Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Allocation / Fee Apportionment

$110M Fee Request Trimmed in $650M Facebook Biometric Settlement

February 26, 2021

A recent Law 360 story by Lauren Berg, “$650M Facebook Privacy Deal OK’d, $110M Atty Fees Trimmed,” reports that a California federal judge praised a $650 million settlement resolving claims that Facebook's facial recognition technology violated Illinois users' biometric privacy rights, calling it a "landmark result," but he trimmed the $110 million requested attorney fees to $97.5 million.  U.S. District Judge James Donato gave his final stamp of approval to the multimillion-dollar deal resolving claims under the "new and untested" Illinois Biometric Information Privacy Act, calling it a major win for consumers in the "hotly contested" area of digital privacy.

The settlement will put at least $345 each into the hands of 1.6 million class members who filed claims, according to the order, and Facebook has agreed to set its "face recognition" default setting to "off" for all global users and delete all existing and stored face templates for the class members.

But Judge Donato also cut back the $110 million in attorney fees that class counsel at Edelson PC, Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP asked for, saying the $650 million size of the settlement fund is not a typical case that warrants the use of a 25% contingency fee as a benchmark.  The judge said in this case it would be more appropriate for him to adjust the benchmark percentage or employ the lodestar method instead to avoid "windfall profits" for class counsel.

"To be clear, the court recognizes the skill, dedication and hard work class counsel brought to this case and their clients," Judge Donato said.  "The fact that the court cannot in good conscience award fees on the presumption of a 25% contingency cut should not be read as detracting from that in any way."

"It is simply a matter of fairness and proportion," the judge said.  He said a 25% presumption is just too big to be applied to a settlement fund as large as this one.  The class counsel spent more than 30,103 hours on the case, according to the order — including 9,577 hours by Robbins Geller, 8,103 hours by Labaton Sucharow and 12,423 hours by Edelson.

The judge adjusted the percentage rate from 16.9% of the settlement fund to 15%, giving the class counsel $97.5 million in attorney fees, according to the order.  The judge said he also cross-checked that number with a lodestar calculation and found the award to be more reasonable than the one requested.  But the judge said 15% of the attorney fee award will be held back pending further order.  He granted the class counsel's request for $915,000 in expense reimbursement, finding sufficient documentation, according to the order.

The judge also reduced the incentive awards for the three class representatives — Nimesh Patel, Adam Pezen and Carlo Licata — from the requested $7,500 each to $5,000 each, saying that even though the requested amount would be a "minuscule proportion" of the settlement, it's still too high in comparison to the amount other class members will receive.

Judge Donato praised the parties' "proposed array of innovative ways to reach class members" and notify them of the settlement, including by direct email, Facebook's newsfeed notifications, publication in Illinois newspapers, a settlement website and an internet ad campaign.  "These were robust measures, and they paid off in spades," the judge said.

Lead Counsel Defends $800M Fee Request in Roundup MDL

February 19, 2021

A recent Law.com story by Amanda Bronstad, “Lead Counsel in Roundup MDL Defend $800M Fee Request,” reports that lawyers defending as much as $800 million in proposed common benefit fees from settlements with Monsanto insisted that the law firms objecting to their request had painted “an incomplete and inaccurate picture” of the Roundup litigation.  More than a dozen law firms had objected to the fee request, with one of them calling the request a “money grab” by lead counsel in the multidistrict litigation.  In a response, lead counsel insisted that the award was justified.

They said Bayer, which owns Monsanto, would not have entered into settlements last year but for their work, which included obtaining three Roundup verdicts.  “The pleadings and affidavits submitted by the objectors present an incomplete and inaccurate picture of the Roundup litigation,” they wrote.  “The simple fact remains that all Roundup attorneys and plaintiffs have benefitted from MDL leadership’s efforts—irrespective of whether or where their cases are filed or unfiled and whether their individually retained attorneys have cases pending in the MDL, have formally availed themselves of MDL work product, or have entered into a formal participation agreement.”  Lead counsel are Robin Greenwald, of Weitz & Luxenberg in New York; Michael Miller, of The Miller Firm in Orange, Virginia; and Aimee Wagstaff, of Andrus Wagstaff in Lakewood, Colorado.

Bayer announced in June that it planned to settle about 125,000 Roundup claims for an estimated $10.9 billion, which included a class action settlement that lawyers later withdrew.  The settlements were not part of a global agreement, however.  Lawyers, including lead counsel, conducted their own negotiations, which have been confidential, and many cases remain unsettled.

In a Jan. 11 motion, lead counsel sought an 8.25% assessment on Roundup settlements to pay for fees and expenses spent on the “common benefit” of all lawyers.  U.S. District Judge Vince Chhabria of the Northern District of California, overseeing the Roundup multidistrict litigation, filed a Jan. 26 order asking lawyers to address four questions about the holdback request, including whether it is even necessary and, if so, how much, and whether it should be lower than the proposed 8% in fees and 0.25% in expenses.  He also asked whether he could issue a holdback “without understanding how much of a premium co-lead counsel has already received on their settlements compared to the typical settlement.”

Several firms criticized the request, particularly on top of an estimated $2 billion in attorney fees they claimed that lead counsel made from contingency fee contracts associated with their own cases, which settled last year for greater amounts than Monsanto is now offering.

In their response, lead counsel noted that the proposed holdback includes an assessment on their own cases, and would compensate about 20 firms not in leadership.  They also said that the assessment pertained only to about 400 law firms that had done one of the following: had at least one case pending in the multidistrict litigation, signed a participation agreement, used “work product” in the multidistrict litigation, or sought help from Kenneth Feinberg, the special master, in settlement negotiations.

“The circumstances of this litigation warrant an expansion of the current scope of the holdback to encompass the entire universe of settlements, because all Roundup plaintiffs have undoubtedly benefited from the efforts and expenditures of common benefit attorneys,” they wrote.  “Indeed, the extensive work that this court has conducted in issuing opinions and managing the litigation have had a direct effect on each and every Roundup case or claim, irrespective of whether or where an attorney might have filed his or her cases.”  Many of the objecting firms had insisted they did not use discovery in the multidistrict litigation and that lead counsel purposely kept the experts to themselves.  Lead counsel countered that they had made work product available on a firm website and provided a “trial package” and experts.

Addressing the objections of specific firms, lead counsel said that Beasley Allen had a pending case in federal court that is part of the trial pool and had coordinated with Weitz & Luxenberg, one of the lead counsel firms, to obtain experts in its state court cases.  Beasley Allen also had asked for an 8% holdback in the multidistrict litigation against Johnson & Johnson over talcum powder, they wrote.  They also attacked the objections of The Lanier Law Firm as “untrue and baffling” given that the firm reached out to lead counsel to retain their experts for upcoming Roundup trials in Missouri state courts.  The Lanier Law Firm also had sought a 10% holdback in multidistrict litigation over DePuy Orthopaedics’ Pinnacle hip implants.

In an email, W. Mark Lanier called the comparison “apples and oranges,” given the amount of work done in the hip implant cases, and disputed claims that he used experts from the multidistrict litigation.  “I find the pleading and allegations a bit baffling as well,” he wrote. “I personally had been told most every expert was being pulled by MDL leadership, and non-MDL cases would have to find their own experts.”  Chhabria has scheduled a March 3 hearing on the fee dispute.

Apple Challenges $87M Fee Request in iPhone Settlement

February 18, 2021

A recent Law 360 story by Dorothy Atkins, “Apple, Ky. AG Rip Class Attys’ $87M Fee Bid in IPhone Deal,” reports that Apple and the Kentucky attorney general joined objectors in urging a California federal judge to reject class counsel's $87.7 million fee bid for cutting a $310 million deal resolving claims over slowed iPhones, slamming it for being millions above the benchmark and padded by unsupported rates.  During a three-hour hearing, Christopher Chorba of Gibson Dunn & Crutcher LLP, counsel for Apple, argued that awarding the fee request would set a "very bad precedent" because class counsel overlitigated the case and shouldn't be awarded for its conduct.

He also said it would result in a net reduction of between $19 and $20 for class members who would otherwise receive more than $100 per claim.  Chorba also argued that class counsel failed to go through the factors warranting its large fee request and that its lodestar calculation is unsupported by the billing submissions.  "We're not saying they shouldn't get any fees," Chorba said.  "The fees are just so outside the norm and so in excess of what would be appropriate."

If approved, the settlement would resolve dozens of consumer protection lawsuits that were filed in 2018 after Apple admitted to issuing software updates that slowed certain iPhones.  The suits allege that Apple designed its software updates to slow down some phone models, nudging consumers to buy newer iPhones.

In May, Apple reached a deal to settle the case for $500 million but objected to the plaintiffs' request for $87 million in attorney fees, asking the court to cut it down by at least $7 million.  Since the settlement was announced, dozens of people have objected, arguing that it doesn't do enough for class members and doles out too much to class attorneys.  In December, the federal government also made clear in a filing that it does not object to the proposed settlement itself but views the fee request as over the top.

During a hearing on the deal's final approval, class counsel Mark Molumphy of Cotchett Pitre & McCarthy LLP argued that the fee award is warranted because the case was exceptional and the risks were great, particularly since the plaintiffs' firms were working on a contingency basis.  He also noted that it's the "first and largest" settlement of the Computer Fraud and Abuse Act claims at issue and that class counsel secured significant recovery that's nearly half of the potential $1 billion damages at issue.

Molumphy argued that a 28% fee award is supported by a lodestar cross-check for the three years of litigation, which included "World War III" discovery, 18 motions, including a motion to dismiss, and what he called Apple's unreasonable litigation demands.  "Frankly there was no roadmap.  There's not a case in which there was a government investigation or plea.  We were the leaders in this case," he said.  "We created a roadmap for others, including government investigation that followed us."

But Apple, the state of Kentucky and multiple class members objected to the size of the fee award and how class counsel proposed to calculate it.  Four attorneys representing objecting class members argued that the 3.5% claims rate was "puny" and the fee request should not be based on the initial $500 million deal because Apple is only paying $310 million due to the low claims rate.

The objectors also argued that a fee recovery of between 10% and 18% is more in line with case precedent, and they slammed class counsel for not submitting detailed billing.  They said the information class counsel provided appears to inflate the hourly rate of staff attorneys to $350 per hour when those attorneys likely received less than $50 per hour for their work and that it appeared to include work by dozens of attorneys who weren't authorized to bill for their time.

John Pentz, counsel for two objectors, pointed out that the alleged billing padding caused U.S. District Judge Lucy Koh to "hit the roof" when she presided over Anthem's $115 million data breach deal, and noted that of the eight contract attorneys billed by Kaplan Fox & Kilsheimer LLP only one is listed on the firm's website.  He also said class counsel didn't explain why those who first filed lawsuits in state court were entitled to a cut of the fees.

Another attorney, Robert William Clore of Bandas Law Firm PC, argued on behalf of objector Alexis West that based on class counsel's own information, the aggregate potential damages at issue were over $4 billion, not $1 billion, and the $310 million represents only 5% of the potential $4 billion damages.

Philip R. Heleringer of the Office of the Kentucky Attorney General echoed other objectors' comments and emphasized that the court has a fiduciary duty to step in for absent class members in situations in which there is a "tension" between class counsel and class members.  Heleringer pointed out that in In re. Yahoo litigation, a court rejected a fee request that had a $10 million discrepancy between the lodestar and fee request, but class counsel's fee request in this case is five times larger than the lodestar.

Heleringer also argued that the settlement does not guarantee class members will receive $310 million.  He said the court should use base lodestar without a multiplier.  He added that there are no rare or exceptional circumstances here and that it's not enough that class counsel is going up against a well-heeled, well-resourced opponent to warrant a multiplier or that it's fighting on a contingent basis, particularly since 81 firms initially filed lawsuits over it.

Litigation Funder Seeks Share of Attorney Fees

February 16, 2021

A recent Law 360 story by Carolina Bolado, “Litigation Funder Wants Cut of $350M Shire Deal,” reports that law firm lender Counsel Financial Services asked a Florida federal judge for permission to intervene in a dispute over divvying up attorney fees from a $350 million whistleblower settlement with biotech company Shire, alleging the law firm Barry A. Cohen PA should be forced to direct any fees it receives to pay back a $43.8 million line of credit.

Counsel Financial says it loaned money to the Cohen firm in February 2009 in exchange for a secured interest in the firm's assets, which includes legal fee proceeds.  In January 2019, the company obtained a $43,778,684 judgment against the Cohen firm, which previously represented whistleblower Brian Vinca in his suit against Shire.

"Counsel Financial thus has an interest in the legal fees that will be awarded to [the Cohen firm] in this action," the company said in the motion.  "Consequently, Counsel Financial seeks to intervene to ensure that its interest in the legal fees obtained by [the Cohen firm] in connection with this matter are rightfully directed by this Court to Counsel Financial directly from the court registry."

The motion is the latest development in a fight over fees from the $350 million settlement, which was announced in August 2016 and resolved claims stemming from Shire's sales and marketing practices around Dermagraft, a skin substitute the company picked up when it acquired Advanced BioHealing Inc. — now known as Shire Regenerative Medicine Inc. — as part of a $750 million deal in 2011.  Vinca and co-plaintiff Jennifer Sweeney filed the first of the six False Claims Act suits against Shire that led to the settlement.

Kevin J. Darken, who represents Vinca's former counsel, says Vinca's current attorneys, Noel McDonell of Macfarlane Ferguson & McMullen and Bryen Hill of Mahany Law, have tried to cut him and the Cohen firm out of a fee award.  Darken has asked the court to disqualify McDonell and Hill for allegedly using stolen confidential emails to challenge the charging lien filed by Darken, Cohen and Saady & Saxe PA for a cut of the attorney fees.

McDonell and Hill have accused Darken and Kevin M. Cohen, the representative for Barry Cohen's estate, of conspiring to a fee-splitting scheme of the proceeds.  Vinca, who fired his attorneys in March 2018, is suing Darken, the Cohen firm and Saady & Saxe for malpractice, claiming they cost him the full whistleblower's cut of the Shire settlement.  Vinca claims his former counsel's failures forced him to share the whistleblower award of the Shire settlement with the five other relators who filed FCA suits after he did.

Generally, the first whistleblower to file gets about 20% of the government's recovery, and any subsequent whistleblowers do not receive a cut. But in this case, U.S. District Judge James Moody Jr. decided to divvy up the proceeds, in part because of deficiencies in the initial eight-page complaint from Vinca and Sweeney, according to McDonell.  Vinca and Sweeney shared more than $50 million from the settlement, while the other whistleblowers shared approximately $30 million.

The six whistleblower lawsuits that led to the settlement all alleged misconduct by Shire from 2007 through the beginning of 2014, including that it paid illegal kickbacks to get health care providers to use or overuse Dermagraft, marketed Dermagraft for uses not approved by the U.S. Food and Drug Administration, inflated the price of the drug and spurred the coding of Dermagraft-related reimbursement claims for payouts higher than what was appropriate.

McDonell told Law360 that Counsel Financial's claim has no bearing on this lawsuit because Vinca was not a party to the financing contract between Counsel Financial and the Cohen firm.  "As Magistrate Judge Porcelli noted in June of 2019, the matter at issue is the merits of a charging lien filed against relator Brian Vinca by former counsel, and to what extent compensation is appropriate," McDonell said.  "Accordingly, on behalf of Brian Vinca, we are confident that CFS has, as Judge Porcelli so aptly put it, 'no dog in this fight.'"

Fee Dispute Looms Over $800M in Fees in Roundup MDL

February 5, 2021

A recent Law.com story by ‘Money Grab’: Objections Fly Over $800M in Fees for Lead Counsel in Roundup MDL”, reports that lawyers are pushing back against a request in the multidistrict litigation over Monsanto’s Roundup pesticide to turn over portions of their settlement amounts to provide lead counsel with what some estimate to be $800 million in attorney fees.  More than a dozen firms with thousands of lawsuits across the country, including Beasley Allen, The Lanier Law Firm and Gibbs Law Group, filed objections to a Jan. 11 motion that lead counsel filed asking for an 8.25% assessment on their Roundup settlements to pay for fees and expenses spent on the “common benefit” of all lawyers.

Many said the holdback for so-called common benefit fees equates to $800 million for lead counsel—what one attorney called a “colossal amount.”  “This court should not condone what is essentially nothing more than a money grab,” said Karen Barth Menzies, of Gibbs Law Group in Oakland, California, who filed an objection on behalf of her firm and two others.  Menzies insisted that the $800 million is on top of an estimated $2 billion in attorney fees that lead counsel made from contingency fee contracts associated with their own cases, which they settled last year for greater amounts than Monsanto is now offering.

In June, Bayer, which now owns Monsanto, announced it planned to settle about 125,000 Roundup claims for an estimated $10.9 billion.  The agreements were not part of a global settlement, however.  Lawyers have conducted their own negotiations, which have been confidential, and many cases remain unsettled.  Many lawyers objecting to the common benefit fee assessment argue that lead counsel settled their own cases for much more than everyone else.

“Now you have a defendant who’s offering people $45,000 for a cancer case,” said Hunter Shkolnik, of Napoli Shkolnik.  His New York firm filed an objection with appellate attorney Thomas Goldstein, of Goldstein & Russell in Washington, D.C.  “And there was no common benefit tax associated with those initial billions of dollars in cases that were settled,” Shkolnik said.  “They intentionally did not tax their own cases and put them into the fund.  You now have the next series of cases settling at much smaller amounts, and they’re seeking 8% common benefit.”

Lead counsel—Robin Greenwald, of Weitz & Luxenberg in New York; Michael Miller, of The Miller Firm in Orange, Virginia; and Aimee Wagstaff, of Andrus Wagstaff in Lakewood, Colorado —declined to comment about the objections.  They are due to respond Feb. 18.  In their request, lead counsel noted that the proposed holdback, of 8% in fees and 0.25% in expenses, includes an assessment on their own cases.

Meanwhile, U.S. District Judge Vince Chhabria of the Northern District of California, overseeing the Roundup multidistrict litigation, has his own questions—including whether a holdback is even necessary and, if so, how much it should be.  On Jan. 26, he asked lawyers to address four questions he had about the lead counsel’s request, including whether he could issue a holdback “without understanding how much of a premium co-lead counsel has already received on their settlements compared to the typical settlement.”  He also asked, “If a hold-back is truly warranted, why shouldn’t it be much lower than the 8% requested by co-lead counsel?”

The objections are the latest dispute among plaintiffs lawyers over common benefit fees, used to reimburse lead counsel in multidistrict litigation for costs and fees associated with discovery, trials and settlement.  Much of that work ends up benefiting lawyers not in leadership positions in the event they want to pursue trials or settlements of their own cases.

In their fee motion, however, lead counsel emphasized that six firms, including their own, did most of the work in the Roundup litigation, including in state courts.  Other firms, they noted, did not want to take the risks early on in the litigation.  “The world was watching this litigation; there can be no doubt that it was high risk for contingency fee lawyers, which explains why all the heavy lifting and lion’s share of litigation costs and risks were left to the MDL leadership,” they wrote.

A “tsunami of advertising” following their big wins, such as the Roundup verdicts in 2018 and 2019, led to thousands more cases filed by “law firms that hedged their bets and previously sat on the sidelines,” they wrote.  “That argument doesn’t at all describe us,” said Rhon Jones, of Beasley Allen in Montgomery, Alabama, who filed an objection to the holdback.  “We very much want to try our own cases and work our own cases, so I don’t see where any of that applies to Beasley Allen.”

Many of the objectors, like Beasley Allen, have cases in state courts that they say are not subject to multidistrict litigation—a response to one of Chhabria’s questions asking whether the holdback should apply to state court cases.  Jones estimated that as much as 90% of the cases over Roundup are in state courts. His own firm, he said, has only six cases in the multidistrict litigation, but 2,000 in state courts, mostly in Missouri.

Many firms argued that Chhabria, as a federal judge, did not have jurisdiction over state court cases, particularly where plaintiffs firms that did not sign any participation agreements with lead counsel.  “We’re not saying they didn’t do good work—there is going to be a common benefit order in the Roundup case,” said Shkolnik, who said he has 100 Roundup cases in the multidistrict litigation but several thousand lawsuits in state courts in Missouri.  “I just question whether or not the court has jurisdiction to apply to purely state court cases.”

Not only did some law firms claim they did not use discovery obtained in the multidistrict litigation, but they insisted that lead counsel purposely kept the experts to themselves and attempted to get other lawyers to refer cases to them.  Several firms submitted declarations, including Mikal Watts, of Watts Guerra in San Antonio, and W. Mark Lanier, of The Lanier Law Firm in Houston, stating they not request help from lead counsel in the multidistrict litigation.  Watts and Lanier both noted, however, that leadership also did not offer them “a trial packet, discovery documents, transcripts, or any other MDL work product,” according to their declarations.

In his objection, filed on behalf of her own firm and seven others, Arati Furness, of Dallas-based Fears Nachawati, wrote that lead counsel “refused to help any of the Roundup victims they do not represent,” and some even solicited referrals from other firms “to enhance their own settlements.”  “In some instances,” she wrote, lead counsel “attempted to push firms into settlements with threats that they were going to be left out in the cold with no experts, no depositions, and no trial package.”  Chhabria has scheduled a March 3 hearing on the fee dispute.