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Category: Contingency Fees / POF

$3.4M Fee Request in $42M GM Oil Guzzling Settlement

September 25, 2019

A recent Law 360 story by Linda Chiem, “Attys Seek $3.4M in Fees From $42M GM Oil-Guzzling Deal,” reports that attorneys have asked a Florida federal judge to sign off on nearly $3.4 million in fees for their work negotiating an approximately $42 million deal with General Motors LLC to end consumers' proposed class claims that certain Chevrolet Equinox and GMC Terrain SUVs had defective oil-guzzling engines.

Plaintiffs' attorneys at Greg Coleman Law PC, Ahdoot & Wolfson PC and Whitfield Bryson & Mason LLP sought court approval for $3.39 million in attorney fees, $109,649 in litigation expenses and $4,500 apiece in service payments for each of the 12 named plaintiffs in three proposed class actions covered by the GM deal.  The attorneys said GM has already agreed to cover those costs, so they would not come out of the settlement pot, according to court documents.

The parties first told the court in April that they had reached a deal valued between $40 million and $45 million to end claims in the three suits alleging the 2.4-liter Ecotec engines in 2010-2013 Equinox and Terrain SUVs had defective piston rings that wore out too quickly and excessively guzzled oil.  In the filing, the plaintiffs' attorneys said the minimum value of the settlement is closer to $42.4 million, so their $3.39 million fees request works out to a "modest" 8% of the total settlement pot that's well within the parameters for "appropriate" fee awards in the Eleventh Circuit.

"Class counsel collectively devoted more than 3,200 attorney hours to the prosecution of this case," they said in their filing. "Accordingly, the amount of time and labor devoted to this case weighs in favor of finding class counsel's requested fee award reasonable."  The class counsel added: "The difficult and contingent nature of this case further demonstrates its undesirability.  There are few lawyers willing to invest significant time and resources prosecuting a lawsuit that involves complicated and uncertain legal questions and a substantial risk of receiving no compensation, which is evidenced by the fact that, to class counsel's knowledge, no other related class actions were filed elsewhere in the country."

Class Counsel Seek $15M in Fees in $74M SunEdison Settlement

September 23, 2019

A recent Law 360 story by Mike Curley, “Attys Seek $15M in Fees From $74M SunEdison Settlement,” reports that the lead counsel in a class action claiming SunEdison Inc. misled shareholders about its financial health before filing for bankruptcy is asking a New York federal court to approve more than $15 million in attorney fees for its work in reaching a $74 million settlement with the company. 

In a memorandum filed, attorneys with Bernstein Litowitz Berger & Grossmann LLP, representing plaintiffs the Municipal Employees’ Retirement System of Michigan and Arkansas Teacher Retirement System, said the fee, which amounts to 21% of the $74 million pot, is reasonable and under the amount suggested by lodestar guidelines.

The request also includes $1.5 million in expenses, and 21% of any additional recovery, according to the memorandum.  The attorneys are also requesting an award of $13,598 to the Municipal Employees’ Retirement System of Michigan and $1,819 to Arkansas Teacher Retirement System for their costs and expenses.

The fees reflect that the settlement was achieved through the “skill, tenacity and effective advocacy” of the lead attorneys, according to the memorandum, including an extensive investigation into SunEdison’s alleged fraud, drafting the complaints, defeating motions for dismissal and summary judgment and nationwide and international discovery efforts.  In addition, the fee is based on a written agreement that lead counsel signed with the Municipal Employees’ Retirement System of Michigan at the start of the case and should therefore be presumed to be reasonable, the attorneys argued.

Circuit courts have approved attorney fees in settlements of this type of more than 30% of the total fund, according to the memorandum, which added that the lodestar payment, based on the amount of hours the attorneys put in, would be $18 million, making the $15 million request only 86% of the lead counsel’s time.

The 2015 class action alleges false and misleading statements and omissions in violation of the Exchange Act and liability and negligence claims under the Securities Act.  The suit is one of a multitude that SunEdison is facing in multidistrict litigation following business decisions that ultimately led to its filing for bankruptcy in April 2016.

In their bid for initial settlement approval filed in July, shareholders in the company also asked the court to allow their counsel to request attorney fees of up to 22% of the settlement fund and another $2 million in litigation expenses incurred over the three and a half years since the suit was filed.  Under the settlement, a $74 million fund will be divided between the two subclasses, with $19.5 million and any of the supplemental insurance money going to the Exchange Act subclass, and $54.5 million going to the Securities Act subclass, the investors said.

Fee Allocation Dispute in BNY Mellon Settlement Can Be Litigated

September 20, 2019

A recent Law 360 story by Chris Villani, “Atty Can Sue for Fees in BNY Mellon Settlement, Judge Rules,” reports that a dispute between Bailey & Glasser LLP, the Howard Law Firm and McTigue Law LLP over a $3 million fee following a $10 million settlement with Bank of New York Mellon Corp. sounds like a breach of contract case to a Massachusetts judge, who invited McTigue on Thursday to sue if it wanted.  Chief U.S. District Judge Patti B. Saris said that, in approving the $3.33 million fee award for the lawyers representing a class of trustees who sued BNY Mellon over alleged excessive charges, she would not resolve a long-running dispute between the lead class attorneys and a lawyer for the named plaintiff in the case.

During a hearing earlier this month in her Boston courtroom, Judge Saris heard arguments from McTigue Law that it was entitled to a 20% cut of the fee under the terms of a co-counsel agreement between McTigue, Bailey & Glasser and Howard Law.  The latter two firms said McTigue violated that pact and should not get the 20% share, and Judge Saris invited McTigue to sort the issue out through a new suit.

“McTigue Law’s motion essentially raises a breach of contract claim against lead plaintiff’s counsel,” Judge Saris wrote in a brief order.  “The court did not resolve that claim in its ruling on lead plaintiff’s motion for attorneys fees and expenses.”  Judge Saris said she would deny McTigue’s motion for a 20% cut without prejudice to a separate breach of contract suit.

The order clarified Judge Saris’ more lengthy Wednesday order giving her blessing for the fee, after which a McTigue representative told Law360 it did not believe the judge’s fee award prevented the firm from going after Bailey & Glasser and Howard Law for the cut it believes it rightfully deserves.  The class of trustees reached a settlement with BNY Mellon in March on the eve of trial, but the accord with the bank did little to stem the disagreements between two class counsel firms and Brian McTigue, the personal lawyer for class representative Ashby Henderson.

Bailey & Glasser and Howard Law told the judge in their fee request that McTigue's firm "did not benefit the class, but rather caused disruption, delay and confusion."  McTigue countered by saying he performed "significant and material work" on the case and argued his cut was agreed to in 2016, when the firms signed a contract stating he “will be apportioned 20% of the lodestar work, awarded 20% of the fees and pay 20% of the expenses in this litigation, all on an ongoing basis, as measured from the beginning of the litigation.”

More Law Firms Enter NFL Concussion Fee Allocation Dispute

September 18, 2019

A recent Law 360 story by Ryan Boysen, “More Firms Pile Onto Seeger Weiss in Concussion Fee Fight,” reports that Zimmerman Reed LLP and Kreindler & Kreindler LLP have added their voices to the growing chorus of attorneys claiming Seeger Weiss LLP shortchanged them for their work on the landmark NFL concussion settlement, in a contentious fee fight in the Third Circuit.  In separate briefs, Kreindler’s Anthony Tarricone and a handful of Zimmerman Reed lawyers said their early contributions to the litigation that led to the massive concussion settlement were overlooked and undervalued by Chris Seeger and U.S. District Judge Anita B. Brody when she determined how to divvy up most of the $112 million common benefit fund in 2017.

“Despite recognizing that 'every attorney involved in the litigation has taken on the risk that work will be performed but no payment will be received,’ the court’s awarded multipliers have almost no correlation to the actual” hours of work performed or the risk of nonpayment inherent in those hours, Zimmerman Reed said in its brief.  “That result is completely inconsistent with the court’s” decision to award Seeger Weiss a comparatively massive risk multiplier for its own hours, Zimmerman Reed added.

Tarricone received a risk multiplier of 1.25 for his hours and Zimmerman Reed received a multiplier of just 1, while Seeger Weiss received a 3.5 multiplier, according to court documents.  That huge 3.5 multiplier, coupled with the hundreds of hours billed by Seeger Weiss for its own work, have allowed it to take home nearly $65 million worth of the roughly $100 million that’s been paid out from the common benefit fund thus far.

Seeger is widely acknowledged as the primary architect of the settlement itself, but most of the 20 or so firms involved in the concussion litigation’s early stages have repeatedly bristled at his perceived heavy-handedness and concentration of power during that process.  While those firms are still able to collect contingency fees when their individual clients’ awards are approved under the settlement, practically all of them were left seething after Judge Brody’s lopsided allocation of the CBF money.

They’ve also taken issue with how that money was divvied up in the first place.  According to an opening brief filed last month that Tarricone, Zimmerman Reed and many other firms have all joined, Seeger was allowed to pour over each firm’s time records and decide what would count and what wouldn’t, and determine their risk multipliers.  That process was then essentially rubber-stamped by Judge Brody with hardly any independent analysis on her part, the opening brief claims.  Meanwhile, all of the other firms involved still have yet to lay eyes on Seeger’s own time records.

The first concussion lawsuit was filed against the NFL in 2011 and the settlement was finally approved in 2015, putting to rest claims that the NFL knew for decades about the long-term dangers of repeated concussions but did nothing to warn its players.  The uncapped deal has a 65-year lifespan and covers about 20,500 retired NFL players, all of whom are potentially eligible for payments ranging from a few thousand dollars to $5 million depending on their age and the severity of their football-related brain injuries.  Thus far it’s on track to pay out roughly $675 million to players, although many attorneys have complained that the process is far more difficult than they bargained for.

While the joint opening brief primarily takes aim at the broader issues that allegedly infected the CBF allocation process, Tarricone and Zimmerman Reed’s briefs focus on their own grievances.  Tarricone says he co-chaired the public relations effort undertaken by the lead lawyers in the concussion litigation and was instrumental in getting retired football players on television and favorable op-eds written, as well as steering reporters to write about concussions in football.

Nevertheless, in the brief, he claims Seeger ordered him to delete 80 hours that should have been payable from the CBF and discounted his efforts when coming up with what he considers the paltry risk multiplier of 1.25 for his other hours.  Tarricone and his firm ultimately received about $1.5 million from the CBF, but Tarricone claims it would have been higher if his actual work and risk were properly accounted for.

Similarly, Zimmerman Reed said the late Charles “Bucky” Zimmerman was instrumental in getting the concussion litigation off the ground in the first place, and then spent many hours from 2013 to 2017 monitoring some lawyers and lenders who were allegedly misleading retired players in an attempt to squeeze money out of them.

“During that time, Seeger Weiss largely ignored the [Ethics Committee’s] efforts,” Zimmerman Reed said.  “Once the issue gained public traction” through an article in the New York Times however, “Seeger Weiss, as was its practice in this case, unilaterally took over the effort initiated by the committee” and then “barely acknowledged the work Zimmerman Reed performed.”

“The district court’s failure to scrutinize Seeger Weiss’s recommendation that it be credited for certain work but that Zimmerman Reed not be credited for similar work on the Ethics Committee is clearly erroneous,” the firm said.  Neither Tarricone nor Zimmerman Reed gave precise dollar amounts or other figures in their briefs, but both were adamant that their final payouts from the CBF should have been higher.

For its part, Seeger has not yet submitted a reply brief in the fee fight.  But his response to the initial objections that were overruled by Judge Brody in her 2017 order on the CBF allocation can likely provide some foreshadowing of the arguments he’ll make before the Third Circuit.  “Certain firms disagree with the court’s decision to ask me to submit a proposed allocation, likening me to a ‘fox’ divvying up the chickens, and claiming that I cannot be objective, or worse,” Seeger wrote in that earlier response.

A Question for Solo Practitioners: Flat Fee or Hourly Rate?

September 11, 2019

A recent New York Law Journal article by Janet Falk, “Flat Fee or Hourly Rate? A Question Solo Attorney’s Question,” reports on which billing method to choose for solo practitioners.  This article was posted with permission.  The article reads:

Attorneys earn compensation by setting fees that are not excessive, according to the Rules of Professional Conduct. (Rule 1.5 (a)).  A lawyer communicates to the client the basis for the fee and expenses, consistent with the scope of representation, of course.  It is up to the individual attorney to determine the amount, the nature of the relationship and whether the fee is fixed or contingent.

For those solo attorneys who previously worked at firms in private practice, the rates for their services were set by firm management, largely based on seniority and experience.  Now, as a solo practitioner, it is time to calculate the amount of the fee, the basis for service and any payment accommodation.

Attorneys have multiple options for fees: hourly, flat fee, retainer, contingency and blended, to name a few.  Consider whether the activities you perform re-occur to the degree that you can accurately predict the time it takes to complete them.  There will be occasions, unfortunately, when you underestimate the activity required.  In anticipation of that possibility, an attorney may calculate an additional percentage as a cushion; alternatively, the agreement may include a clause to submit an invoice for the additional services and time at the conclusion of the work performed.

One advocate of the flat fee arrangement is Patricia Werschulz.  She notes: “I have about 20 different activities which I routinely perform for clients.  Each has its own price structure” for her patent and trademark services at Werschulz Patent Law.

Zara Watkins, who writes briefs for appeals and substantive motions in state, federal and immigration cases at On Point Expertise, also prefers flat fees.  She estimates the time (one hour per page of the brief) and multiplies it by her usual hourly rate.  “If I have to go over my estimate, I send an invoice at the end of the project.”  Werschulz and Watkins extoll the freedom to focus on the matter at hand and the legal analysis, and not track their time in small segments of an hour.

Other attorneys dislike flat fee agreements.  Craig Wolson, who leads Wolson Litigation Support Group with a practice focused on securities, lending and other finance, says: “Clients almost always want a fixed fee or cap fee arrangement, which I try to avoid if at all possible.”  Instead, he works on an hourly fee basis, billed against a retainer, based on his estimate of the time expected to be devoted to the matter that month.  Wolson finds that clients do not accurately anticipate the scope of work or the length of time it will take.  “Unexpected things often come up during the course of the representation, clients often change their mind as to what they want to do after the project begins, and/or clients often ask for more work to be done than they would if they knew they were paying by the hour.”  In other words, clients may receive additional services under the flat fee arrangement and the attorney may earn less than if the same work were billed on an hourly basis.

Another perspective on the hourly rate is that it may be more reliable, both for billing and in terms of the prevailing legal environment.  Craig Dobson, whose practice is focused on ethics and immigration at Dobson Law, says “I often bill by the hour when I represent lawyers on ethics matters.”  In the past, he charged flat fees for immigration cases, “but I am now considering more hourly billing because of the unpredictability of representing clients during the current administration.”

Even though attorneys may dislike tracking the fractional hour, and corporations are known to complain about it, Andrew Berks says “Larger businesses, businesses with experienced in-house counsel, and large organizations generally prefer hourly billing” for his services at Berks IP Law, which focuses on intellectual property, patents and litigation.  Whether on a flat fee basis or an hourly basis, be prepared to raise your rates as you gather more experience in your solo practice.  After logging more than 10 years, both Berks and Werschulz deemed it appropriate to increase their fees, based on their longevity in patent law.

In addition, consider that your own expenses will increase over time and that the market rate of your competitors will also be rising.  Wolson notes: “If I see that other lawyers with similar backgrounds are charging more, I will raise my rates.”  Such an increase in fees may cause some clients to stop using your services; indeed, Watkins lost a few accounts when she raised her rate.  However, she “was able to replace them with other, higher paying clients and do less work for the same amount of money.”

Nonetheless, attorneys may be flexible when advising a client who has a limited budget, on a case-by-case basis, of course.  For example, investigative counsel Charles-Eric Gordon, of the Law Offices of Charles-Eric Gordon, comments: “If a prospective or existing client consults me on a price-sensitive matter, which I believe will be extremely interesting, I may accept less of a retainer and an additional amount on contingency.  I also try to base my fees somewhat on a sliding scale, when appropriate.”

Patent attorney Werschulz has an alternative solution.  “If a client cannot afford my services, I send them to Volunteer Lawyers for the Arts to apply for pro bono representation.  If they truly can’t pay my fees, VLA can make a determination and I will take the case.”  There are attorneys who indicate a degree of transparency in their fee structure.  Berks has a tabular fee schedule “with a list of various services and costs.  I use this routinely as a starting point when clients request costs in advance.  Some people want to see it, especially foreign counsel.”

Payment of fees is yet another issue.  Perhaps, like Watkins and Werschulz, an attorney will require full payment up front, which is consistent with a flat fee agreement.  Others may offer a payment plan, on a case-by-case basis, of between three and 12 months.  Gordon states: “I always make certain to require a retainer of at least half of what I estimate the final fee and expenses will be.”

In addition to accepting payment via the usual credit card, check and ACH, consider online payment services.  Werschulz receives payments through the credit card and e-check services of LawPay.  She also notes that she accepts wire transfers from international clients and, perhaps once a year, is paid in cash.  Berks finds that using Quickbooks and hiring a bookkeeper to manage the service is efficient.  “I want to make it as easy as possible for clients to pay me. Something nice about Quickbooks is the emails with invoices have a payment link that accepts credit cards and ACH payments.”

All in all, the solo attorney has many choices regarding flat fee, retainer or hourly billing; flexibility and transparency of fees; payment plans and receipt of payments.  Based on years of experience, relationships with clients, the legal environment and the competitive market, the fees and payment plan that a solo attorney sets today will likely evolve over time.

Janet Falk is the head of Falk Communications and Research in New York.  She provides media relations and marketing communications services to law firms and consultants.