A recent Law 360 story by Anne Cullen, “2nd Circ. Upholds $300M Atty Fees in Forex Rigging Case,” reports that the Second Circuit downed an objector's efforts to lop more than a third off a $300 million fee award for the firms that scored an investor class billions of dollars in settlements from banks accused of rigging interest rates in the foreign exchange markets. In a short, unpublished decision, a three-judge panel backed the fee award to lead counsel Scott & Scott Attorneys at Law LLP, Hausfeld LLP and other firms, rejecting arguments from sole objector Keith Kornell, who had insisted the attorneys' cut should have been closer to $190 million.
While Kornell had argued that any risk the firms faced taking on the case disappeared just over a year into the litigation when the investors cut the first deal, the Second Circuit found his theory runs counter to well-settled case law that states "litigation risk must be measured as of when the case is filed." In addition, the panel said, "this contention ignores that claims against the other defendants remained unresolved."
Kornell had also argued that the lower court made a mistake when it relied on total hours in calculating the lodestar, rather than a breakdown of hours by time, task and defendant. But the panel rejected that argument as well. The panel said the Second Circuit previously held that "when a court relies on the lodestar 'as a mere cross-check, the hours documented by counsel need not be exhaustively scrutinized by the district court."'
The litigation kicked off in 2013, when investors accused 16 major banks — including Bank of America, Citigroup and Morgan Stanley — of manipulating the benchmark rates used in forex transactions involving millions of dollars' worth of their assets. Five years later, after settlements totaling $2.3 billion had been reached with all but one of the banks, a New York federal judge ruled that the investor class' counsel could walk away with 13% of the pot.
The fee award was lower than the $381.4 million the firms had wanted, but Kornell indicated in a December appeal notice that he still believed the award was too high, although investors have expressed doubt about Kornell's motive or actual involvement in the case.