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Category: Fee Allocation / Splitting

Class Counsel Earn $45M in $210M Salix Settlement

August 19, 2017

A recent Law 360 story by Dave Simpson, “Class Attys Score $44.6M in Fees in $210M Salix Settlement,” reports a New York federal judge signed off on $44.6 million in fees for attorneys who secured a $210 million settlement to end a proposed class action by Salix Pharmaceuticals Ltd. shareholders claiming the company misrepresented inventory levels to falsely inflate its stock price.

In approving the settlement, U.S. District Judge Kimba M. Wood greenlit a request from lead class counsel Bernstein Litowitz Berger & Grossmann LLP that 21.24 percent be set aside for attorney fees and an additional $1.9 million for litigation expenses.  In approving the fees, Judge Wood cited the complexity of the litigation, the quality of the counsel’s representation, and the risk attorneys assumed in taking the case on contingency.

“Lead counsel successfully challenged the motion to dismiss, vigorously prosecuted the action through a highly contested discovery process, and achieved a favorable settlement against a well-represented opponent,” Judge Wood’s decision said.  “Counsel all have ample experience in class action litigation.  Altogether, the high quality of representation warrants the requested fee award.”

The case originated from two securities lawsuits that were filed after Salix stock plunged by more than 30 percent following the company’s November 2014 disclosure that it had much more inventory of many of its drugs than management had previously claimed.  The suits were consolidated in March 2015, and the amended complaint alleged violation of the Securities and Exchange Act.

The parties agreed to a $210 million settlement in March for a class of shareholders estimated to be in the thousands.  The shareholders’ attorneys said in their proposed settlement that fees for a non-class action would typically range between 30 percent and 33 percent of the settlement amount, and argued their requested award of 21.24 percent of the settlement is “well within the range of percentage fees that have been awarded in the Second Circuit in securities class actions and other similar litigation with comparable recoveries.”  The requested fee is based on an agreement the firm reached with a lead plaintiff before litigation began, and should therefore be given a “presumption of reasonableness,” according to that filing.

The suit is In re Salix Pharmaceuticals Ltd., case number 1:14-cv-08925 in the U.S. District Court for the Southern District of New York.

Plaintiffs Firm Sues for Fees in Celgene $280M Settlement

August 16, 2017

A recent Bloomberg Big Law Business story by Max Siegelman, “Plaintiffs Firm Sues for Fees in Celgene $280M Settlement,” reports that court filings show plaintiffs law firm Grant & Eisenhofer is suing their former client and their former co-counsel from a $280 million settlement against pharmaceutical giant Celgene Corporation.

G&E claims it racked up a $7 million tab that has not been paid since the case was settled in July, and that it is entitled to a share of the contingency fee for the recovery effort.  Their original deal would have won the firm anywhere between $28 and $33 million, according to the complaint filed in California federal court.

In 2010, G&E filed a complaint against the pharmaceutical company Celgene on behalf of Beverly Brown, one of its former sales managers.  According to that complaint, the company pressured Brown and others to promote the drug Thalomid as a treatment for bladder, breast and brain cancer, despite lacking FDA approval for these uses.  As part of its marketing plan, the complaint alleged, Celgene dispatched over 100 “agents,” to hospitals and doctors offices around the country to aggressively push the drugs and their untested results.

The case was settled for $280 million in July, 2017.  Most of the settlement is earmarked for the federal government, 28 states and Washington D.C.  The payment is equivalent to about two weeks worth of sales of Revlimid, which generated $6.97 billion in revenue for Celgene last year, according to data compiled by Bloomberg News.

G&E is suing Brown, California firm Bienert, Miller & Katzman, and South Carolina based Richard Harpoolitan on the grounds that those firms and a former G&E director Reuben Guttman, poached Brown as a client after Guttman left the firm.  They are suing for breach of contract, intentional interference with contract, quantum meruit and declaratory relief in the U.S. District Court in the Central District of California.

The claims stem from a frayed relationship between the firm and Guttman, who took on the plaintiff Brown as a client in 2009, according to the complaint.  He left the firm in early 2015 and shortly after, Brown replaced the G&E legal team with Guttman and another former lawyer from the firm who later started a firm with Guttman called Guttman, Buschner & Brooks PLLC.

Despite the switch, G&E claims it should be compensated for the work it performed on behalf of Brown in the case.  According to the G&E complaint, whistleblowers typically receive 25 to 30 percent of the settlement.  Given the $280 million settlement with Celgene, that means Brown could receive anywhere from $70 to $84 million as a whistleblower “bounty,” some of which will go to her legal team.  According to G&E, their original deal with Brown would have won the firm a 40 percent contingency fee — anywhere between $28 and $33 million.

Fee Dispute Between Firms in SAC Capital Case

August 2, 2017

A recent New York Law Journal story by Christine Simmons, “Reed Smith Battles Rival Firms Over Fees, Conflicts in SAC Capital Case,” reports that two plaintiffs firms are urging New York judges to deny Reed Smith's claim to $6.75 million in attorney fees for its work as co-counsel in a securities class action, claiming the traditionally defense-side firm misled them in stating it was free from conflicts.

Wohl & Fruchter, a four-attorney firm that was class counsel with Pomerantz, contends Reed Smith should not be allowed any portion of a $27 million attorney fee award obtained in May in the class action against SAC Capital Advisors and other defendants.  "No reasonable attorney would have supported Reed Smith's continued representation of the plaintiffs," said the class counsel firms, represented by Paduano & Weintraub in the fee dispute, in explaining why the firm was terminated.

The fee dispute became heated in June when Reed Smith filed a lawsuit in Manhattan Supreme Court against Wohl & Fruchter and name partner Ethan Wohl, alleging tortious inference with a contract and unjust enrichment.  Reed Smith claims that Wohl & Fruchter, when looking for co-counsel, realized that it was a small firm "overmatched by the resources available to the SAC defendants," represented by Paul, Weiss, Rifkind, Wharton & Garrison, Willkie Farr & Gallagher, Goodwin Procter and Bracewell.

Under its engagement letter, Reed Smith said it immediately committed significant resources to the SAC action.  And soon after Reed Smith filed notices of appearance in the case, the SAC defendants reached out to Wohl for settlement discussions, Reed Smith said.  "Reed Smith's appearance was the obvious catalyst for the settlement discussions, which proved to be successful," the firm claims.

But Reed Smith asserts that when counsel for the SAC defendants at Paul Weiss mused about a possible conflict involving Reed Smith before Southern District Judge John Koeltl, the Wohl firm saw an opportunity to eliminate Reed Smith.  "[Wohl] intentionally exploited Paul Weiss' statements in order to malign Reed Smith and to induce the lead plaintiffs to terminate the engagement agreement," Reed Smith said.

Wohl and his firm deliberately blocked and excluded Reed Smith from any interactions with the lead plaintiffs or opposing counsel in the SAC case, Reed Smith claims.  Reed Smith's engagement agreement states if the firm is terminated for any reason other than good cause," Reed Smith will continue to be entitled to the contingent fees," the firm notes.

Reed Smith was originally represented in the fee dispute by Marc Kasowitz at Kasowitz Benson Torres.  Earlier this month, Dechert partners Gary Mennitt and Andrew Levander replaced Kasowitz as Reed Smith's counsel.  Hitting back, the Wohl firm has moved to dismiss Reed Smith's case in state court.  It also brought a motion in the federal securities case last week, urging Koeltl to deny the fee claims and enjoin the state lawsuit.

Wohl and Pomerantz said Reed Smith should be barred from asking for fees because it chose not to apply for fees before the federal court and because its claim is too late.  The firms argue Reed Smith represented the plaintiffs "for less than a week," and the firm was dismissed after admitting it was not free from conflict.  "Its conflicts of interest and lack of candor fully justified class counsel's determination that it should be terminated," they said.

Investor Rips Fee Request in $100M Halliburton Settlement

August 1, 2017

A recent Law 360 story by Jon Hill, “Investor Rips Atty Fee Requests to $100M Halliburton Deal,” reports that an investor representing Halliburton Co. shareholders in a $100 million settlement with the company over its asbestos liability disclosures has slammed attorneys’ fees requests from two law firms previously involved in the case, telling a Texas federal court that their work provided no meaningful benefit.

Former co-liaison counsel Federman & Sherwood and Kilgore & Kilgore PLLC have asked the court to award them attorneys’ fees of more than $333,000 combined, but lead plaintiff The Erica P. John Fund Inc. argued that the firms do not deserve to be compensated.  “Neither Federman nor Kilgore conferred any independent benefit upon the class and both firms had a role in work that was detrimental to the class,” the fund said.

The court granted preliminary approval in March of the $100 million settlement with oil services company Halliburton, marking the beginning of the end for what had become one of the longest-running class actions in U.S. history.  In connection with the settlement, class counsel Boies Schiller Flexner LLP and Kahn Swick & Foti LLC told the court that they would seek a combined fees award equivalent to a third of the settlement fund — more than $33 million — plus reimbursement for nearly $6.3 million in expenses for their decade of work litigating the suit.

But before that request was formalized in a motion filed by the EPJ Fund earlier this month, Federman and Kilgore filed their own bids for attorneys’ fees of more than $200,000 and $132,000, respectively.  The amounts were reasonable for the more than 300 hours that each firm clocked in efforts on behalf of the class since 2002, the firms argued. Both had served as co-liaison counsel to Schiffrin & Barroway LLP until that firm withdrew as lead counsel in 2005, at which point Kilgore continued on as local counsel for another two years.

But the EPJ Fund has opposed these fee requests, contending that both firms were supporting players and have not met the high burden of proof necessary for non-lead counsel to demonstrate the benefits they created for the class and overcome a lead plaintiff’s objections.

According to the fund, Federman has identified no specific beneficial tasks in its fee application and has even incorporated in its tally the time it spent on a previous fee application to accompany a rejected 2004 settlement proposal of $6 million that it supported.  This proposed settlement was a “disaster” that delayed recovery for the class by more than a year, the fund claimed.

“By including fee-related work pertaining to the failed $6 million settlement in its requested lodestar, Federman undermines the credibility of its entire fee application,” the fund said.  Kilgore’s request fared no better in the estimation of the fund, which noted that the firm “unbelievably” counted in its fee request the time it spent helping to oppose the fund’s effort in 2006 to replace the then-co-lead counsel.  These former co-lead counsel have “tellingly” not asked the court for fees, the fund said.

“That Kilgore seeks compensation for work that was indisputably detrimental to lead plaintiff and the class speaks volumes regarding its fee request,” the fund told the court.  The fund said it is not opposed to reimbursement of reasonable expenses incurred by either Federman or Kilgore, which are seeking to recover expenses of more than $18,000 combined.

In a separate filing, Federman objected to the class counsel’s attorney fee application on the grounds that Boies Schiller and Kahn Swick have not provided their “contemporaneous and detailed time and expense records” despite a request sent by both certified mail and email.

Such records are necessary so that the court and all parties involved “can make an informed and complete evaluation as to the reasonableness of the fee and expense award requested by class counsel,” Federman argued, urging the court to require disclosure of these reports before making any final decision on their award application.

But the EPJ Fund shot back in a footnote in its filing Monday, saying, “Federman’s request, like the firm’s fee quest, is without basis.”  The court will determine whether to approve the attorneys’ fee and expense award applications at or after a settlement fairness hearing scheduled for July 31.

Attorneys Net $8.75M in Barclays Foreign Exchange Misuse Settlement

July 28, 2017

A recent Law 360 story by Melissa Daniels, “Barclays Forex Rigging Settlement Nets $8.75M in Atty Fees,” reports that counsel for Axiom Investment Advisors LLC will receive $8.75 million from a $50 million settlement with Barclays Bank LLC in a New York federal court action filed over purported misuse of a foreign exchange trading system to boost bank profits.  The fee award equals 17.5 percent of the settlement, which will be divvied up among four firms: Scott + Scott LLP and Korein Tillery LLC, who are class counsel, as well as Hausfeld LLP and Nussbaum Law Group PC.

“Class counsel shall allocate the attorneys’ fees awarded among plaintiff’s counsel in a matter that they, in good faith, believe reflects the contributions of such counsel to the institution, prosecution and settlement of the action,” U.S. District Judge Lorna G. Schofield said in a five-page order.  The plaintiffs' attorneys will also receive more than $339,000 in reimbursements, the order said.

The settlement, announced in February 2016, ended Axiom Investment Advisors LLC’s class action allegations that Barclays used its Last Look system, which monitors foreign exchange trades, to put a slight hold on clients' foreign exchange orders so it could determine whether the price a customer sought to pay was profitable for the bank.  It would then enter a different price or cancel trades with little or no explanation, Axiom said.

The firms who worked on the case said in their request for fees they put in more than 5,100 hours on the case.  They also said the requested fee amount was actually below the typical amounts awarded in comparable cases in the Second Circuit's courts.  Axiom will receive a service award of $10,000 from the settlement fund, according to Judge Schofield’s order.

Axiom filed its suit in late November 2015, less than two weeks after Barclays was hit with a $150 million fine by the New York Department of Financial Services for misconduct using the Last Look system, forcing it to fire its global head of electronic fixed income, currencies and commodities automated flow trading.

The settlement class includes anyone who was affected by these practices between June 1, 2008, and the date the settlement is preliminarily approved, as long as they lived in the U.S. or placed an order using BARX, the bank’s electronic trading platform.  Judge Schofield’s order said notices have been mailed to 1,373 potential settlement class members about the proposed 17.5 percent fee award.

The case is Axiom Investment Advisors LLC v. Barclays Bank PLC, et al., case number 1:15-cv-09323, in the U.S. District Court for the Southern District of New York.