A recent Law 360 story by Mike LaSusa, “Attys Must Show Work for $23M in American Realty Deal,” reports that a New York federal judge pointed to a lack of billing records as he held off approving nearly $23 million in attorney fees requested by derivative plaintiffs in a case revolving around allegedly shady accounting practices at the real estate business formerly known as American Realty Capital Properties.
U.S. District Judge Alvin K. Hellerstein issued a two-page order directing the parties seeking $22,920,000 in fees and $594,882 in expenses to file billing records and other relevant information with the court by Jan. 10. "Unless derivative plaintiffs' counsel provides contemporaneous and detailed billing records showing services they performed in each particular aspect of the case and showing disbursements, their claim for attorneys' fees will not be recognized," Judge Hellerstein said.
The derivative plaintiffs had requested the multimillion-dollar attorney fee sum in mid-December after getting preliminary approval for a settlement agreement tied to a related $1 billion deal aimed at ending a class action centering on the ARCP accounting. In their fee request, the derivative plaintiffs argued that the terms of the class action settlement provided benefits worth at least $286.5 million to ARCP’s successor, Vereit Inc., in addition to saving the company a significant chunk of change that would otherwise be spent on ongoing litigation.
The derivative plaintiffs called the deal "an exceptional settlement" for Vereit and its shareholders, and pointed out that the $23 million sum they’re seeking represents only 8% of the $286.5 million figure. But Vereit fired back, highlighting the lack of billing records that should have accompanied the fee bid. The company also called the request "entirely unreasonable," and said that "class plaintiffs took the lead in all material respects in litigating the coordinated actions." "Proper evaluation of derivative counsel’s contributions to the resolution of these cases reveals that their fee request represents a significant overreach," Vereit said. "For the entirety of this action, derivative counsel were able to piggy-back off the work of others."