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The NALFA

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Category: Lawyering

Law Firms Seek Share of Fees From $680M Fund in BP MDL

April 14, 2017

A recent NOLA.com story by Katherine Sayre, “BP Oil Spill: Two Louisiana Firms To Receive $87 Million Each in Attorney Fees,” reports that two law firms in New Orleans and Lafayette that led the massive BP oil spill litigation are set to receive $87.8 million each under a proposed division of about $680 million in class action attorney fees, according to a court filing this week.

The complex case over the 2010 Deepwater Horizon drilling rig explosion and ensuing oil spill in the Gulf of Mexico involved a two-phase trial with expert testimony and settlement negotiations over several years.  The case consolidated individual economic and medical claims and state government claims from across the country to U.S. District Court in New Orleans.

BP, owner of the failed Macondo well, Transocean, owner of the Deepwater Horizon rig, and Halliburton, which was in charge of pouring cement at the well, have agreed to pay the plaintiffs' attorney fees.

A proposed split of about $680 million -- not including reimbursed expenses -- was filed in U.S. District Court in New Orleans this week.  The two firms getting the biggest chunk of the award are Herman, Herman & Katz of New Orleans and Domengeaux, Wright, Roy & Edwards of Lafayette with $87.8 million each.  Cunningham Bounds of Mobile, Alabama, and Weitz & Luxenberg of New York are set to receive about $42 million each.  Nearly two dozen firms based in New Orleans are proposed to get a combined $243 million.

The fee committee, made up of six of the plaintiffs' attorneys, reviewed requests from the dozens of law firms involved in the case and conducted 74 interviews over 12 days before making their recommendation, according to the proposal filing.  "The fee committee felt confident that a minimum of 518,250 hours were reasonably expended through the end of 2015 for the common benefit of class members and others affected by the Deepwater Horizon incident," the filing says.  BP agreed to pay about $555 million in attorneys fees; Transocean and Halliburton agreed to about $124 million.

For Domengeaux Wright Roy & Edwards of Lafayette, the case "required full-time devotion and pre-occupation with substantial personal and professional sacrifice (among other things effectively relocating to New Orleans for approximately three years)," the proposed allocation says.

In October, U.S. District Judge Carl Barbier, who has overseen the seven-year-old case, wrote that the multi-district litigation "would appear to be one of the largest, if not the largest, MDL in history."  "Over 130,000 individual civil actions and/or claims-in-limitation were filed by private businesses, individuals, and local governments," Barbier wrote.  "Yet even greater than its sheer size was the MDL's complexity."  The proposed allocation must be reviewed by John Perry, appointed special master over fees for the case, and Barbier.

In April 2016, Barbier approved a $20 billion settlement for BP to pay out to state and local government claims and Clean Water Act violation fines.  BP is expected to pay an estimated $13 billion in economic and medical claims to individuals and businesses.

Fee Request Reduced 90 Percent in VW Dealer Case

April 13, 2017

A recent Courthouse News story by Nicholas Iovino, “Judge Whacks 90% of Attorney Fees in VW Dealer Case,” reports that a federal judge cut more than $25 million from attorneys’ fees in a $1.2 billion settlement between Volkswagen and its U.S. dealerships.  U.S. District Judge Charles Breyer reduced the award to $2.9 million, finding a request for $28.5 million too high, given that “much of the groundwork for the settlement was laid in negotiations” for a previous deal.

Breyer lopped off $1.5 million in billable hours deemed as “hybrid time,” or hours spent negotiating both the dealership settlement and a larger, $10 billion deal for owners of 2.0-liter diesel engine vehicles.  He found that attorneys already had been compensated for those hybrid hours in a $175 million fee award approved in March.

The $2.9 million fees award is the latest Volkswagen must pay to make amends for its installation of emissions-cheating software in 11 million vehicles worldwide, including nearly 600,000 diesel-powered vehicles sold in the United States.  The defeat device software kicked in to hide emissions during tests, while allowing cars to spew up to 40 times more nitrogen oxide on the road than allowed under federal law.

Under the $1.2 billion deal approved in January, 644 U.S. dealerships will each receive an average $1.85 million to cover losses precipitated by the German automaker’s diesel-gate scandal.  Although the requested $28.5 million makes up a mere 2.8 percent of the $1.2 billion deal, granting it would allow the lawyers to pocket more than 14 times the value of hours they actually worked, Breyer wrote.

“Dealer class counsel did not expend significant additional time procuring the settlement, nor did it undertake significant additional risk, given Volkswagen’s incentive to settle quickly,” Breyer wrote in the 10-page ruling.  He cut an additional $560,000 in anticipated billable hours, finding Volkswagen has already started paying dealerships and no further hours are needed to execute the deal.

Breyer recalculated the total value of billable hours at $1.47 million and applied a 2.0-multiplier, for a total of $2.95 million to be split between two law firms.  Hagens Berman Sobol Shapiro will receive $2.3 million; Bass Sox & Mercer will get $622,000.  The judge also granted the firms $87,538 in litigation costs.

NALFA: Some Class Counsel Turn to Fee Experts When Seeking Fees

February 27, 2017

Attorney fees are often a bone of contention in class actions.  In fact, upon settlement, the only disputes usually to surface center around the attorney fees.  Upon settlement approval, class counsel file somewhat self-interested fee requests with the court.  Here, even when prepared with the proper standard of care, these fee requests appear bias and self-serving.  Indeed, these self-seeking requests for fees are a source of frustration for the courts and often contested by professional fee objectors.  These internal dynamics can drag class action litigation on for years.  Recently, some class counsel have even grudgingly low-balled their fee requests to avoid this confrontation and delay in payment (see Race to the Bottom: Class Action Lawyers are Low-Balling Fee Requests).  This unjustified self-reduction in fees is short-sighted and sets a bad precedent for future class action cases.

In order to break this stalemate, some class counsel are rethinking their fee requests by turning to attorney fee experts.  Attorney fee experts are fully qualified expert witnesses who provide expert declarations on the reasonableness of attorney fees and expenses in underlying actions.  They are skilled litigators with subject matter expertise and are highly qualified on a range of fee and billing issues like hourly rates, billing practices, fee award factors, litigation management, and lawyering just to name a few.  A qualified, outside fee expert provides a fee-seeking attorney with an independent, unbiased, and objective analysis of the attorney fees and expenses in the underlying class action.  Fee experts can manage the entire fee application process, provide an expert report/opinion, or advise and consult on fee matters.  Some fee experts include law professors and former judges.

Hiring a qualified fee expert during the settlement phase shows the court and would-be professional fee objectors that you are taking the setting of attorney fees in a constructive and impartial manner.  Retaining a fee expert shifts the focus from an internal and rather self-assured fee analysis to an outside, objective, and peer review-driven fee analysis.  By relying on a qualified fee expert, class counsel can defuse the existing tensions within the class action and speed up the recovery of attorney fees.  What is more, courts are more likely to rule in favor of a fee analysis provided by a qualified and disinterested expert, rather than someone with a financial stake in the outcome.

Judge Wants Review of Legal Bills After Inadvertent Billing Practices

February 11, 2017

A recent ABA Journal story by Debra Cassens Weiss, “Judge Wants Review of Legal Bills After Firm Reveal 9,000 Hours of ‘Inadvertent’ Double-Billed Time” reports that a federal judge in Boston is proposing the appointment of a special fee master to review the accuracy of legal bills submitted by several prominent law firms—and is suggesting the firms pay the costs of the probe.

U.S. District Judge Mark Wolf proposed in the Feb. 6 memorandum and order that up to $2 million in special fee master costs be paid from nearly $75 million in attorney fees that had been awarded to plaintiffs’ counsel in their settled suit against State Street Bank, the Boston Globe reports.  The class action had contended the bank overcharged its customers in connection with certain foreign exchange transactions.

Wolf cited a report by the Boston Globe Spotlight team that found three law firms submitted some charges for the same lawyers, often with differing hourly rates.  Some of the hourly rates listed in the legal filings were as much as 10 times more than what the lawyers generally earned, according to the newspaper’s report.

One of the firms, the Thornton Law Firm of Boston, submitted bills showing an hourly rate of $425 for staff attorneys, but one of those lawyers told the Boston Globe he was paid only $30 an hour for his work.  The Thornton firm was recently in the news as a result of a Boston Globe report that claimed partners at the firm who made Democratic campaign donations were reimbursed with law firm bonuses.

Wolf proposes that recently retired U.S. District Judge Gerald Rosen of Michigan be appointed as special fee master to review the accuracy and reliability of representations made in the legal bills, to report on whether misconduct occurred, and if so, to recommend whether the misconduct should be sanctioned.

Nine law firms shared in the legal fees.  Besides Thornton they included class-action law firms Labaton Sucharow, the lead law firm in the State Street case, and Lieff Cabraser Heimann & Bernstein.  According to the Globe, Thornton has a “lucrative partnership with Labaton Sucharow in which Thornton often finds potential legal clients for the much bigger New York firm.”

After Globe reporters contacted Labaton Sucharow for its story on the legal fees, the law firm submitted a letter to Wolf acknowledging “inadvertent errors” in written billing submissions.  Seventeen staff lawyers in Thornton’s report were also listed as staff attorneys on Labaton’s report, the letter said.  And six of the staff attorneys in Thornton’s report were also listed as staff attorneys on the report by Lieff Cabraser.

In all, the firms overbilled by about $4 million and double counted about 9,000 hours, the letter revealed.  The duplicative time has been removed, the letter said, and when differing billing rates were listed for a given staff attorney, the time will be claimed at the lower rate.

UK Judge Rules $20M Legal Bill ‘Highly Unrealistic’ in Fee Dispute Case

February 10, 2017

A recent American Lawyer story by Chris Johnson, “Dechert Client Fee Dispute to Proceed After Court Rules $20M Legal Bill ‘Highly Unrealistc’,reports that Dechert has been dealt a blow in its long-running fee dispute with a former client, with a High Court judge in the U.K. ruling that the company can proceed in its attempt to recover millions of dollars from the firm.

Eurasian Natural Resources Corporation accused Dechert of "systematic and gross overcharging" after the firm billed the London-based mining company $20.3 million for 23 months of work relating to a criminal investigation by the U.K.'s Serious Fraud Office.  The judge said that Dechert's fee estimates were "considerably awry on every occasion" and were based on "highly unrealistic" assumptions.

The dispute will now move to formal cost assessment proceedings, which an ENRC spokesman said are likely to take place early next year.  ENRC, which is being represented by London disputes boutique Signature Litigation, is disputing $14.5 million of Dechert's total fee.

The ENRC spokesman said the company was "pleased" with the ruling.  "We have always been concerned about the level of charging by Dechert, but felt unable to challenge these while our internal investigation was underway," he added.  A Dechert spokeswoman said: "We look forward now to proceeding with the costs assessment process."

The judgment also revealed that DLA Piper, which was originally hired by ENRC to work on the internal corruption probe, had estimated that its fees on the matter would come to around $500,000.

DLA's lead partner on the dispute, Neil Gerrard, took the case with him to Dechert when he joined the firm in 2011.  Dechert was subsequently fired by ENRC in April 2013, with the company initiating proceedings against the firm that fall.

In a letter to The American Lawyer last May, Dechert general counsel Arthur Newbold said that ENRC's allegations were "outrageous and unfounded."  Dechert had previously failed in two separate attempts to have the cost proceedings heard in public.  ENRC successfully argued that a public hearing could have potentially damaging consequences for the company's ongoing fraud office investigation.