A recent Law 360 story by Bryan Koenig, “Hausfeld, Susman Awarded in $58.4M in Libor MDL Fees, Costs,” reports that Hausfeld LLP and Susman Godfrey LLP will decide how to dole out a nearly $60 million award for attorneys' fees and expenses approved by a New York federal judge from $250 million in multidistrict litigation settlements between Citigroup, Barclays and investors suing over rigging of the London Interbank Offered Rate.

U.S. District Judge Naomi Reice Buchwald left it up to the two lead firms to decide how to apportion the $14.9 million in litigation expenses and $43.5 million in attorneys’ fees awarded from the two class action settlements granted final approval at the beginning of August.  “Numerous firms” were involved in representing the so-called over-the-counter investors over the seven-year MDL, the judge said in an order that only slightly pared back Hausfeld and Susman Godfrey’s bid for compensation.

“Class counsel have unquestionably devoted a significant number of hours to this action — 46,744.30 through July 27, 2017 to be precise, and this action has undisputedly been complex and fraught with risk,” Judge Buchwald said.  “While these factors may militate in favor of a larger award, the amount of recovery in this case is substantial, and a higher percentage would incur the risk of providing an unwarranted windfall to class counsel at the expense of the class.”

Citigroup Inc. has agreed to pay $130 million and Barclays Bank PLC to pay $120 million to compensate OTC investors who say they purchased Libor-tied financial instruments during a time when multiple major banks allegedly worked together to manipulate the rate.  Bank of America NA and JP Morgan Chase Bank NA are still fighting the OTC plaintiffs in a bid to duck out of the case, even as multiple other banks have penned their own deals.  The underlying allegations stem from investigations by government regulators around the world into the alleged rigging of Libor that sparked a series of lawsuits that eventually were gathered into the MDL in the Southern District of New York.

Judge Buchwald said that the expenses, which come primarily from $14.2 million from the Citi settlement fund, aren’t “so high as to be unreasonable,” considering “the complexities of this case and the necessity for extensive expert involvement.”  The Barclays settlement is contributing far less because that bank settled first, in November 2015, while Citi didn’t settle until July 2017.  

The judge also signed off on $25,000 in fee awards for each of the five named OTC plaintiffs:  Baltimore’s mayor and city council; the city of New Britain, Connecticut; Jennie Stuart Medical Center Inc.; Vistra Energy Corp.; and Yale University.  The plaintiffs had wanted the money to come solely from the Barclays settlement, but Judge Buchwald instead split it between the deals, with $12,000 per plaintiff coming from the deal with Barclays and $13,000 per plaintiff coming from the Citi settlement fund.

The biggest change the judge made was to the attorneys' fee bid, with the plaintiffs having sought $50 million, although that was based on 20 percent of the overall settlement after expenses had been subtracted.  Judge Buchwald instead went with 18.5 percent of the awards after expenses, using a base of just over $235 million to arrive at the attorneys' fees of $43.5 million.

“Given these amounts of expense reimbursements, incentive awards, and attorneys’ fees, the class writ large will receive 76.62% of the aggregate settlement amounts (prior to other expenses, such as those incurred in providing notice to the classes),” the judge said.  That percentage, the judge continued, “comports with public policy notions” putting most of a settlement recovery with the class rather than their lawyers.  “It is simply inconceivable that attorneys’ fees of more than $43 million — $930 per hour for each of the 46,744.3 hours class counsel reports to have spent — would somehow be insufficiently incentivizing for class counsel to vigorously pursue actions of this nature,” Judge Buchwald said.

The case is Mayor and City Council of Baltimore et al. v. Credit Suisse AG et al., case number 1:11-cv-05450, and the MDL is In re: Libor-Based Financial Instruments Antitrust Litigation, case number 1:11-md-02262, both in the U.S. District Court for the Southern District of New York.