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Category: Contingency Fees / POF

Contingency Fee Percentages in Megafund Class Actions

August 21, 2020

Quinn Emanuel relies mostly on recent attorney fee scholarship and attorney fee jurisprudence in their recent $185M attorney fee request in the ACA class action.  Their fee request reads: 

In one recent case, In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 991 F. Supp. 2d 437 (EDNY 2014), the Court conducted a survey of so-called “megafund’ cases and provided its thoughts on a graduated scale for attorneys’ fees.  The scale set forth in Interchange Fee suggests a marginal fee percentage at various levels if recover; as recoveries go higher, the marginal fee percentage decreases. Id. at 445.  Using that matrix, which is set forth below, the Interchange Fee Court awarded class counsel $544.8 million in fees out of a $5.7 billion settlement fund, representing a contingent fee of 9.56%.

$77M in Attorney Fees in $386M Bond Price Fixing Settlement

August 13, 2020

Recently a federal district court in New York granted final approval of a $386.5 million settlement, including over $77 million in attorneys’ fees, in a class action brought by investors alleging that various banks engaged in a conspiracy to fix prices of bonds issued by Fannie Mae and Freddie Mac.  Investors claimed that the banks were artificially inflating the value of new bonds, overcharging buyers and underpaying sellers.  The final order approves five settlements in the case. 

In ruling, the court considered the plaintiffs’ request for attorneys’ fees.  The court awarded over $77 million in attorneys’ fees from the settlement fund to plaintiffs’ attorneys for engaging in roughly 30,200 hours of work.  Attorneys also received approximately $1.7 million in expenses, plus interest on the fee and expense awards.  The attorneys’ fees represent 20% of the total settlement amount of $386.5 million.  In addition to attorneys’ fees, the court also approved $400,000 in service awards to the class representatives, with the lead plaintiff receiving $300,000.

NALFA Quoted in Portland Business Journal

August 5, 2020

NALFA and NALFA member and attorney fee expert John D. O'Connor of O'Connor & Associates in San Francisco were quoted in Portland Business Journal.  The news article, by Elizabeth Hayes, “Former Portland Insurer’s Law Firm Asks for $184M in Legal Fees” reports on Quinn Emanuel’s attorney fee request in the health insurers Obamacare reimbursement case.  Below is a copy of the article:

Health Republic went out of business after it took a $20 million hit when the government didn't pay it in full under the risk corridors program.  In February 2016, when Lake Oswego-based Health Republic Insurance was winding down its operations, it made an audacious move.  The small Consumer Operated and Oriented Plan, which had just 15,000 customers, took on the federal government.

Health Republic filed the first of what would become multiple lawsuits brought by insurers across the U.S. over the federal “risk corridors” program.  The cases sought to require the government’s to make good on its promise to compensate health plans that lost money on Affordable Care Act plans.

The shortchanging cost Health Republic $20 million and dealt a fatal blow to the company and dozens of other insurers.  Portland-based Moda Health took an even bigger hit than Health Republic, at $250 million, and followed Health Republic’s lawsuit with one of its own. Moda's suit worked its way to the U.S. Supreme Court, which in April ruled that the government owed U.S. insurers $12 billion.

Now Health Republic’s law firm, Chicago-based Quinn Emanuel Urquhart & Sullivan LLP, is seeking $184 million in attorney fees for the 183 clients it represented in the two class action suits it filed.  Both are related to the risk corridors but didn’t go to the Supreme Court.  The firm argues, however, that it filed a first-of-its-kind lawsuit. It “did not remain idle" while the other, non-class action cases, moved forward, but submitted multiple amicus briefs focusing on the “negative economic and societal impact that would result if the government failed to honor its commitments.”  Justice Sonia Sotomayor used that reasoning in her majority opinion, saying “the government should honor its obligations.

Quinn Emanuel, which specializes in complex litigation, represented Health Republic and the other insurers in the class actions on a contingency basis, meaning it would receive a fee only if they win the cases.  Quinn Emanuel’s “stellar performance” resulted not only nearly $4 billion for its insurer clients, but 100 percent industrywide recovery, the firm argues in its 40-page motion for attorney’s fees filed last week in the U.S. Court of Federal Claims.

It is asking for 5 percent of the judgments in its two class actions, which it argues would be “one of the lowest percentage rates ever awarded to class counsel, even in cases with multi-billion-dollar recoveries, such as this.”

If approved, the amount would still be one of the largest fee requests for a single law firm in U.S history, according to the National Association of Legal Fee Analysis.  There have been much larger fee awards, including those in the Enron lawsuit, but they are generally split between multiple firms.  John O’Connor, a San Francisco attorney and attorney fee expert, said it’s hard to say if the court will approve Quinn Emanuel’s request.  The percentage is low, but the total amount would represent an unusually high multiple of the firm’s average hourly rate of around $1,000.

The firm put in about 10,000 hours, translating to an hourly average rate of $18,500, if the award is granted.  “You can’t say it’s totally ridiculous,” O’Connor said. “Nor can you say it’s a slam dunk that they should get it. The thing they have going for them is it’s such a small slice of the pie.”  Quinn Emanuel emphasizes in its brief that it and Health Republic took on a “substantial risk” in suing the government.  Stephen Swedlow, a Quinn Emanuel partner, did not respond to a request for comment.

In an ironic twist given the eventual outcome, Moda CEO Robert Gootee apparently agreed.  When former Health Republic CEO Dawn Bonder told Gootee she was going to file the lawsuit, he responded that she was “making a ‘bold’ choice and that he would not even consider doing so on behalf of Moda, as he thought the lawsuit had no chance of success,” according to Quinn Emanuel’s recent brief.

Moda spokesman Jonathan Nicholas declined to comment on the conversation.  “Moda did not have any contingency fee arrangement with our law firm,” he said. “Robert insisted from the very outset that a core, fundamental right was at issue here, and he determined that our company would go all in — and all alone – in an effort to see that our judicial system, at its highest level, could indeed right a wrong!”

NJ Judge Wrongly Used Past Private Practice to Cut Attorney Fees

July 29, 2020

A recent Law 360 story by Bill Wichert, “NJ Judge Wrongly Used Private Practice Past to Cut Atty Fees” reports that a New Jersey state judge improperly relied on unpublished decisions and her own private practice experience when she gave class counsel a lower attorney fee award than class counsel asked for when it settled a suit against a car dealership, a state appellate panel said Wednesday in nixing the ruling.  The panel concluded in a published opinion that Superior Court Judge Mara Zazzali-Hogan — formerly with Gibbons PC — was wrong to cut the requested hourly rates for attorney Christopher J. McGinn and lawyers and a paralegal at the Wolf Law Firm LLC to about $120,772 in fees and costs, which undercut their request by more than $40,000.

"In rejecting class counsel's submissions and reducing the hourly rate for all the attorneys and the paralegal, the judge relied on her personal experience in private practice, a methodology rejected in Walker ... and considered four unpublished decisions," the three-judge panel said, citing the New Jersey Supreme Court's 2012 opinion in Walker v. Giuffre.  As for Judge Zazzali-Hogan's reliance on the unpublished decisions, the panel pointed to the state Supreme Court's 2008 opinion in Brundage v. Estate of Carambio, which acknowledged that "[state court] rule 1:36-3 'provides that "[n]o unpublished opinion shall constitute precedent or be binding upon any court."'"

"Under these circumstances, we are persuaded that the judge's reduction of the hourly rates was based upon consideration of inappropriate factors, and thus reflects a mistaken exercise of discretion," the panel said, adding in a footnote: "In remanding this matter, we make no finding or suggestion about what hourly rates ultimately should be deemed reasonable for this kind of case."  McGinn and the Wolf Law Firm, representing plaintiff Nina Seigelstein, appealed the judge's decision in the suit against Shrewsbury Motors Inc. and its principal, which claimed the dealership unlawfully charged customers documentary fees that were not itemized, court documents state.

Under the settlement in the case, the defendants agreed to pay $125 to each member of a 2,883-member class, court documents state.  The attorneys sought roughly $162,000 in fees and costs, with hourly rates ranging from $165 for the paralegal to $500 for McGinn and $765 for fellow lead attorney Andrew R. Wolf, court documents state.

To back up the proposed hourly rates, the attorneys submitted certifications from Wolf, McGinn and three other lawyers who didn't work on the case, as well as two state court decisions, court documents state.  Citing the unpublished cases and her "fifteen years of private practice," Judge Zazzali-Hogan in March 2019 reduced the hourly rates, which set McGinn's and Wolf's at $475 and $575, respectively.  The judge also reduced the billable hours and used a smaller contingency fee enhancement percentage than what the attorneys requested.

Judge Won’t Approve Fees That Amount to $7,500 An Hour

July 24, 2020

A recent Law 360 story by Dorothy Atkins, “Judge Won’t OK Atty Fees She Says Equal $7,500 An Hour” reports that a California judge issued a tentative ruling approving Merrill Lynch's $12.5 million wage and hour deal but rejected class counsel's $3.75 million fee bid, saying the case "was not particularly complicated" and their requested award would come out to $7,500 per billable hour.  Alameda Superior Court Judge Winifred Y. Smith said she would only approve an attorney fee award of $1.25 million, which she acknowledged is "substantially less" than the requested fee bid and represents only 10% of the total settlement.

The judge reasoned that although there's "ample authority" to support a 30% benchmark for awarding fees, when she considers the number of hours that the class attorneys spent on the case and the case's complexity, a lower fee award is warranted.  Class counsel has told the judge they expect to have spent a total of 860 hours on the case by the end of it, but the judge wrote in her tentative ruling that it's more likely they will "reasonably" have spent only 500 hours working on the case.

Judge Smith added that if she were to award $3.75 million in fees, then class counsel would receive $7,500 per hour for their 500 hours of work, or at least $4,360 per hour based on their asserted 860 hours of work.  "The court will not award windfall fees at exorbitant implied hourly rates of over $4,000/hour (accepting the asserted 860 hours) or over $7,000/hour (the 500 reasonable hours)," the opinion says.

If approved, the settlement would resolve a lawsuit that Marc D. Lowe initially filed in May 2018 and amended the following September, adding Kevin McGuan as a named plaintiff.  The latest rendition of the complaint asserts six causes of action, accusing Bank of America NA's investing and wealth management division of committing a host of state labor statute violations, including failing to reimburse financial advisers for their business expenses, failing to provide accurate wage statements, and failure to pay all wages owed.

Merrill Lynch denied the allegations, but before a dispositive motion was filed, the parties entered mediation and informed the court in October 2019 that they had reached a settlement.  Under the proposed deal, roughly 1,500 class members would receive an average of $5,738, while attorneys would seek up to $3.75 million, or 30% of the settlement, in fees and up to $35,000 in costs. McGuan and Lowe would also receive a service award of $25,000 each.