A recent Law 360 story by John Petrick, “Glancy Prongay Seeks $1.2M Fees in K12 Charter School Deal,” reports that Glancy Prongay & Murray asked a California federal judge to approve $1.2 million in attorney fees for its negotiation of a $3.5 million settlement in a shareholder suit claiming online charter school operator K12 Inc. hid its practice of inflating attendance numbers and success rates.  In a motion, the firm also asked for $166,979 in litigation expenses and the awarding of $5,500 to lead plaintiff Babulal Tarapara for his costs, which includes lost wages, incurred in his representing the settlement class.

Over nearly three years, Glancy Prongay attorneys worked a collective 4,564.35 hours on a contingency basis without any promise of ultimately being paid, according to the motion brief.  The $1.23 million in attorney fees represents about 33% of the overall settlement, which is in line with national averages and rightfully takes into account the risks taken by lead counsel in what the motion brief describes as “hard-fought and difficult” litigation.  “Lead counsel faced numerous challenges to establishing liability, loss causation and damages.  The risk of losing was very real, and it was greatly enhanced by the fact that lead counsel would be litigating against a corporate defendant represented by highly skilled defense counsel,” according to the motion brief.

As for the lead plaintiff’s fee request, according to the motion, Tarapara spent about 55 hours participating in the case.  During that time, he reviewed court orders, pleadings, briefs and communicated with lead counsel about case developments.  He also assisted lead counsel in tracking down documents and responding to interrogatories.  U.S. District Judge Phyllis J. Hamilton granted preliminary approval to the deal in February after finding it was higher than the median settlement amount for securities class actions and that the parties had litigated hard before shaking hands on an agreement.

K12's stock price dove in October 2015 following the company's revelation that it was under state investigation and a widely publicized academic study that questioned the effectiveness of online charter schools.  In early 2016, California's former Attorney General Kamala Harris said she reached an agreement valued at $168 million to end her suit against the for-profit online charter school operator.  Claims included that K12 had violated false advertising and unfair competition laws by convincing parents to enroll their kids using misinformation about student performance and other aspects of its program.  That settlement included an $8.5 million payment to the Golden State's top cop and another $160 million in debt relief in the form of "balance budget credits" to the California Virtual Academies, nonprofit schools K12 managed.