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Category: Fee Allocation / Splitting

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.

NY Court: Attorney Fees Controlled by Circumstances and Equities

September 6, 2019

A recent New York Law Journal story by Jason Grant, “In Fee Dispute Between Personal Injury Firms in Settled Case, Lower Court’s Award, and Discretion, Stands,” reports that a law firm pursuing a contingency fee dispute against a successor law firm in a personal injury action that settled for $50,000 was rightfully awarded only $1,500 in fees, despite its argument to a lower court that it was “entitled to 40% of the net contingency fee recoverable,” a state appeals court has ruled.

“The issue of apportionment of an attorney’s fee is controlled by the circumstances and equities of each particular case, and the trial court is in the best position to assess such factors,” wrote an Appellate Division, Second Department panel, while citing Rodriguez v Ryder Truck Rental, in an opinion that underscored the trial court’s latitude and discretion in arriving at an appropriate fee apportionment where there is a fee dispute between law firms retained on contingency.

The unanimous panel also noted in the opinion that “’when there is a fee dispute between the current and discharged attorneys for the plaintiff in an action to which a contingent fee retainer agreement applies, [t]he discharged attorney may elect to receive compensation immediately based on quantum meruit or on a contingent percentage fee based on his or her proportionate share of the work performed on the whole case,’” citing Ficaro v. Alexander, quoting Wodecki v. Vinogradov.

In the case before the panel, the originally retained law firm in the underlying motor vehicle accident-based suit, the Law Offices of Andrew Park, moved in March 2018 for a determination of appropriate attorney fees and had “elected to receive a contingent percentage fee at the conclusion of this action,” the panel said.  The firm’s motion came nearly a year and a half after the underlying case, Pyong Woo Ye v. Ebrahem Izak Pasha, had settled.

Panel justices Reinaldo Rivera, Hector LaSalle, Betsy Barros and Angela Iannacci wrote in their opinion that “‘an award of … reasonable attorney’s fee[s] is within the sound discretion of the Supreme Court based upon such factors as the time and labor required, the difficulty of the issues involved, the skill required to handle the matter, and the effectiveness of the legal work performed,’” citing Wodecki v. Vinogradov, quoting Juste v. New York City Tr. Auth.

They added, “Here, Andrew Park elected to receive a contingent percentage fee at the conclusion of this action.  Given the time and labor expended by each attorney in the action, the skill required for the various work performed, and the effectiveness of each counsel’s legal work, we agree with the Supreme Court’s determination to award Andrew Park attorneys’ fees in the sum of $1,500.”

Judge: Special Fee Master’s Attorney Fee Analysis 'Flawed' in Syngenta MDL

August 28, 2019

A recent Law.com story by Amanda Bronstad, “’Structural and Procedural Flaws’ Foul Up Fees in Syngenta Settlement,” reports that judges in three states have divvied up more than $440 million in attorney fees so far in the litigation over Syngenta’s genetically modified corn, but their orders have prompted multiple appeals and an unusual rebuke from the bench. 

U.S. District Judge John Lungstrum of the District of Kansas, who is overseeing the multidistrict litigation against Syngenta, granted $503 million in common benefit fees last year as part of a $1.5 billion class action settlement.  He divided the fees into four pools, three of which focused on cases in specific venues: Kansas, Minnesota and Illinois.  Lungstrum allocated nearly $247 million in fees to 59 firms handling the multidistrict litigation in Kansas but allowed judges in Minnesota and Illinois to decide which firms got how much in their own venues.

On Aug. 19, Chief U.S. District Judge Nancy Rosenstengel of the Southern District of Illinois, doled out more than $78 million for law firms in the Illinois cases but criticized the report and recommendation of special master Daniel Stack, whom she appointed in the case, as having “structural and procedural flaws.”

“Because the report and recommendation placed claimant numbers, expenses, and client acquisition costs at an equal footing with the hours actually expended in pursuit of the plaintiffs’ cause, the methodology does not accurately display the firms’ common benefit value,” she wrote.  “The methodology also carries the risk of blindly and disproportionately rewarding attorneys for marketing efforts, rather than work performed advocating for the benefit of the plaintiffs.”

She then slashed $23.4 million to Houston’s Clark, Love & Hutson and two other firms, Chicago’s Meyers & Flowers and Phipps Anderson Deacon, a San Antonio firm now called Phipps Deacon Purnell.  Stack had awarded those firms $61.6 million, or about 79% of the total fees in Illinois—an amount Rosenstengel called “grossly excessive.”

Rosenstengel’s criticism of Stack, a retired judge on the Madison County, Illinois, Circuit Court, got the attention of Cleveland-based Anderson Law Offices, which is appealing an allocation of $550 million in common benefit fees in the transvaginal mesh litigation.  Stack served as special master in that case, in which Clark Love, whose managing partner, Clayton Clark, served on the fee and cost committee, is set to receive more than $45 million in fees.

Rosenstengel’s order had “strikingly similar circumstances” to the mesh case, according to a filing by Anderson Law Offices before the U.S. Court of Appeals for the Fourth Circuit, and “presents a compelling example of how common benefit fee allocations should be closely scrutinized by the district courts, which plainly has yet to be conducted in this case.”

The Syngenta settlement, approved Dec. 7, resolved lawsuits alleging it sold genetically modified corn seed that China refused to import, causing about 600,000 farmers and other producers to lose billions of dollars.  Objectors represented by two lawyers, George Cochran of the Law Offices of George W. Cochran in Streetsboro, Ohio, and Robert Clore of Corpus Christi, Texas-based Bandas Law Firm, have appealed the settlement’s approval, including the $503 million in fees.  That award, which is one-third of the class action settlement fund, is far more than the average of 5% to 15% in deals involving more than $1 billion, they wrote.

“The unprecedented fees deprived the injured farmers of hundreds of millions of dollars that should have addressed their losses,” they wrote.  “Without a sizeable reduction in fees, approval of the settlement itself was error.”  In a response filed last month, lead plaintiffs counsel defended the settlement and the fees, noting that they advanced $31 million to fund the litigation.  “This was no ordinary class action but one with multiple forums that went to class trial—twice—and the size of the fund was directly related to the work of plaintiffs’ counsel, who imposed ‘unprecedented’ liability on the defendants,” they wrote.

In approving the common benefit fees, Lungstrum largely adopted the report and recommendation of special master Ellen Reisman of Reisman Karron Greene in Washington, D.C.  On March 20, Lungstrum allocated fees to specific firms in the Kansas cases, agreeing with the recommendations of co-lead counsel in the multidistrict litigation and rejecting two objections that questioned whether firms responsible for doling out the fees, including to themselves, had conflicts of interest.

Co-lead counsel were Stueve and Don Downing of Gray, Ritter & Graham in St. Louis; Scott Powell of Hare, Wynn, Newell & Newton in Birmingham, Alabama; and William Chaney of Dallas-based Gray Reed & McGraw.  Their four firms, plus Seeger Weiss, collectively received almost $215 million in fees.  On May 30, Hennepin County District Court Judge Laurie Miller divvied up nearly $118.3 million in fees to 188 law firms.  She also relied on co-lead counsel, which included Gustafson Gluek, Bassford Remele and Watts Guerra, which collectively stand to receive $87 million.

Watts Guerra is among the firms that have appealed the allocation orders to the U.S. Court of Appeals for the Tenth Circuit.  Watts Guerra initially sought $150 million in common benefit fees for itself and hundreds of other law firms that represented 57,000 farmers.  Mikal Watts, of Watts Guerra, to which Miller awarded $39.7 million in fees, declined to comment.

The Tenth Circuit abated the fee appeals pending Lungstrum’s final judgment following an allocation of $60.4 million in remaining fees to attorneys with individual clients, referred to in court documents as the “IRPA,” or individually retained private attorneys.  At issue in Rosenstengel’s order this month was Stack’s reliance on using a percentage, along with his “personal experience and observations,” rather than billing records of the law firms.  She also found that, although the Clark/Phipps group submitted 141,663 common benefit hours, more than any other firm, a “large portion” of the time was logged by anonymous employees and lacked records.

She instead awarded $24.2 million in additional fees to nine firms led by Heninger, Garrison & Davis, based in Birmingham, Alabama, which were “at the forefront of the Illinois Syngenta litigation.”  Stack had given those firms, called “The Garrison Group,” less than $9.7 million, or 12.4%, of the fees.

Seeger Weiss Targeted in NFL Concussion Fee Appeal

August 14, 2019

A recent Law 360 story by Ryan Boysen, “First Shots Fired in Seeger Weiss Concussion Fee Appeal,” reports that Seeger Weiss LLP has “hoarded” nearly $65 million for its work on the landmark NFL concussion settlement while punishing rival firms by docking their pay over perceived slights, all through an “improper process” that “lacked transparency and basic mechanisms of fairness,” according to the opening briefs in a contentious Third Circuit appeal.

The appeal was filed over a year ago, challenging an order by U.S. District Judge Anita B. Brody that created a $112.5 million common benefit fund to pay the 24 firms involved in bringing to fruition the uncapped concussion settlement, which has paid out nearly $660 million in claims since it was approved in 2015.  In opening briefs filed, two groups of law firms and retired football players led by Locks Law Firm and Lubel Voyles LLP took aim at Seeger Weiss’ role in divvying up that money.

The firms argued that Judge Brody essentially gave Chris Seeger carte blanche to award himself and other firms whatever he pleased, then rubber-stamped his decisions with hardly any oversight, violating constitutional due process obligations and binding precedent in the process.  Adding insult to injury, Locks Law said, all of the firms involved in the settlement were required to submit time records to Seeger while he determined their final awards, but to this day no other firm “has seen Mr. Seeger’s records” and “neither will this court: those records were never made part of the record below.”

“The court empowered Mr. Seeger … to reward himself and penalize rivals without any on-the-record scrutiny of his own time records,” Locks Law said.  “The court accepted Mr. Seeger’s [determinations] with only minor adjustments.”  “There is no justification for this manifestly inadequate process,” Locks Law added.

While ostensibly separate, the allegations in the briefs mirror complaints about the settlement as a whole, which many attorneys claim has been marred by a lack of transparency and a seeming willingness on Judge Brody’s behalf to improvise when deciding issues of considerable importance to the class of 20,000 retired players suffering from concussion-related brain damage the deal is meant to compensate.

The briefs also underscore the bad blood that’s been building up for years between Seeger and many of the other lawyers involved in the case.  To take just one example, Locks Law was terminated as class counsel alongside five other firms in May, a move many viewed as retaliation for its request that Judge Brody reconsider new medical guidelines that Locks Law had argued would make it harder for players to get paid.  Prior to that, Locks Law butted heads with Seeger directly when it sought to take over the implementation of the deal, arguing that Seeger was letting the NFL steamroll the players with “scorched earth” legal tactics.  Both of those motions were denied.

In a nod to those broader tensions, Lubel Voyles acknowledged in its brief that while “fee fights in class action litigation are, sadly, not rare,” it is rare “for the optics of a common benefit fee award to be so poor that even class counsel are divided on every aspect of the award, not just allocation of the money.”  Locks Law said that before Judge Brody made a decision on how to apportion the $112.5 million CBF, some firms recommended a special master be appointed for that purpose while Locks Law itself urged the creation of a committee.

Instead, Locks Law said, Judge Brody let Seeger make “the sole determinations of what work performed by other [leading firms] qualified for common benefit compensation in his petition.”  “The district court’s decision to delegate responsibility for that allocation to the largest recipient of those fees, co-lead counsel Christopher Seeger,” was an “improper process,” Locks Law said.

Locks Law said all of the firms applying for those fees had to submit their time sheets to Seeger for him to review, but Seeger’s own records were only ever reviewed in camera by Judge Brody.  After approving more hours for his firm than any other, and awarding a higher lodestar multiple — a common calculation used by law firms to determine fees in many instances — for those hours than to any other firm, Seeger ultimately received about $52 million of the initial $85 million payout from the fund.  His firm has since received $8 million more, and is waiting on Judge Brody to approve more than $4 million on top of that, for a total of nearly $65 million.

Meanwhile, Locks Law has received less than $5 million in common benefit fees thus far, despite representing more than 1,000 players in the litigation compared to Seeger’s 20-or-so clients, a common point of contention raised by many other lawyers involved in the case.  Locks Law says Seeger seized on an interview Gene Locks gave to Bloomberg Businessweek for a 2013 article that “infuriated the NFL” as a reason to justify the low lodestar multiple given to Locks Law, but in its brief the firm said that explanation was “not credible.”

Lance Lubel of Lubel Voyles claims he was cut out of the CBF fees entirely because he objected to the settlement, something he's done frequently, even though his earlier complaints about the deal’s language led to significant safeguards being put in place to protect retired players.  Lubel echoed many of Locks Laws’ concerns with Seeger’s role in the CBF distribution, but went one step further by also challenging a 5% holdback that’s currently applied to each successful monetary award and a 22% fee cap Judge Brody imposed on attorneys representing retired players.

The 5% holdback is being set aside, and Judge Brody has said she’ll rule at a later date on whether or not to tap those funds to continue paying CBF fees for the implementation of the 65-year-long program, money that would presumably only be available to Seeger after Judge Brody axed the other class counsel firms in May.  Lubel said the $112.5 million should be enough money to compensate the lead firms over the entire course of the settlement’s lifespan.

As to the 22% cap on attorney fees, which works out to 17% after the holdback is applied, Lubel said Judge Brody “has, in the spirit of helping class members, gutted their chances of qualifying for an award through the claims process.”  That’s because many retired players require expensive medical tests before they can qualify for an award, and the price of those exams can easily reach $10,000 or more.  For various reasons, a player’s attorney is often the only party willing and able to front those funds, Lubel said.  But artificially capping their fees at a relatively low 17% rate makes them less willing to spend that money to get the ball rolling on a client’s claim, he continued.

The case is In re: National Football Players' Concussion Injury Litigation, case number 18-2012, in the U.S. Court of Appeals for the Third Circuit.