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18 Law Firms Ask Ninth Circuit for Share of $175M Fee Award in VW MDL

December 21, 2018 | Posted in : Class Action, Contingency Fees / POF, Expenses / Costs, Fee Allocation / Splitting, Fee Award, Hourly Rates / Hourly Billing

A recent Law 360 story by Dorothy Akins, “18 Firms Ask 9th Circ. For Cut of $175M Fees in VW MDL,” reports that an attorney representing 18 law firms told the Ninth Circuit they're owed part of $175 million in fees and costs awarded in multidistrict litigation over Volkswagen’s emissions cheating and were wrongfully cut from the award shared among approximately 100 firms simply because they weren't the "chosen ones."

During a hearing in San Francisco, Bruce Nagel of Nagel Rice LLP told a three-judge panel that U.S. District Judge Charles R. Breyer improperly concluded that work done by his law firm and 17 others before Lieff Cabraser was appointed as lead counsel was worthless.  As a result, paralegals at the "chosen" law firms are earning over $1,300 per hour for their work on the litigation and senior attorneys are earning $4,200 per hour, while the 18 law firms appealing the order have received nothing for what amounts to identical work, Nagel argued.  "The district court found … the identical work to be worthless," he said.

Although Nagel was arguing on behalf of all 18 law firms, he noted that his law firm was the second or third to file a complaint against the automaker and led a "press blitz" following Volkswagen's 2015 announcement that the company deliberately installed software designed to cheat federal and state emissions tests in nearly 600,000 2009-2015 vehicles.  In March 2017, Judge Breyer issued a nine-page order granting class counsel’s request for $167 million in attorneys' fees and $8 million in costs, which represented roughly 1.7 percent of the $10 billion class settlement fund that was set up to resolve the 2.0-liter class action claims.

But Nagel argued that Judge Breyer's order never compared the work done by the different law firms and his ruling was based on "bald assertions" and on a "finding of fact not supported by anything."  Nagel said if the ruling is allowed to stand, the order would require some class representatives to have to pay their own lawyers, while other class representatives don't have to, because their attorneys happen to be lead counsel and are effectively the "chosen ones." That sets up a bad precedent and bad public policy, Nagel argued.

But Samuel Issacharoff, who represents the plaintiffs' steering committee and class counsel, pushed back, arguing that the 18 law firms appealing the order didn't follow the process required to submit their hours in order to receive a cut of the $175 million.  Ultimately, Issacharoff said there were 99 non-lead counsel firms that cooperated with lead counsel and went through auditing.  Those 99 firms received a portion of the award, Issacharoff said.

On rebuttal, Nagel argued that his firm submitted multiple letters to lead counsel regarding their work on the litigation but never received a response.  Another appellant, attorney James B. Feinman who represented himself, also argued that he would file a lien against the automaker in Virginia state court to recover the outstanding attorneys' fees.  But counsel for VW, Sharon Nelles of Sullivan & Cromwell LLP, argued that any outstanding attorneys' fees must come out of the $175 million award.  Nelles said the automaker isn't responsible for any additional fees based on the terms of the $10 billion class action settlement, and the company would fight any liens against it filed in state court.