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Category: Hourly Rates / Hourly Billing

UBS Balks at $3.2M in Attorney Fees in Whistleblower Action

December 12, 2018

A recent Law 360 story by John Petrick, “UBS Balks at Whistleblower Case’s $3.2M in Attys’ Fees,” reports that UBS Securities asked a New York federal judge to reject a “jaw-dropping” and “excessive” $3.2 million in attorneys' fees requested by a former analyst who won a $1 million verdict in his whistleblower trial under representation by Herbst Law PLLC and Broach & Stulberg LLP.  Attorneys for the bank argue that while the Sarbanes-Oxley Act allows for a winning party to recoup “reasonable” fees, this request is overstuffed with billable hours spent on claims that were lost at former analyst Trevor Murray's trial, duplication of work and extra time needed to make up for the attorneys’ own mistakes.

“The court should significantly reduce the amount of fees and costs that Murray’s counsel requests in order to prevent Murray’s counsel from reaping a windfall from their own limited success and inefficient, excessive work,” attorneys for UBS said in the motion.  Murray won only a “fraction” of what he sought at trial and his attorneys went after unreachable claims that a reasonable attorney would never have pursued, which prolonged the case needlessly, UBS attorneys said in the motion.

Murray won a nearly seven-year fight with the bank after he alleged he was fired in 2012 for complaining his superiors were pressuring him to falsely report better market conditions to boost UBS’ revenue numbers and impress investors.  The former analyst filed the lawsuit in February 2014, claiming UBS pressured him to skew his research to support the bank’s commercial mortgage-backed securities trading and loan origination activities, and to report better conditions in the market because that line of securities was a significant revenue source.

Murray allegedly told the bank’s head CMBS trader he was concerned certain CMBS bonds were overvalued, according to the suit.  But Murray was told not to publish anything negative about the bonds because they had been purchased by the UBS trading desk, he claimed.  He was fired shortly thereafter, just a month after receiving what he said was an excellent performance review.  UBS argued Murray was laid off as part of a mass downsizing sparked by the global financial downturn in 2011.

A jury in Manhattan awarded Murray nearly $1 million following a three-week trial, deciding he was fired for refusing to skew his research to impress investors, according to filings in the case.  The jury disagreed, however, on how long Murray would have remained at the firm, and awarded him much less than the amount of damages he was seeking.

Petitions filed last month asked for $638,950 to cover Herbst's attorneys’ fees and another $1,160.55 plus interest in costs, and $2.6 million to cover Broach & Stulberg's work in the case.  While Broach & Stulberg started out as lone counsel during several rounds of pretrial motions, Herbst “parachuted” into the case just a month before trial, applying to become lead counsel because it said it had more trial experience, according to the motion.

UBS attorneys maintained in their opposition motion that though a judge said Herbst could only assist in the case and not take over as lead counsel, for all intents and purposes, Herbst performed as if its attorneys were in fact lead counsel for the remainder of the case.

Herbst told Law360 his billable hours were reasonable and that he expects the court to think so, too.  "All of our firm’s time was spent on the Sarbanes-Oxley claim on which Mr. Murray prevailed and obtained what the jury decided was the full measure of his economic loss, special damages and compensatory damages," he said.  "Accordingly, based on UBS’s opposition, which does not attack our hourly rates and only presents picayune opposition to the hours we expended, our firm should hopefully receive a full lodestar recovery."

The case is Trevor Murray v. UBS Securities LLC et al, case number 1:14-cv-00927, in the U.S. District Court for the Southern District of New York.

U.S. Trustee Seeks More Attorney Fee Info in Sears Bankruptcy

December 7, 2018

A recent Law 360 story by Rick Archer, “US Trustee Faults Fee Info in Sears’ Request for IP Law Firm,” reports that the U.S. Trustee’s Office has asked a New York bankruptcy court to reject Sears Holding Corp.'s request to retain boutique law firm McAndrew Held & Malloy Ltd. to handle intellectual property matters unless it gets more information on what the firm will be paid.  In an objection, U.S. Trustee William Harrington said that, among other inadequacies, Sears’ request states McAndrews would receive a range of flat fees for a list of IP-related services but fails to assign specific payments to specific services.  “Accordingly, without more specific disclosure regarding the flat fee and the flat fee services, it is impossible to determine if the retention of McAndrews is reasonable,” he said.

Once one of the nation's largest retailers, Illinois-based Sears entered bankruptcy in October to reshape its physical footprint and reduce a debt load of more than $11 billion created by years of consecutive net revenue losses, store closings and unsuccessful efforts to adapt to a changing retail world.  After closing 142 of the 700 Sears and Kmart stores still in business, the company said it hopes to sell about 400 earnings-positive stores along with other potentially viable sites and assets including intellectual property while under Chapter 11 protection.

Two weeks ago, Sears applied to retain McAndrews, a Chicago-based IP firm, to handle trademark, copyright, patent and domain name issues.  The application said McAndrews has been Sears’ IP counsel for more than six years.  “By virtue of such prior engagement, McAndrews is intimately familiar with the facts and history of the company’s IP assets and coordinates the filing of IP applications in foreign jurisdictions.  The compensation proposed by McAndrews is at or below comparable rates in the IP market,” it said.

The application said Sears was proposing to pay a fixed fee of $43,750 a month, a flat fee of between $750 and $11,000 for a list of specific IP-related services, such as trademark and copyright registration, and an hourly rate for any other services.  The company also asked for permission to put $130,000 in retainers in trust to be paid to McAndrews in the event that it fails to pay any future invoices from the firm.

In his filing, Harrington said he was objecting on the grounds the application only gives the range of flat fees and does not give a specific fee for each of the specified services.  He also said the application “inexplicably” asks McAndrews be allowed to waive the requirement to file time records in six-minute increments for the fixed and flat fee services and that McAndrews had not shown why it should have a retainer in trust.

The case is In re: Sears Holding Corp, case number 7:18-bk-23538, in the U.S. Bankruptcy Court for the Southern District of New York.

Defense Claims ‘Overreaching’ Fee Request in ERISA Case

December 5, 2018

A recent Law 360 story by Danielle Nichole Smith, “Hospital Plan Rips ‘Overreaching’ $2.4M Fee Bid in ERISA Suit,” reports that the retirement plan for a Montana hospital told a federal judge that a request for $2.4 million in attorneys’ fees was “grossly excessive” after a $293,946 settlement resolving claims that the plan flouted the Employee Retirement Income Security Act.  The Retirement Plan for Employees of Northern Montana Hospital said in its objection that the $2.4 million fee request was “plainly overreaching” and needed to be reduced, noting that the amount was more than eight times the amount of monetary recovery.  And the proposed class counsel’s lodestar was $2 million more than that of the defendants’ attorneys, the plan said.

“The plaintiff’s attorneys’ fee request is grossly excessive by any measure,” the plan said.  “The fee request exemplifies the problem that led the Supreme Court to mandate that attorneys’ fee awards remain ‘reasonable in relation to the results obtained.’”

The settlement in the case provided $125,776 to named plaintiff Dr. Joel Cleary for retirement benefits he was wrongly denied and $168,170 to a proposed class of 175 plan participants whose benefits had been miscalculated, according to the plan’s objection.  The settlement also provides injunctive relief, requiring the plan to comply with ERISA statutes governing benefit determination and claims procedure, the plan said.  The plan contended, however, that the injunctive measures didn’t provide any meaningful relief or benefit since the plan had already complied with ERISA.  So the injunctive relief didn’t have any monetary value to consider when calculating attorneys’ fees, the plan said.

The Keller Rohrback LLP attorneys representing the proposed class had asked for the fees in November after the settlement with the plan and administrative committee was reached.  In support of their motion, the attorneys described their experience with ERISA cases and the work they performed in the suit.  The attorneys said they devoted a significant amount of time and effort to the case and that the rates they charged were what they typically billed clients whose cases weren’t handled on a contingency basis and had been approved in complex ERISA cases.  The attorneys also requested $75,086 in costs.

In the fee request, the attorneys also noted that the time they devoted to the suit kept them from working on other cases or taking on other representations.  The attorneys said they spent nearly 3,600 hours on the case as of October.  But the plan said that the attorneys’ lodestar amount was unreasonable, arguing that the reasonable hourly rate in Montana for ERISA cases was a lot less than what the attorneys requested.  The defendants’ attorneys only billed a total of $270,500 through October, the plan said.

If the court chose to use the lodestar method, the class’s attorneys’ lodestar had to be adjusted downward considering the results obtained, the plan said.  Additionally, the case didn’t present novel or difficult questions since the defendants didn’t dispute that Cleary was owed benefits or that the proposed class’s benefits had been miscalculated, the plan said.

The plan told the court that the percentage-of-recovery method was the best way to calculate the fees and that the $293,946 should be treated as a “constructive common fund” for determining such a percentage.  Though 25 percent was the “benchmark” for attorneys’ fees in the Ninth Circuit, the plan said it wouldn’t object to a 50 to 75 percent award since the recovery was so modest.

The case is Cleary v. Retirement Plan for Employees of Northern Montana Hospital et al., case number 4:16-cv-00061, in the U.S. District Court for the District of Montana.

Some Oppose 5 Percent Attorney Fee Set-Aside in Pelvic Mesh MDL

November 30, 2018

A recent Legal Intelligencer story by Max Mitchell, “Pelvic Mesh Trial Lawyer Slams MDL Settlements as ‘Puny’ Opposing Leadership’s Fee Petition,” reports that as the pelvic mesh MDL has begun to settle, attorneys on the leadership committee have asked the federal court overseeing the litigation’s massive inventory to set aside 5 percent of the awards for common benefit fees and expenses.  With the settlements already topping $7 billion, that means more than $360 million is set to distributed among the firms.

However, at least two firms are opposing the request, with one saying the hold-back amount is far too much.  Attorneys with Philadelphia-based Kline & Specter filed a response opposing the 5 percent set-aside request.  The highly critical filing contends that the federal cases have settled for “puny” amounts compared to the multimillion-dollar verdicts juries have been willing to award both in state and federal courts.  “The leaders in this litigation did the worst possible thing to the detriment of all plaintiff mesh victims and their attorneys: they settled their inventories way too cheaply, making it difficult for other attorneys to settle their cases reasonably,” attorney Shanin Specter said in the filing.

According to the filing, the average award for the tens of thousands of cases that have settled is about $40,000, while the average award for the cases that have gone to trial is about $9.8 million.  Specter’s firm took a leading role in several pelvic mesh cases that were tried in Philadelphia state court, including winning a $57 million verdict last year.  In the filing, Specter suggests that the set-aside amount be halved from the leadership committee’s request.

The firm’s filing also faults the leadership team with taking too many cases to effectively handle, saying the “discounted settlements were driven by the sheer enormity of the number of claims” and the “inability” of the lawyers to fully work up their inventories.  “It’s been an open secret in this litigation that the ‘leadership’ took too many cases to effectively litigate themselves.  By doing so and by not associating other lawyers to help discover and try their cases, they were forced to settle,” Specter said in the filing.  “This wasn’t bad for ‘leadership’ because a large number of small fees on small settlements is still a large number.  But it mistreated the women they represent. And it mistreated the other plaintiff’s counsel who were stuck behind this low bar set by the leadership.”

Andrus Wagstaff in Colorado also filed a notice of intent to oppose the petition for the 5 percent set aside.  The notice did not outline the crux of the firm’s objection, but the notice did say that it hired Blank Rome attorney Andrew Williamson to represent the firm in the dispute.  Georgia attorney Henry Garrard of Blasingame, Burch, Garrard & Ashley, who is chairman of the fee and compensation committee, said he plans to file a response, and declined to comment further, other than saying, “There is a lot to the story that’s not in their objection.”

The pelvic mesh MDL consists of seven separate consolidated litigations against some of the largest medical product manufacturers in the country.  According to federal records, the litigation topped out at nearly 107,000 claims, and, as of Nov. 15, the seven consolidated litigations have an inventory of 37,299.

On Nov. 12, Garrard filed the petition requesting the 5 percent award.  According to the petition, 94 law firms submitted more than 900,000 hours of time, and the committee has recognized nearly 680,000 of those hours as contributing toward the litigation’s common benefit.  The petition also noted that the current value of the settlements is roughly $7.25 billion, and the total amount for settlements is expected to be around $11 billion.  With the requested 5 percent set aside, that would make the total amount expected for the common benefit fund to reach $550 million.

The response from Kline & Specter, however, said the MDL leadership failed to secure a global settlement, and that the petition largely ignores the work done in the state court litigation that benefited the federal MDL, such as obtaining the verdicts, which, the filing said, weakened the defendants’ position and drove settlements.  “Given the paltry recoveries for the injured women in this successful-in-the-courtroom, surrender-at-the-settlement-table mass tort, it is more equitable for the common benefit fee to be half of the requested amount and to remit their proportionate share of these saved funds to the injured women,” Specter said in the filing.

Special Fee Master Recommends $500M in Fees in Syngenta MDL

November 27, 2018

A recent Law.com story by Amanda Bronstad, “Syngenta Special Master Rejects $150M in Fees for Texas Attorney Mikal Watts,” reports that a special master reviewing fee requests from hundreds of law firms in the $1.51 billion settlement with Syngenta has recommended that lead counsel get half the estimated $500 million in legal fees but rejected the idea that attorney Mikal Watts, who represents 60,000 farmers in the deal, should get $150 million.

U.S. District Judge John Lungstrum on Nov. 15 approved the class action settlement, which resolved lawsuits alleging Syngenta sold genetically modified corn seed that China refused to import, causing about 600,000 farmers and other producers to lose billions of dollars.  Lungstrum oversaw the multidistrict litigation coordinated in Kansas federal court, but many other cases were pending in federal and state courts in Minnesota and Illinois.  Some were class actions, while others were individual lawsuits.  That led to a big battle over attorney fees. On Nov. 21, special master Ellen Reisman issued a report and recommendation on how to allocate fees to about 400 law firms.

“Here, the settlement agreement recognizes that the successful result in this case was obtained through the work of multiple counsel in multiple jurisdictions who collectively applied litigation pressure in multiple forums that ultimately persuaded Syngenta to resolve the various litigations through a nationwide class action settlement,” wrote Reisman, of Reisman Karron Greene in Washington, D.C. “How to allocate the attorneys’ fee award among plaintiffs’ counsel is less straightforward.”

Objections to the report are due Dec. 5, and a hearing is set for Dec. 17.  Reisman’s report largely reflects a suggestion from lead counsel in the multidistrict litigation in Kansas on how to divvy up the fees, much of which was based on a fee sharing agreement in the settlement.  Although other lawyers played key roles in reaching the settlement, 50 percent of the fees should go to 95 law firms in the multidistrict litigation in Kansas, Riesman wrote.  That included lead counsel Patrick Stueve of Kansas City, Missouri-based Stueve Siegel Hanson; 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.

Reisman particularly praised the work of a lead settlement counsel Chris Seeger of New York’s Seeger Weiss.  “Mr. Seeger was the clear leader of the settlement effort on the plaintiffs’ side, and without his efforts a settlement would not have been achieved,” she wrote.  She rejected arguments from Watts, of Watts Guerra in San Antonio, that he and a group of 224 associated law firms, representing primarily individual farmers with cases in Minnesota state court, should get one third of the pie.

The dispute mirrors similar fee fights that have erupted in mass torts between plaintiffs attorneys appointed to represent the class and those who have brought individual suits on behalf of their clients.  Reisman, in her report, acknowledged those other cases, predominantly the $1 billion concussion settlement with the National Football League.  In that case, she wrote, the judge allowed some portion of attorney fees to go to lawyers with individual clients, and not just lead class counsel, but capped their contingency rates.  “There is significant legal support for the proposition that the courts have the required personal and subject-matter jurisdiction and the legal and equitable authority to modify contingent fee arrangements,” she wrote.

But she found that the Syngenta litigation had some key differences—most notably, the pressure that a large chunk of individual cases had on reaching a settlement.  In her report, she wrote that “no single event or group of plaintiffs’ counsel was solely responsible for pushing this litigation to resolution.”

The Syngenta multidistrict litigation, created in 2014, involved subclasses of farmers in eight states planned for trials.  Last year, a mistrial aborted the first bellwether trial, in Minnesota, but a federal jury awarded $217.7 million to a class of Kansas farmers in a second trial.  Another trial, on behalf of a class of Minnesota farmers, was ongoing when both sides struck a deal.

Watts Guerra partner Francisco Guerra was co-lead plaintiffs counsel in Minnesota state court, but no one from the firm had a lead role in the multidistrict litigation.  The firm did work on the Minnesota trial, however, and Watts was one of four lawyers appointed to the plaintiffs’ negotiating committee.  Watts did not sign the fee sharing agreement in the settlement but instead based his request on a 2015 joint prosecution agreement with lead counsel in the multidistrict litigation.  He calculated his request using a reduced contingency rate of less than 24.2 percent and $12.8 million in reimbursements for common benefit expenses he paid in the Minnesota state court litigation.

His request for fees got some pushback.  Some lawyers representing individual farmers, including one who filed a lawsuit with Watts earlier this year, accused the Texas lawyer of cutting them out of negotiations and luring farmers to retain him in order to get fees. Watts called the suit “frivolous.”

In court documents, lead counsel in the multidistrict litigation argued that the 2015 joint prosecution agreement had nothing to do with the class actions and would set Watts up to get as much as $200 million.  They sought 50 percent of the $500 million, with Seeger Weiss getting at least 10 percent, but suggested that 12.5 percent go to the lead lawyers in Minnesota state court and 17.5 percent to attorneys in Illinois.  The remaining $100 million would be reserved for other lawyers.

Reisman agreed on the 50 percent and, as to the arguments from Watts, found that the 2015 agreement was “irrelevant” to the fee award in a nationwide class action.  But she doubled the allocation to the Minnesota group, which includes Watts, assigning 24 percent, or about $120.8 million.

“Unquestionably, the Minnesota state court litigation both advanced the cause of pressuring Syngenta on multiple fronts and, through coordination with Kansas counsel, assisted the nationwide class effort,” Reisman wrote.  Lawyers in the Illinois cases, whose award totaled $80.5 million, or about 16 percent, “presented an important third pressure point on Syngenta,” she wrote.

She also allocated 10 percent to lawyers with individual clients, capping their contingency rates at 10 percent.  She said most of those firms recruited clients and filled out fact sheets, while lawyers in leadership in Kansas, Minnesota and Illinois did the “vast majority” of the work.  “A 10 percent contingent fee is obviously a significant reduction from the typical 30-40 percent contingent fee,” she wrote. “However, it is appropriate given the history of this litigation.”