A recent Law 360 story by Rose Krebs, “5 Firms Seek $44M Atty Fees in GCI Liberty Suit in Chancery”, reports that five firms will seek $44 million in fees for their work in a suit filed over alleged fiduciary duty breaches in GCI Liberty Inc.'s sale to Liberty Broadband Corp., in what they assert is one of the most significant results ever achieved in any Delaware stockholder litigation.  In a brief filed to the Delaware Chancery Court, Bernstein Litowitz Berger & Grossmann LLP, Prickett Jones & Elliott PA, Kessler Topaz Meltzer & Check LLP, Klausner Kaufman Jensen & Levinson PA and Morris Kandinov LLP indicated that they intend to seek two separate fee awards of $22 million each.

In the filing, the firms said they are seeking a $22 million fee award related to an agreement reached in November that headed off a preliminary injunction fight over the sale, after the plaintiffs accused GCI Liberty's directors of violating Delaware corporation law that banned certain mergers involving controlling shareholders.

"This case highlights the worst inequities that a dual-class capital structure invites and the best results that strategically sound and effectively executed shareholder litigation can achieve," the brief said.  "Here, self-interested fiduciaries attempted to transfer substantial and valuable voting rights to themselves.  Plaintiffs and their counsel challenged the scheme, secured expedition over strident opposition, and, under extreme time pressure, assembled an evidentiary record that was so strong that defendants capitulated to avoid a pre-vote injunction hearing."

Under the agreement, GCI Liberty controlling stockholder John C. Malone and CEO Gregory B. Maffei gave up "massive benefits they extracted in connection with the stock-for-stock merger of GCI Liberty Inc. and Liberty Broadband Corporation," the brief said.  And they did so "without receiving any release from liability for additional harm arising from" their alleged misconduct, the firms said.

The agreement "caused the conversion of Malone's and Maffei's GCI super-voting shares (and options) into Broadband non-voting shares (and options)," the brief said.  As a result, Malone's and Maffei's voting power in the combined company was reduced from more than 60% to less than the 49% that they held in Broadband prior to the merger, the firms said.

"Plaintiffs believe that these are among the most significant – and valuable – non-monetary benefits ever achieved in Delaware stockholder litigation and warrant plaintiffs' requested fee," the brief asserted.  The firms said they will also seek another attorney fee award for negotiating a $110 million deal to end the litigation.  They will seek an award equal to 20% of the settlement amount and file a brief with the court in support of that request at a future date, according to the brief.

"The settlement does not reduce the benefits provided by the PI Stipulation [November agreement], which are continuing, permanent benefits for the equity holders of Broadband, including members of the Class," the firms said.  "Any award of attorneys' fees and expenses in connection with the [agreement] will not be paid out of the settlement fund while any award of attorneys' fees and expenses in connection with the $110 million settlement will be paid out of the settlement fund."