadelphia settlement, which offered consumers coupons and the lawyers $9.5 million in cash. A federal judge said the deal was "inadequate and unreasonable."

Today, even some companies involved in no-cash deals have developed qualms, said Lew Goldfarb, a vice president at DaimlerChrysler Corp. In 1995, he said, his company agreed in a settlement to repair minivan door latches--the exact promise it had already made to federal regulators.

Class lawyers said the settlement included an enforcement mechanism, required Chrysler to publicize the recall and as a result probably saved lives--something Goldfarb disputes.

"The lawyers got $5 million and consumers got zero, not a piece of gum," Goldfarb said. "I'm ashamed of that settlement."

Edelman has worked both sides of the class action system.

Fresh out of law school in 1976, he joined the powerhouse law firm of Kirkland & Ellis and helped GM and other corporations fight off class actions.

By 1985, however, he had switched sides and opened his own consumer law practice. Known today as Edelman, Combs & Latturner, the 16-lawyer Chicago firm estimates it has recovered more than $500 million for consumers.

Even Edelman's detractors describe him as a superb technician whose victories have established case law favoring consumers.

Four years ago, in fact, Public Citizen helped prepare Edelman for a successful U.S. Supreme Court argument that law against abusive debt-collection practices should apply to lawyers.

Edelman, 45, estimates that he has handled more than 300 class actions and resolved one out of 10 with a coupon settlement.

Dexter Kamilewicz, a Maine real estate broker, was one of the 715,000 consumers Edelman represented in the BancBoston escrow case. In the settlement, Kamilewicz personally received $2.19.

Kamilewicz says he was unaware of the refund--and the entire legal dispute--until he noticed a $91.33 disbursement from his account. The bank told him the money was for legal fees.

Outraged, Kamilewicz filed a class action accusing Edelman and other lawyers of defrauding bank customers. Kamilewicz also charged that the jargon-filled notice mailed to class members didn't explain they stood to lose money.

Attorneys general from nine states filed briefs on Kamilewicz's behalf, but a federal judge ruled that his court had no jurisdiction over the lawsuit. The Supreme Court declined to hear his appeal.

Kamilewicz chose not to comment for this article, noting that Edelman's firm had countersued him for $25 million. That case is settled, but he said he feared landing in court yet again.

"Dexter is a true American patriot," said his lawyer, Ralph Wellington. "But he is bruised by the experience."

Edelman also declined to discuss the case. John Sharbrough, another lawyer in the suit, said consumers benefited because the bank returned 18 percent of the escrow funds to homeowners earlier than planned.

The bank trimmed the total payments required for Kamilewicz's escrow account by $1,000, Sharbrough said. But law professors have since pointed out that new federal regulations would have forced cuts anyway.

The decision also failed to impress U.S. District Judge Milton Shadur. He did not handle the BancBoston case but found its outcome so disturbing that he described it in a law journal as "appalling" and "astonishing."

Two years before the settlement, Shadur wrote, the bank had offered the same refund to consumers and said it would pay the attorneys $500,000. The lawyers instead negotiated a larger fee--more than $8 million--paid not by the bank but from customer accounts.

"The principal real-money beneficiaries of the settlement," Shadur wrote, "turned out to be the class counsel themselves."

Consumer Lynde Selden II wrote to Edelman after he negotiated a coupon settlement with American Honda Finance.

"You have got to be kidding!" he wrote. "You are going to get paid for this settlement? By its terms I get nothing unless I agree to enter into a new lease agreement with the defendants who already cheated me?"

In an interview, Edelman said a judge who presided over the case's early stages had first suggested using coupons. The deal later ran aground, he said, because "his successor disagreed."

Edelman was more successful in the lack-of-disclosure lawsuit against General Electric Capital Auto Lease. Once again, Edelman and his colleagues settled for coupons good only on a new car leased through GE Capital or up to $50 off the cost of terminating a lease. That prompted yet more protests, but U.S. Magistrate Joan H. Lefkow sided with Edelman.

"The feeling that class counsel are getting rich while accomplishing little for class members is acknowledged," Lefkow wrote. "Nevertheless, it must also be recognized that the intended benefit of this type of litigation is not to be found in individual class members' awards."

Other objections surfaced last month after Edelman's firm agreed to a settlement with BankAmerica Corp.

Some homeowners who borrowed money from a bank subsidiary will get discounts of $70 to $135 on a future mortgage only if they refinance with Bank of America within five years, the notice shows. If they act within 90 days, they may trade the coupons for cash--from $3 to $7.50 each.

Lawyers for the class will share fees and expenses totaling $530,000.

Staff researcher Alice Crites contributed to this report.