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$315M Fee Allocation Dispute in Vioxx Class Action

February 24, 2011 | Posted in : Contingency Fees / POF, Expenses / Costs, Fee Agreement, Fee Dispute, Hourly Rates, Lodestar

A recent Corporate Counsel story, “Fierce Fight Erupts Over $315 Million Vioxx Attorney Fee Funds” reports that several law firms have objected to the proposed allocation of fees from the $4.85 billion Vioxx product liability settlement.  Last year, after winning 11 of 16 trials involving allegations that its painkiller Vioxx contributes to heart disease and other illnesses, Merck agreed to a $4.85 billion settlement fund.  In October 2010, New Orleans federal district court judge Eldon Fallon set aside 6.5 percent of the fund -- $315.3 million – for attorney fees.  He also appointed nine firms to allocate the fees among the 109 plaintiffs law firms involved in the New Orleans MDL Vioxx litigation.

Last month, the committee filed its fee allocation recommendations (pdf) with the court.  The proposal grants the committee’s own members a large portion on the fees in the common benefit fund: $230 million, or about 70 percent of the total pool.  Since the fee committee submitted its recommendation, 17 law firms have filed objections to the allocation of fees.  They accuse the committee of ignoring lodestar calculations and granting its own members fee equivalent to hourly rates as high as $2,205, while leaving only scraps for other lawyers who committed thousands of hours to the Vioxx litigation.

“No one to my knowledge who has taken such a risk has ever been awarded such a ridiculously low rate considering the qualifications of the people who did this work,” wrote plaintiffs lawyer Daniel Becnel in his fee objection (pdf).  Becnel, who told us his firm committed more than 16,000 hours to the Vioxx litigation, including work that steered the MDL to Louisiana, was allocated $455,000 by the fee committee after complaining that his initial award of $97,000 amounted to only $6 an hour.

The objectors have also raised questions about the agreement between Michael Stratton of Stratton Faxon and fee committee members Herman of Herman Herman Katz & Cotlar, Christopher Seeger of Seeger Weiss, and Andrew Birchfield of Beasley Allen.  Stratton was appointed by Judge Fallon to represent plaintiffs attorneys with single clients in the Vioxx litigation, who didn’t want to pay a full 8 percent share of their clients’ settlement into the MDL common fund.  At a conference before the judge (pdf), Stratton and the fee committee members agreed to reduce the pay-in to 4 percent for single-client plaintiffs firms that had already squawked at the 8 percent assessment.  Fee allocation objectors claim the Stratton deal decreased the size of the common fund.  “Of the $315,250,000 awarded by this court, only $311,885,030 has been recommended for allocation,” they argue.

NALFA first reported on this case in blog post “Plaintiffs Lawyers Awarded $315M in Fees in Vioxx Litigation.”  For more information visit www.officialvioxxsettlement.com