Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Hours Billled

$1.2B Valeant Settlement Earns Robbins Geller $157M Fee Award

February 2, 2021

A recent Law 360 story by Dean Seal “Final OK on $1.2B Valeant Deal Earns Robbins Geller $157M”, reports that a New Jersey federal judge gave final approval to a $1.2 billion settlement of an investor action against Valeant Pharmaceuticals, landing lead counsel Robbins Geller Rudman & Dowd LLP a hefty payday.  U.S. District Judge Michael A. Shipp overruled objections from two investor plaintiffs when he granted a special master's recommendation to approve the deal reached in December 2019 between investors and the pharmaceutical company that became known as Bausch Health Cos. Inc. in 2018.

The nearly five-year-old lawsuit claimed Valeant used a clandestine network of pharmacies to push high-priced drug prescriptions, sending the stock plummeting once price-gouging allegations surfaced.  Investor plaintiff Cathy Lochridge had lodged an objection to the 13% attorney award for Robbins Geller and local lead counsel Seeger Weiss LLP, arguing that the $157.3 million request was too high considering that the settlement "captures just 3% of class damages," but Judge Shipp said it was also the ninth-largest securities class action recovery ever.

"As Lochridge correctly notes, 'what is important is that the district court evaluate what class counsel actually did and how it benefited the class,'" the judge said.  "Here, lead counsel obtained a $1.21 billion all-cash recovery for the benefit of over 400,000 members."

The stock-drop litigation represents consolidated claims by investors who saw Valeant's stock price slide from more than $250 a share in 2015 to below $10 two years later.  The company has been fined by regulators and sued by investors who said it defrauded the market.  Investors claimed that Valeant had employees work under aliases for a company called Philidor Rx Services LLC that used deceptive practices to block generic alternatives from competing with Valeant's branded drugs.  Valeant allegedly duped insurers by changing prescription codes to ensure they were filled with Valeant-branded drugs and making claims for unrequested refills, investors said, and covered up the scheme by lying about the pharmacies' ownership and issuing a series of false statements to investors.

In December 2019, Bausch announced that it had agreed to resolve the case with a $1.21 billion settlement while admitting no liability and denying all wrongdoing.  Last June, a special master issued a report recommending final approval of the settlement, plan of allocation and attorney fees and expense reward, leading to objections from two plaintiffs.

The first, from brokerage firm Timber Hill LLC, objected to the settlement itself as well as the plan of allocation, arguing against the plan's imposition of an "arbitrary" 5% recovery cap on options investors while permitting common stock and debt investors to take the remaining 95%.  The cap demonstrated that options investors were not adequately represented in the settlement, Timber Hill said, asking that the cap be increased to around 9.5%.

Judge Shipp overruled the objection, saying that Timber Hill's expert had originally supported an options cap in the 5% range and that he found the plan to be "fair, reasonable and adequate."  The second objector, Lochridge, had asked that the attorney fee award be reduced to 6% of the settlement fund, or around $72.6 million, arguing that "this is the lowest ever return on class damages for a billion-dollar securities settlement."

Judge Shipp disagreed, saying Lochridge's low recovery argument was based on "new and inconsistent" analysis from Timber Hill's expert and speculation that Valeant could have agreed to a higher settlement amount despite its uncertain financial position.  The judge also found that the hefty settlement fund and low number of objectors and opt-outs weighed in favor of approving the award, as did the complexity and duration of the litigation and lead counsel's devotion of more than 75,000 hours to the case.

Polsinelli Sued Over Billing Issues

January 22, 2021

A recent Law 360 story by Craig Clough, “Polsinelli Says Clients’ ‘Slacking Off’ Claims are “Meritless”, reports that Polsinelli PC urged a Pennsylvania federal judge to toss a lawsuit accusing the firm of overcharging and underperforming while representing a pharmacy and its former CEO in an investigation by the U.S. Securities and Exchange Commission, saying claims the firm "slack[ed] off" are not plausibly alleged.  Philidor Rx Services LLC and former CEO Andrew Davenport said in the suit that Polsinelli shifted much of its legal work to another firm and added unnecessary third-party legal fees, but those arguments don't belong in a breach of contract claim, Polsinelli said.

"Plaintiffs do not allege that Polsinelli breached any specific provision of the engagement letters but instead allege that it negligently performed its obligations such that Philidor allegedly paid more than it should have," Polsinelli said.  "That is a negligence claim.  And as explained below, plaintiffs' negligence claim fails for multiple reasons."

Philidor and Davenport alleged in their November lawsuit that Polsinelli transferred much of its legal work to another firm working on their case, WilmerHale, which charged by the hour and added unnecessary third-party fees.  This way, Polsinelli received the same $14 million capped flat fee, and WilmerHale billed more hours than anticipated, the complaint said.

Davenport was convicted in 2018 for his involvement in a $9.7 million kickback scheme after the SEC investigated Philidor's relationship with Valeant Pharmaceuticals International Inc.  Philidor hired Polsinelli and former partner Jonathan N. Rosen in 2016 when the SEC investigation was first launched.  Gary Tanner, a former Valeant executive who was a co-defendant in the investigation and trial, hired WilmerHale. Tanner and Davenport agreed to have a joint defense with WilmerHale and Polsinelli attorneys, with Philidor agreeing to pay the flat fee for Polsinelli and the hourly fees for WilmerHale.

The investigation eventually led the government to charge Davenport and Tanner with honest services wire fraud and conspiracy to commit money laundering in 2017.  Philidor claims that once Polsinelli realized the case would likely face trial, the capped flat fee agreement was looking "less and less lucrative" to the firm.  Polsinelli began pushing work to WilmerHale and adding third-party legal fees for work the plaintiffs say the firm should have been able to do in-house and should've been included in the $14 million they paid, such as hiring an outside counsel for Davenport's defense, the complaint alleges.

Philidor was charged over $5 million in expert fees instead of the $2 million initially agreed to and more than $13 million in counsel fees instead of the $2 million agreed to, among other millions of dollars in third-party fees, the complaint alleges.  The company is accusing Polsinelli of one count of breach of contract, one count of unjust enrichment and a third count of mismanagement of litigation.  Philidor is asking for damages in the form of the costs of suit and the counsel fees they were charged because the firm's effort "represented a slacking off and willful rendering of imperfect performance."

Polsinelli said all the claims are "meritless," including the negligence claim, which is time-barred and fails even if it wasn't.  Under Pennsylvania law, there is a two-year statute of limitations for tort claims, and because the trial wrapped in May 2018, all of the alleged breaches occurred before then and the claim is untimely, Polsinelli said.  Under Pennsylvania law, the plaintiffs must also allege Polsinelli failed to "exercise ordinary skill and knowledge" to properly plead the negligence claim, but the claim does not make that allegation, Polsinelli said.  The firm also argued, among other things, that the unjust enrichment claim should be tossed because it "is a quasi-contractual doctrine that does not apply in cases where the parties have a written or express contract."

Judge Shaves Fee Request After Not Proving Rates

January 20, 2021

A recent NLJ story by C. Ryan Barber, “Ballard Spahr Wins $122K in Legal Fees in FOIA Suit Over PPP Loan Secrecy, reports that Ballard Spahr will receive $122,347 in legal fees for its work in an open records lawsuit that forced the U.S. government to release detailed information about who received hundreds of millions of dollars through a COVID-19 emergency loan program.  The law firm asked for nearly $154,842 in fees and costs, but U.S. District Judge James Boasberg of the District of Columbia said Ballard Spahr failed to support its billing rates and hours worked, and subsequently shaved off nearly $32,000.

Ballard Spahr, representing The Washington Post and other media outlets against the Small Business Administration and U.S. Treasury Department, sought to use the higher rates available under the Legal Services Index Matrix.  The federal government countered that Boasberg should use the lower rates detailed in a matrix used by lawyers at the U.S. Attorney’s Office for the District of Columbia.

Boasberg ultimately found Ballard Spahr failed to show how its preferred rates were in-line with rates used within the legal community for similar FOIA litigation, and granted the government’s request.  “They offer no evidence whatsoever—such as surveys or billing-rate tables—of rates charged and received by lawyers of comparable skill and experience in the D.C. market generally, let alone when handling FOIA cases,” Boasberg wrote.  “Indeed, their declarations do not even assert that their requested figures are in line with prevailing community rates for similar litigation.”

Boasberg shaved off another $6,710 due to an error in the hours billed, ultimately settling on $122,347 in legal fees and costs.  According to the USAO matrix listed in the ruling, Ballard Spahr partner Charles Tobin’s hourly rate came to $665.  Associates Maxwell Mishkin and Kristel Tupja’s rates came to $388 and $369 an hour, respectively.

Tobin said the award highlights the public importance of the case in ensuring there’s accountability of a program that handed out nearly half-a-billion dollars.  “Overall, the fee award is higher than most, and fully justified in this case,” Tobin said.  ”We are hopeful it serves as a powerful deterrent for government agencies that aren’t transparent enough on issues like this one.”

$11M Fee Request in Home Health Care FCA Case

January 19, 2021

A recent Law 360 story by Sarah Jarvis, “Attys Want $11M After Record Home Health Care FCA Deal,” reports that a whistleblower is seeking more than $11 million in attorney fees and costs for a $57 million deal in his suit alleging the Visiting Nurse Service of New York defrauded the government, saying the figure is reasonable for the scope and outcome of the case.

Former VNSNY executive Edward Lacey asked a New York federal court for an order requiring the agency to pay him more than $11,147,000 in fees, costs and expenses incurred in Constantine Cannon LLP's successful litigation of the case, which resulted in a record deal last June to resolve Lacey's False Claims Act suit.  Lacey had claimed that VNSNY, the largest not-for-profit home health care agency in the U.S., billed for services it never provided and disregarded patients' formal treatment plans.

"Relator is seeking payment for a total attorneys' fee lodestar of $10,110,337.50," Lacey said.  "This amount is reasonable by any objective measure based on [Constantine]'s hourly rates and the hours the firm worked to secure this historic result."  Lacey said the firm spent 17,374 hours in attorney and legal support time on the case and used the smallest team possible to avoid duplicating resources, noting that only two lawyers worked on the case for its first 18 months.  After that, another lawyer joined in October 2015 and another in January 2016, but that principal team didn't expand again for almost two years to handle an accelerated schedule, according to Lacey's memorandum.

In support of his request, Lacey also noted the quality of the result, saying the $57 million settlement is one of the largest home health care fraud settlements ever and the only one to successfully challenge the failure to comply with patient plans of care.  Lacey said the settlement "hopefully remedies — or at least turns a regulatory spotlight on — a practice that adversely affects millions of sick and elderly patients across the country."

June's settlement ended Lacey's claims that VNSNY billed Medicare and Medicaid for therapy and services that doctors never provided and maintained an "accept all referrals" policy regardless of capacity constraints. VNSNY did not admit liability as part of the deal and maintains that it didn't bill for visits doctors never provided.  As part of the settlement, the federal government was stipulated to receive $50.1 million of the settlement, with New York state getting about $6.8 million.  Lacey was then awarded a 29% share of the total $57 million award, his counsel said, and Lacey noted in his memo that this amount was the outer limit of what the government was allowed to award.

$41M Fee Request in $155M Snap Securities Settlement

January 12, 2021

A recent Law 360 story by Rachel O’Brien, “Attys for Snap Investors Seek $41M From $155M Deal” reports that investors of Snap Inc. asked a California federal judge to approve $41.1 million in attorney fees and expenses for Kessler Topaz Meltzer & Check LLP, as they seek final approval of a nearly $155 million settlement over the social media giant's initial public offering.  The deal, a preliminary version of which was announced in March, ends claims that Snap, the company behind the popular Snapchat messaging app, hid problematic growth metrics leading up to its initial public offering.

The $41.1 million ask includes $38.7 million — 25% of the settlement fund — for attorney fees and $2.4 million in litigation expenses, as lead counsel at Kessler Topaz "vigorously pursued this action from its outset and was actively preparing for trial when the settlement was reached," the filing said.  The attorneys "directed a far-ranging investigation" including filing two complaints, starting document discovery, subpoenaing 20 parties and twice moving to compel Snap to produce documents, among other things, the filing said.

The investors' attorneys collected and reviewed almost 2 million pages of documents and helped prepare five reports from experts, including those in the internet advertising industry, and took or defended five expert depositions, the investors said in the filing seeking a final OK of the agreement.  The attorneys said the settlement class members were informed that their counsel would seek up to 25% of the fund and litigation expenses up to $3.25 million, and while they can object until Jan. 25, no objections to the figures have been filed to date.

Kessler Topaz said its attorneys and professional support staff alone spent more than 50,000 hours working on the case, originally filed in May 2017.  The "requested fee award is reasonable, justified, and well within the range of what courts in this Circuit regularly award in class actions," the filing said.

The March preliminary settlement came only two months before the case was set to go to trial and with a summary judgment motion and class certification appeal still pending.  The deal stipulated that $154.7 million would be paid to close out the federal class action.  Also part of the deal was a separate $32.8 million payment to settle a California state court case over the same alleged misconduct.