A recent Law 360 story by Rachel Graf, “Salix Class Attys Seek $44.6M in Fees For $210M Settlement,” reports that attorneys who secured a tentative $210 million settlement to end a proposed class action by Salix Pharmaceuticals Ltd. shareholders claiming the company misrepresented inventory levels to falsely inflate its stock price asked a New York federal judge for $44.6 million in fees.
The shareholders’ attorneys said the amount, representing about 21.24 percent of the settlement, is similar to the fees granted in comparable class actions, and is reasonable given the “numerous challenges” the counsel faced in proving liability and damages, especially since they brought the action on a contingent basis.
“The significant monetary recovery was achieved through the skill, tenacity and effective advocacy of lead counsel, which litigated this action on a fully contingent fee basis against highly skilled defense counsel,” the attorneys said in the filing. “Lead counsel had to devote a vast amount of time and resources to the action, litigating through an extensive and hard-fought fact discovery process before the settlement could be obtained.”
The case originated from two securities lawsuits that were filed after Salix stock plunged by more than 30 percent following the company’s November 2014 disclosure that it had much more inventory of many of its drugs than management had previously claimed. The suits were consolidated in March 2015, and the amended complaint alleged violation of the Securities and Exchange Act. The parties agreed to a $210 million settlement in March for a class of shareholders estimated to be in the thousands.
The shareholders’ attorneys said that fees for a non-class action would typically range between 30 percent and 33 percent of the settlement amount, and argued their requested award of 21.24 percent of the settlement is “well within the range of percentage fees that have been awarded in the Second Circuit in securities class actions and other similar litigation with comparable recoveries.”
The requested fee is based on an agreement the firm reached with a lead plaintiff before litigation began, and should therefore be given a “presumption of reasonableness,” according to the filing. In addition to the $44.6 million fees award, the attorneys have requested to be reimbursed for $1.9 million in litigation expenses and $29,800 in costs.
The suit is In re Salix Pharmaceuticals Ltd, case number 1:14-cv-08925 in the U.S. District Court for the Southern District of New York.