A recent Law 360 story by Reenat Sinay, “Glancy Prongay Gets $7.5M in Fees for $286M Deal,” reports that a New York federal judge awarded attorneys at Glancy Prongay & Murray LLP $7.5 million in fees — $15.4 million less than what they had initially requested — for their role in guiding American Realty Capital Properties investors to a $286.5 million deal ending derivative claims.  U.S. District Judge Alvin K. Hellerstein approved a steeply reduced fee amount for lead counsel in the derivative suit, making up just 2.6% of the total settlement.  Judge Hellerstein approved the agreement resolving allegations of shady accounting practices back in January but had declined to rule on attorney fees at that time.

The judge noted that while the attorneys “strongly pursued this complex and risky action” and “completed extensive discovery,” they also overbilled for their work and relied on a parallel class action against ARCP, now known as Vereit Inc.  “The Derivative Action piggybacked on, and at times even distracted from, the class action,” he said.  “Counsel in the class action spearheaded the global settlement efforts.  Derivative counsel billed excessive time for background research, overstaffed depositions and duplicated efforts between law firms.”

The law firm had initially asked for $22,920,000 in attorney fees, or 8% of the settlement fund, and $594,882 in expenses.  Following Judge Hellerstein’s refusal to rule on the bid back in January due to a lack of billing records, Glancy Prongay submitted a revised request for $15,752,232, while counsel for Vereit contended that $6.35 million would be enough.  Judge Hellerstein approved a revised request for $548,267 in expenses.

ARCP investor Joanne Witchko brought the derivative suit in 2015, claiming ARCP — by then renamed Vereit — had wrongly refused to pursue claims against its own brass over an accounting restatement and stock drop.  The complaint by Witchko was one of a slew of suits over the retraction of 18 months' worth of ARCP financial reports, which led to executive departures and torpedoed the planned $700 million sale of an ARCP unit.

A number of class actions surrounding the accounting scandal were consolidated before resulting in last year's billion-dollar settlement, which would see Vereit pay $738.5 million.  A related entity called AR Capital and others, including former ARCP CEO Nicholas Schorsch, would be responsible for $225 million.  Former ARCP manager Grant Thornton would pay $49 million, and former ARCP CFO Brian Block would pay $12.5 million, according to court records.

In that action, Judge Hellerstein also awarded lead counsel at Robbins Geller Rudman & Dowd LLP less than what they had requested, although he offered no explanation for the decision.  The firm had asked for attorney fees worth 12.4% of the settlement fund, which comes out to $127.1 million, plus expenses of just over $5.1 million.  Judge Hellerstein awarded Robbins Geller $100 million in fees and $5,154,721 in expenses.