A recent Law 360 story by Josh Liberatore, “$7M Cut From Atty Award in John Hancock Overcharging Suit” reports that attorneys who helped a class of John Hancock life insurance policyholders score a $123 million settlement will now take home $27 million for their work, after a New York federal judge trimmed about $7 million from Susman Godfrey LLP's initial award to reflect settlement opt-outs. According to an amended order signed by U.S. District Judge Alvin K. Hellerstein, the class attorneys will receive $27 million in fees, down from $34.4 million the judge awarded to Susman Godfrey in March. The fee reduction comes after it was revealed at a fairness hearing on May 17 that policyholder opt-outs have reduced the total settlement fund by around $30 million.
On May 17, Judge Hellerstein also gave full approval to the class settlement, which had called for $123 million in cash to go to around 1,300 John Hancock Life Insurance Co. of New York universal life insurance policyholders who were subject to "cost of insurance" increases in 2018 and 2019. However, two groups of policyholders opted out of the settlement, dropping the cash total to around $93 million, Judge Hellerstein said at the fairness hearing.
In March, Judge Hellerstein granted in full Susman Godfrey's proposed order for $34.4 million in fees, plus a pro rata share of interest earned on the settlement fund as well as $1.4 million in expenses. Each of the seven named plaintiffs in the class action will receive $25,000 in incentive awards, according to the March order. Following the opt-outs, the judge sought to trim Susman Godfrey's award to $25 million. The firm had argued for just under $30 million, but Judge Hellerstein thought that was "excessive" and could be considered a "windfall." The firm and judge eventually agreed on $27 million.
Other than the fee reduction, Judge Hellerstein's order from March will stay largely the same. The only other change was a provision stating that as class counsel, the Susman Godfrey attorneys "shall not receive attorney fees or be reimbursed expenses until after the settlement administrator sends for delivery a settlement check to each settlement class member," which must come "within 44 days after the final settlement date."
The settlement itself was given full approval following its preliminary approval in January. In addition to $123 million in total available cash, it provides class members with nonmonetary benefits, including a five-year freeze on COI increases for class members, that Susman Godfrey has said are worth an additional $67.8 million. The original $123 million settlement amount as well as the new $93 million figure equal 91.25% of the COI overcharges that John Hancock collected from class members through August 2021, Susman Godfrey said. That ratio is well above previous COI overcharge cases in New York federal court, the firm has said.
The $34.4 million that the Susman Godfrey attorneys were set to take home had represented 28% of the cash settlement and 18% of the overall settlement benefits when nonmonetary benefits are included, the firm said. The new $27 million award represents around 29% of the cash settlement when adjusted for opt-outs.