March 4, 2013
A recent ABA Journal story, “Law Firm Billing Contract Lawyers at $1K Hourly must Reveal what they were Paid, Federal Judge Says,” reports that a federal judge in Manhattan ruled in favor of discovery by a perpetual fee objector over the wages paid by a law firm to the contract attorneys it billed at $1,000 an hour in its fee request.
Last year, Citigroup Inc. agreed to pay $590 million to settle the securities class action suit, In re Citigroup Inc. Securities Litigation, brought by plaintiffs firm Kirby McInerney over the subprime/mortgage crisis. The suit alleged that Citigroup materially misrepresented its exposure to collateralized debt obligations (CDOs), as well as the value of those CDOs. Kirby McInerney litigated this case for over four years and engaged in extensive motion practice and discovery to achieve the result for shareholders. The settlement, however, grinded to a halt when perpetual fee objector Ted Frank objected to the plaintiffs’ $100 million fee request.
“At NALFA, we think this sets a bad precedent and goes too far. Now, law firm wages and salary is fair game for fee objectors to comb through as they prolong and derail the class action settlement process,” said NALFA Executive Director Terry Jesse.
NALFA also reported on this case in “Citigroup Plaintiff Lawyers Fire Back at Perpetual Fee Objectors”