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Law Firm Uses Expert Testimony to Recover Fees in Major Class Action

October 25, 2010 | Posted in : Billing Practices, Contingency Fees / POF, Expenses / Costs, Fee Expert / Member, Fee Request, Hourly Rates

A recent NLJ story, “Labaton Seeks $55 Million Paycheck in Countrywide Class Action” reports that Labaton Sucharow, LLP, the firm that obtained a $624 million settlement against Countrywide Financial Corp. and KPMG  – the largest recovery to date in a securities class action filed over the housing crisis – is seeking more than $55 million in attorney fees and expenses.  U.S. District Judge Mariana Pfaeizer in Los Angeles gave the settlement preliminary approval, but questioned the hours billed and the number of associates and contract attorneys used by Labaton Sucharow.  Labaton is seeking more than $47.3 million in attorney fees, or about 7.59% of the total settlement.  In addition to the fees, Labaton’s fee motion asks for interest and reimbursement for nearly $8.1 million in expenses.

The firm submitted the expert declaration of Michael Diamond, a mediator in Beverly Hills, with their fee request.  Diamond called the 7.59% figure “reasonable”.  “This is clearly not a case where a strike suit lawyer seeks a windfall fee after forcing a settlement without doing real substantive work,” he wrote.  Diamond, who is getting paid $750 per hour for his expert work, said that partner billing rates of $550 to $865 “seem on the low side” and that the blended rate of $403 per hour, when accounting for paralegals and associates, appeared to be “an extremely reasonable rate for a New York or Los Angeles firm handling cases at this level.”  The firm also had as many as 119 “short-term attorneys” working on the case, Diamond wrote.

The firm submitted a chart comparing its fee request to the percentage of attorney fees awarded in 14 other shareholder class action settlements valued at between $400 million to $800 million.  In those cases, the average fee request amounted to 15.54% of the recovery.  Labaton also submitted charts detailing how hours were spent on the case, noting that nearly 43% of the time involved reviewing documents in discovery.  The firm’s lawyers reviewed nearly 30 million pages of documents and prepared for 81 depositions, according to the fee request.