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Category: Quantum Meruit

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.

Law Firms Dispute Attorney Fees in Nearly 200 NFL Concussion Cases

August 15, 2017

A recent Legal Intelligencer story by Max Mitchell, “Fla. Firms Challenge Fee Liens in Nearly 200 NFL Concussion Cases,” reports that four Florida law firms that banded together into a limited liability company are disputing attorney fees in nearly 200 cases that resolved under the National Football League's settlement over concussion-related conditions.

The firms, which formed a professional limited liability company called Neurocognitive Football Lawyers PLLC, filed objections to attorney liens filed in 184 cases pending in the U.S. District Court for the Eastern District of Pennsylvania.  The objections contend that the attorneys who filed the liens at issue do not currently represent the 184 former players, and those attorneys failed to properly file those liens with the court, or provide any material benefits to their former clients.

"The vast majority of the liens were asserted by former individual counsel who filed boilerplate lien notices with no detail, or with scant detail reflecting any beneficial service that may have been performed for each listed NFL player before the effective date of the settlement," the objection, filed by Theodore Karatinos of Holliday Karatinos Law Firm in Tampa, Florida, said.  "While prior counsel may assert a quantum meruit lien after being discharged, most of the discharged counsel failed to prove that their legal services conferred substantial benefits to their clients, the former NFL players."

In 2013, the NFL agreed to settle the roughly 20,000-plaintiff multidistrict litigation for about $1 billion.  Some players sought—and failed--to challenge the accord, and some opt-out plaintiffs were recently given permission to outline a new set of claims against a company that made football helmets.

In February, lead attorneys in the litigation also filed a request asking the court to award $112.5 million in legal fees.  Since that time numerous attorneys have sought to score their piece of the potential fees.

The objection filed was not the first time the Neurocognitive Football Lawyers have disputed with others over the fees.  In March, the group asked the court to appoint a special fee master to look into the proposed fee agreements, and challenged the amount proposed be set aside for the lawyers.

The latest objection for the four firms focused on the argument that the prior counsel could not show the plaintiffs received any benefit from their former attorneys' representation, and contended that some of the discharged firms did not register the player with the claims administrator.

"Sending emails and form letters to the former NFL players with updates on the progress of the concussion class action before the claims process opened constituted an immaterial legal service," the objection said. "Where the former NFL player could simply Google the case website or secondary news source for updates on the progress of the case, legal services which merely updated the clients provide no 'reasonable value.'"

The objections also said that Pennsylvania law does not allow a discharged attorney to assert a lien on an unmatured contingency fee, and that many of the firms were unable to produce a fee agreement for the court to evaluate the claims.

Texas High Court to Hear $7.2M Fee Dispute

June 26, 2017

A recent Texas Lawyer story by John Council, “Texas High Court Picks Up Oil Family’s $7.2M Attorney Fee Fight,” reports that one of Dallas' wealthiest families has frustrated federal courts with their bitter trust fund dispute for nearly a decade.  Now the Texas Supreme Court wants to jump in with a $7.2 million attorney fee dispute.

Hunt v. Hill involves a fight between the heirs of the Hunt family's oil fortune.  The case was settled in a U.S. District Court in Dallas in 2010 but continues to live on in numerous federal appeals over the distribution of trust funds and fee disputes among family members and their attorneys.  The Texas high court recently decided to hear one such fee dispute, Albert G. Hill Jr. v. Shamoun & Norman.

In this case, Dallas' Shamoun & Norman sued former client Albert G. Hill Jr. in state court alleging he owed them a multimillion-dollar "performance incentive bonus" for helping settle Hunt v. Hill.  But Hill countered he never signed a contract agreeing to pay that attorney fee.

A Dallas jury later awarded Shamoun & Norman $7.2 million in attorney fees under the theory of quantum meruit for the reasonable value of the services it rendered to settle those suits.  But the trial court set aside the jury's verdict and rendered a take-nothing judgment in Hill's favor — a decision the Fifth Court of Appeals reversed.

Hill appealed the verdict arguing he shouldn't have to pay for a bonus that was never put in writing.  The Texas Supreme Court agreed June 16 to hear the case to determine whether attorneys can recover fees under the theory of quantum meruit if their oral contract is unenforceable.

The opposing parties will bring two of the biggest guns in Texas appellate law with them to the high court's oral arguments.  Shamoun & Norman is represented by former Texas Supreme Court Justice Wallace Jefferson, who is now a partner in Austin's Alexander Dubose Jefferson & Townsend.

Hill is represented by James Ho, a former Texas solicitor general and partner in the Dallas office of Gibson Dunn & Crutcher, who's mentioned as a potential candidate for the U.S. Court of Appeals for the Fifth Circuit.

"This lawsuit exemplifies why so many Texans have such disdain for lawyers.  Texas law prevents attorney fraud and abuse by requiring lawyers to reduce contingency fee agreements to writing," said Ho, who has lined up considerable amici support for Hill's position.  "It is a simple requirement, and we agree with the district judge, the solicitor general, and the business community that it should be enforced, not nullified by lawsuits like this."

4th Circuit: In Awarding Fees, Judges Must Consider Risk and Results

June 1, 2017

A recent Reuters story by Allison Frankel, “4th Circuit: In Fee Awards, Judges Must Consider Risk and Results,” reports on a case involving contingency fee risk in awarding attorney fees.  The story reads:

In 2010, the law firm Gilbert, working on contingency, went to trial and won a $26 million judgment for Alpha, a specialized U.S. tire maker suing foreign competitors for stealing its trade secrets.  Before Gilbert could attempt to enforce the judgment, Alpha fired the firm, replacing Gilbert with a new firm co-founded by two former Gilbert lawyers.  The new firm went on to defend Alpha’s judgment on appeal and, eventually, to reach a $15.5 million settlement with the defendants.

How much money does Alpha owe Gilbert?

The 4th U.S. Circuit Court of Appeals awarded Gilbert $3.1 million in fees.  The award, as I’ll explain, is not a contingency fee – but it is a stern reminder to trial judges that when lawyers assume risk in contingency fee cases, they deserve a fair reward for successful results.

Under the terms of Gilbert’s engagement agreement with Alpha, had the firm represented Alpha all the way through settlement, Gilbert would have been due a 40 percent contingency fee.  But if Alpha fired Gilbert before any recovery, the contract said, the law firm was entitled only to its hourly billings.

Before U.S. District Judge T.S. Ellis of Alexandria, Virginia, Gilbert claimed its lawyers worked nearly 11,000 hours on the case, at hourly rates ranging from $375 to $900, for a total lodestar of about $4.5 million.  That did not fly with Judge Ellis, to say the least.  The judge said that under Virginia state law, the fee award must be based on quantum meruit, or “as much as deserved.”  Judge Ellis said Gilbert had inflated its hours and charged unreasonable hourly rates.  He ended up awarding the firm only $1.2 million.

In January 2016, the 4th Circuit vacated and remanded the award, reminding Judge Ellis that decades-old precedent from Virginia’s highest court requires judges to consider, among several other factors, the size of the case, the risk borne by lawyers working on contingency and the results obtained.  The appeals court instructed the judge to re-analyze the fee question with those considerations in mind.

On remand, Gilbert cut its claimed hours to 6,700 (perhaps mindful of Judge Ellis’ extremely skeptical assessment of the firm’s billing records).  It nevertheless said it was entitled to twice or three times its lodestar billings because of the contingency fee risk of its engagement with Alpha and the $26 million judgment it won.

The judge held his line.  He declined to apply a multiplier, in part because he said Gilbert had not reported fees he considered excessive in its engagement letter with Alpha.  The judge once again slashed Gilbert’s rates and hours and calculated the same award as in his previous ruling: just $1.2 million.

That was an abuse of his discretion, 4th Circuit Judges Roger Gregory, Allyson Duncan and Henry Floyd held in an unpublished opinion by Judge Gregory, the circuit’s chief judge.  “The district court focused on the engagement letter when it should have concentrated its efforts on determining the reasonable value of Gilbert’s services given the contingent nature of the representation,” the 4th Circuit said.  “The lodestar fee the district court awarded is inappropriate under the circumstances of this case and inadequately explained.”

The 4th Circuit said contingency fee lawyers, under Virginia precedent, are entitled to consideration for betting on a successful result.  “We cannot ignore the amount of work that Gilbert did without any guarantee of recovery, and the district court’s sharp reduction of Gilbert’s rates simply did not reflect that risk,” the court said.  “The facts in this case justify awarding Gilbert’s customary rates without reduction.”

Rather than send the case back to Judge Ellis for a third go-round, the 4th Circuit made its own calculations, crediting Gilbert with its reported 6,700 or so hours and an average hourly rate of about $460, for a total of about $3.1 million in fees.  (The firm has also been awarded about $1.7 million in costs.)

The opinion is unpublished and the circumstances of Gilbert’s dispute with Alpha are unusual.  But it’s heartening to see an appellate court recognize that entrepreneurial lawyers who get good results deserve to be compensated for their enterprise.

Pfizer Settles Fee Dispute in $785M FCA Deal

May 10, 2017

A recent the Law 360 story by Brian Amaral, “Pfizer Settles Fee Dispute in $785M FCA Deal,” reports that Pfizer Inc. and a relator who blew the whistle on false claims have agreed to resolve their dispute over how much in attorneys’ fees the company should pay after its $785 million settlement.

Details of the arrangement between the company and Dr. William St. John LaCorte in Massachusetts federal court were not made public; on Tuesday, Senior U.S. District Judge Douglas Woodlock signed a stipulation dismissing LaCorte’s motion for attorneys’ fees because of a settlement.

LaCorte had asked for $7.7 million for his attorneys at the Sakla Law Firm for thousands of hours of work on the case, which alleged that Pfizer unit Wyeth had overbilled Medicaid for the heartburn drug Protonix.  Pfizer said previously that LaCorte’s lawyers were not intimately involved in the development of the suit, in which the government intervened, and that LaCorte’s attorneys therefore didn’t need $7.7 million.  The fees are called statutory fees, paid out by Pfizer to a successful qui tam plaintiff as part of the False Claims Act.

The suit alleged that Wyeth, in a scheme that ended three years before Pfizer acquired it, misrepresented to the government how much it gave in discounts to hospitals to buy Protonix.  Wyeth had to tell the government its “best prices” and would pay rebates to state Medicaid programs for the difference so that the program for poor and disabled people would get the best price possible.  Wyeth avoided paying hundreds of millions of dollars between 2001 and 2006 by misreporting the discounts it gave hospitals, the government said.

The government stepped into the case and settled it.  Lauren Kieff, a former hospital sales representative for AstraZeneca Pharmaceuticals LP, and LaCorte, a frequent qui tam plaintiff who practices medicine in New Orleans, split $100 million in service awards for their help blowing the whistle.

That set the table for another fee dispute, separate from the one that was settled Tuesday.  LaCorte and his attorneys agreed to split their service awards, with 62 percent going to LaCorte and 38 percent going to his attorneys.  But the three firms that represented him are still fighting it out over how to split the 38 percent, with two of them — LaCorte's former lawyers at Vezina & Gattuso LLC and Boone & Stone — arguing that the fees should be split evenly, and a third, the Sakla group, saying that the other two firms didn’t do enough to justify an even split.

The most recent filings show that the firms are asking Judge Woodlock for summary judgment on that dispute.  The statutory fees from Pfizer, at issue in Tuesday's order, were for work that the Sakla firm had done. 

The case is U.S. ex rel. LaCorte et al. v. Wyeth Inc., case numbers 1:03-cv-12366 and 1:06-cv-11724, in the U.S. District Court for the District of Massachusetts.