A recent NLJ story, “Alaska Rejects Method Calculating Fees,” reports that in an apparent case of first impression, the Alaska Supreme Court has ruled that out-of-state rates may not be used to calculate attorney fee awards except in exceptional circumstances. Unlike many other states, Alaska has a fee-shifting court rule to award courtroom victors 30 percent of their “reasonable actual fees” in cases that go to trial and do not result in money judgments.
“Since attorney fee awards are a usual part of any judgment in Alaska, the prospect of having to pay [an]…award based on fees well in excess of those that would have been billed by in-state lawyers may deter Alaskans from seeking redress in the country for their bona fide disputes.” Justice Peter Maassen wrote for the court.
Paying out-of-state hourly rates may be justified in the extraordinary situation in which there are not Alaska lawyers with the “necessary expertise or the necessary wiliness to take” a case, but that does not apply in this situation, Maassen said.
The issue arises in a settlement dispute between Exxon Mobile Corp. and Nautilus Marine Enterprise Inc. The two companies, as well as a third, settled a lawsuit related to the 1989 Exxon Valdez oil spill in 2006, and the accord reserved for the judge the question on how much prejudgment interest should be awarded.
Exxon filed a state court lawsuit seeking to reform the contract so that prejudgment interest would not be compounded or to obtain a declaratory judgment that the contract did not require compounded interest. A state court judge found that Exxon was the prevailing party and that the parties intended for the federal court judge to calculate the method of compounding the prejudgment interest.
The Alaska Supreme Court remanded the case for a new calculation of attorney fees owed to Exxon. Maassen, writing for the court, upheld the lower court’s ruling that an additional 5 percent in attorney fees could be awarded to Exxon as a sanction because Nautilus’ president had acted in bad faith. According to the opinion, he altered his personal telephone logs to add fraudulent references to compound interest.
A recent NLJ story, “Equityholder in Asbestos Case Wants Fee Examiner,” reports that Coltec Industries Inc., the parent company and primary equityholder in a gasket maker in bankruptcy, has moved to have an independent fee examiner look at the $105.2 million in fees paid to attorneys and other professional firms in the proceedings. Garlock Sealing Technologies LLC, Garrison Litigation Management Group Ltd. and the Anchor Packing Co. are the three debtors who filed for bankruptcy over four years ago because the large number of asbestos suits they face.
The official committee of asbestos personal injury claimants, the official committee of unsecured creditors and the future asbestos claimants’ representatives all have been authorized to engage professional firms, leading to the accrual of $105.2 million in fees. “One thing that is clear is that Coltec’s equity in these debtors is being squandered,” the company said in court papers.
Coltec is suggesting the appointment of W. Clarkson McDow Jr., a former U.S. bankruptcy trustee for region four covering South Carolina, Virginia, West Virginia, Maryland and the District of Columbia, to review fee applications and to control rising administrative expenses.
“Fee examiners or fee review committees have been appointed in numerous large, recent bankruptcy cases, such as those involving Bethlehem Steel, Bradless, Enron, Worldcom, Adelphia, Lehman Brothers, Collins & Aikman Corp., Exide, General Motors, Spansion and the City of Detroit,” Coltec said. “Fee examiners have likewise been appointed in a number of asbestos Chapter 11 cases.”
Coltec said it has been considering seeking a fee examiner in the case for two years but it waited until after U.S. Bankruptcy Judge George Hodges of the Western District of North Carolina determined the liability Garlock owes to asbestos plaintiffs. During the proceedings held to estimate Garlock’s liability, Hodges found evidence of misrepresentation by plaintiffs’ lawyers in several cases that Garlock settled in the past or in which Garlock lost jury verdicts.
The alleged evidence of misrepresentation led the judge to estimate that Garlock likely owes $125 million to asbestos plaintiffs, not around $1 billion to $1.3 billion as the plaintiffs alleged.
A recent CBS Sports story, “O’Bannon Lawyers Seek $52.4 Million from NCAA After Victory,” reports that plaintiffs’ lawyers, led by Michael Hausfeld of Hausfeld LLP are seeking attorneys’ fees of $46,865,319 and recoverable costs of $5,555,739 from the NCAA. The plaintiffs also added they reserve “all rights to amend” their fee request and documentation because they have “not yet had sufficient time to audit these submissions thoroughly” and some attorneys’ time cited could be covered under video-game settlements with Electronic Arts and Collegiate Licensing Company.
On Aug. 8, U.S. District Judge Claudia Wilken ruled that the NCAA violates antitrust law by prohibiting college players from being paid off their names, images and likenesses. Wilken’s injunction would allow schools to pay players licensing money into a trust fund starting in 2016-17. Damages were not part of the trial, but Wilken ruled “the plaintiffs shall recover their costs from NCAA.”
Plaintiffs’ lawyers cited how they have survived seven motions to dismiss, won a partial victory at class certification, obtained a partial summary judgment, and won a three-week bench trial. “The resulting injunction will have considerable financial benefits for the class, as it may well amount to tens of millions of dollars each season,” the O’Bannon lawyers wrote.” Moreover, and of critical importance, this is pioneering litigation – without any precedent and lacking any preceding public enforcement. Plaintiffs’ counsel contributed staggering resources to this litigation despite considerable uncertainty of any recovery.”
In their fee request, the attorneys said Hausfeld LLP supervised and coordinated the work of 43 law firms “who contributed resources to this landmark limitation in an effort to match the dozen of attorneys litigating on the NCAA’s behalf … as well as the hundreds of attorneys representing the NCAA’s member schools and conferences across the country. Each plaintiffs’ firms shared in the considerable risk of non-payment given the unique aspects of this litigation and the NCAA’s past success in attaining dismissal” based on a 1984 U.S. Supreme Court ruling.
The hourly rates cited by the O’Bannon lawyers range from $985 for partners with more than 40 years of experience to $250 for the most junior associates. “These historical rates are reasonable first because they are the standard rates charged by Plaintiffs’ counsel and comparable to the rates the NCAA has paid for their own counsel in fiercely defending this litigation,” the O’Bannon lawyers wrote.
Hausfeld claimed his law firm has spent 29,874 hours working on the case since 2009 that totals $17,078,140 in billing based on historic hourly rates. In addition, Hausfeld’s firm claims $2,625,802 in expenses. Those costs were advanced to Hausfeld LLP during the case “by a client that has hired my firm by the hour,” Hausfeld wrote. The rates used to calculate those figures “are the usual and customary hourly rates charged for each attorney or staff member’s service,” Hausfeld wrote.
Hausfeld LLP accounts for 38 percent of the attorney hours and total expenses being charged by 25 law firms working on the O’Bannon case, according to the filings. Boies Schiller & Flexner LLP, which was another key law firm in the case, is seeking $2,279,033 in attorney fees and expenses. Bill Isaacson, partner at Boies who help try the case, claimed $536,300 in attorney fees for 571 hours at an hourly rate of $938. Isaacson had the highest attorney fee at Boies.
The filing also show in part how the O’Bannon lawyers paid for the case. Throughout the case, Hausfeld LLP maintained a litigation fund “into which co-counsel firm paid assessments and which was used to pay for many case-related expenses,” Hausfeld wrote. For instance, Boies Schiller & Flexner contributed $300,000 to the litigation fund. Of the expenses that came from the fund, Hausfeld is seeking $195,663 from taxable costs and $3,243,533 in expenses for categories such as photocopying deposition expenses and trial graphics specialists.
A recent USA Today story, “Attorneys’ Fees Criticized in NFL Concussion Settlement,” reports that the NFL has agreed to pay $112.5 million to the attorneys who sued the league over player concussions, according to the proposed settlement between the league and its former players. By negotiating attorneys’ fees before the settlement has been approved by a judge, former NFL player Sean Morey told USA Today Sports that he believes the attorneys for the players became “business partners” with the NFL instead of legal opponents.
In Morey’s view, the agreement on legal fees gave attorneys more of an incentive to reach a deal and not hold out for a better benefits package on behalf of their clients. “By essentially enticing them to become their business partner, (the ex-players’ attorneys) gave away leverage,” said Morey, who last month filed an objection to the settlement along with six other former players.
The fee award is subject to court review. A fairness hearing on the proposed settlement is scheduled for Nov. 19. In their objection to the settlement, the critics noted the courts have a duty to look for “subtle signs that class counsel have allowed pursuit of their own self-interests…to infect negotiations.” In a reply to the critics, the plaintiffs’ attorneys said the fees were not negotiated until after the terms of compensation for class members were resolved.”
For more on this settlement, visit www.nflconcussionsettlement.com
A recent Texas Lawyer story, “BP Oil Spill Litigation: How Much Has BP Paid Plaintiffs Lawyers So Far?,” reports that the BP oil spill litigation remains far from resolved and final, and the same is true of the plaintiffs lawyers’ fees, despite earlier expectations for a $600 million fee award. So far, the plaintiffs steering committee (PSC) counsel and other lawyers representing the class have “sought and received” less than 6 percent of the $600 million maximum in fees previously agreed upon, according to an Aug. 13 email from Geoff Morrell, a senior vice president for BP’s U.S.-based subsidiary. Specifically, Morrell’s statement said that the lawyers have been paid nearly $30 million and have made an additional fee request for $1.8 million.
More than two years ago, on April 18, 2012, BP and the PSC stated in a joint memorandum filed in the multidistrict litigation that “class counsel would seek an interim fee award of $75 million. Additional interim payments equivalent to 6 percent of class claims would be paid quarterly, and the fee award would not exceed a total of $600 million under any circumstances.”
But since then, BP has appealed the proposed settlement. Most recently, on Aug. 1, it filed a petition for writ of certiorari with the U.S. Supreme Court. With that petition, BP seeks a hearing to overturn a U.S. Court of Appeals for the Fifth Circuit ruling approving the settlement. In its petition, BP argues that the settlement is “inappropriate,” since “many members of the class have not been injured by the defendant.”
For their part, two members of the executive committee of the PSC, Stephen Herman and James Roy stated in emails that they had not yet received any scheduled payments. Asked about the potential consequences to their fees as a result of BP’s cert petition, Herman, a partner in New Orleans’ Herman Herman & Katz, and Roy, a senior partner in Lafayette, Louisiana’s Domengeaux Wright Roy & Edwards, wrote: “All we are focused on right now is getting claimants what they are owed under the settlement.”
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