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Category: Fee Benchmark / Standard

Judge Needs More Data in $57M Antitrust Fee Request

March 27, 2024

A recent Law 360 story by Celeste Bott, “Ill. Judge Needs More Info To OK $57M Chicken Antitrust Fee”, reports that an Illinois federal judge overseeing a sprawling antitrust litigation against broiler chicken producers said he couldn't rule on class counsel's renewed bid for a $57 million attorney fee award thrown out by the Seventh Circuit last year without more information on one of the firm's graduated fee arrangements in a similar 2015 antitrust case, which wasn't disclosed in the first go-around.

U.S. District Judge Thomas Durkin said during a remote hearing that he wanted more briefing from the both plaintiffs' firms — Hagens Berman Sobol Shapiro LLP and Cohen Milstein Sellers & Toll PLLC — and from class objector John Andren as to what effect the 2015 case has had in assessing the attorney fee award in the $181 million deal for chicken buyers.

In the earlier case, Cohen Milstein took on some of the nation's largest investment banks while representing the Public School Teachers' Pension and Retirement Fund of Chicago, a sophisticated plaintiff which negotiated attorney fees ex ante, or ahead of case resolution.

In that case, the plaintiff adopted a graduated scale.  If the same scale were to be used in the chicken case, class counsel estimated they would be entitled to $44 million for the $181 million settlement, or roughly 26%.  But the counsel argued they would have negotiated a higher rate in the broiler chicken case because it doesn't involve a trillion-dollar financial market.

Andren, meanwhile, said Judge Durkin should apply a similar fee schedule agreed to by Chicago Teachers, which entail fee brackets that decline both by the size of the settlement and by the stage of settlement.

"The latter is as important as the former, because sophisticated plaintiffs realize that trials are expensive and risky," Andren said in his opposition to the firms' renewed bid for a $57 million fee award in the chicken case.  "To align the incentives of class and counsel, attorneys need to receive a larger share of the recovery for more procedurally-advanced settlements and verdicts. This cannot occur when relatively early settlements are paid at 33%."  Judge Durkin also noted Tuesday that both are large, complex antitrust cases with many defendants and astronomical damages.  "There's enough similarities where I want to hear from both sides," he said.

The law firms, however, have contended "there is an ocean" between the size of the potential recovery, and potential fee awards, in both cases, and noted that in the chicken case, they represent indirect purchasers, which increases the risk relative to the banking cases.

"Indirect purchasers face defendant attacks that direct purchasers do not, and these attacks increase the chance of waking away with nothing.  And even though they take on this additional risk, the total damages indirect purchasers can recover based on state law claims is about half of what direct purchasers can recover for their federal claims," the firms said in a renewed fee motion filed in September 2023.

In that motion, they argued the court applied the correct methodology for determining fees the first time and came to the correct conclusion in awarding just over 33% of the settlement fund.  "Not only does the original award align with other awards in this specific case, it also aligns with the best available data on negotiated rates in antitrust cases," the class counsel said.  The fee award is back for reconsideration by Judge Durkin after the Seventh Circuit held last year that he failed to adequately consider bids made by class counsel in auctions in other cases and fee awards in different circuits.

Andren had taken issue with the roughly one-third cut of the settlement that Hagens Berman and Cohen Milstein were to receive in a deal the firms had struck with Fieldale Farms Corp., Peco Foods Inc., George's Inc., Tyson Foods Inc., Pilgrim's Pride Corp. and Mar-Jac Poultry.

Private plaintiffs began suing the nation's largest broiler-chicken producers in September 2016, claiming the producers coordinated and limited chicken production to raise prices and exchanged detailed information about capacity, sales volume and other data through statistical research compiler Agri Stats Inc.

The settlements at issue in this appeal were reached with Tyson for $99 million, Pilgrim's for $75.5 million, Peco for $1.9 million, George's for $1.9 million, Fieldale for $1.7 million and Mar-Jac for $1 million.  The agreements were awarded final approval by a district judge in December 2021.

A three-judge Seventh Circuit panel complimented the lower court in August 2023 for its "fine job of shepherding" the complex litigation, but said it made a mistake when it discounted bids made by one of the two firms serving as class counsel in other cases because the proposals had declining fee scale award structures.

Andren had also argued that the lower court should have taken into account that class counsel frequently did work in Ninth Circuit district courts, which employ a lower 25% "benchmark" for presumptively reasonable attorney fees.  The Seventh Circuit panel agreed the Illinois district judge shouldn't have categorically assigned less weight to Ninth Circuit cases in which counsel was awarded fees under a mega-fund rule.  In addition to vacating the fee award, the panel remanded the matter for "greater explanation and consideration" of the factors it laid out, noting it expressed no preference as to the amount or structure of the award, just the need for further review.

Article: The Changing Landscape of Fees in Securities Class Actions

December 11, 2023

A recent Law 360 article by Edward Flores, The Shifting Landscape of Securities Class Action Fees”, reports on the changing landscape of attorney fees in securities class actions.  This article was posted with permission.  The article reads:

A recent Law360 article notes that there appears to be a growing shift in how class action fees are awarded, with the benefits secured for class members taking an increasing role in determining fees rather than fees simply being a function of the settlement amount.  An examination of data on the percentage of the recovery awarded to attorneys in securities class actions shows that while the percentage declines as recoveries get larger, that percentage also increases as recoveries grow relative to a statistically predicted recovery.

As part of the settlement stage of a securities class action, plaintiffs file motions for approval of the settlement, as well as attorney fees and expenses.  In these motions, the attorney fees sought are typically based on a percentage of the proposed settlement, with the proposed figures often based on a sample of recent cases, the case's lodestar multiplier or relevant benchmarks.  For example, a June case in the U.S. District Court for the District of Delaware, In re: Electric Last Mile Solutions Inc., noted that "Lead Counsel intends to seek an award of attorneys' fees of no more than one third of the Settlement Amount.  This fee request is in line with other settlements approved in recent cases."

In another case in the U.S. District Court for the Middle District of Tennessee in July, Bond v. Clover Health Investments Corp., the plaintiffs' counsel noted that the "request for 25% of the Settlement Fund ... amounts to a lodestar multiplier of 3.53, which is within the range of multipliers commonly awarded in securities class actions and other complex litigation."

Finally, the plaintiffs' counsel in a U.S. District Court for the Northern District of California case in August, Purple Mountain Trust v. Wells Fargo & Co., noted that "Lead Counsel seeks an award of attorneys' fees of 25% of the Settlement Amount.  This fee request ... is consistent with the benchmark for attorneys' fee awards in this Circuit."

Plaintiffs counsel also typically highlights the recovery they have obtained for the class and their work to obtain that recovery.  For example, in the aforementioned case involving Clover Health, counsel for the plaintiffs noted that the "recovery represents approximately 13.2% of the likely recoverable damages in this case, well above the median recovery of 1.8% of estimated damages for all securities class actions settled in 2022."

However, those recoveries are, at best, benchmarked as a percentage of some estimate of losses suffered by the class.  An important question is whether plaintiffs counsel receives a higher fee when they obtain an unexpectedly large settlement, potentially indicating productive work on their part.  Moreover, it may be of interest to see what other factors drive attorney fees awarded in securities class actions, both in terms of examining the direction and magnitude that certain factors have on attorney fees, as well as for purposes of estimating or cross-checking proposed fees given certain characteristics of a case.

Data and Analysis

To examine what factors can help explain attorney fees awarded, we analyzed securities class actions with alleged violations of Rule 10b-5 involving common stock that settled during the period from January 2012 through June.  In addition to the logarithm of the actual settlement amount, some of the variables analyzed include a potential proxy for attorney performance and the strength of a case, the time to resolution of a case, and the status of certain motions as of the time of settlement.

As a potential proxy for attorney performance and the strength of a case, we calculated the ratio of the actual settlement value to its mean predicted settlement value to examine if better-than-expected settlements are reflected in attorney fees received.  For each case, the mean predicted settlement value was calculated using an econometric model that uses as inputs variables that are historically known to drive settlement values.[8] For the middle 95% of cases in the dataset, the value of this ratio ranges from 0.2 to 3.8.

We also examined the effect that the time to resolution has on attorney fees, based on the filing of the first complaint of a case.  Finally, we examined the effects that the filing and outcome of the motion to dismiss and the motion for class certification have on attorney fees.  In measuring attorney fees, we used two different variables: attorney fees as a percentage of the settlement, and total attorney fees and expenses as a percentage of the settlement.  As these variables range from 0 to 1, a fractional logistic regression model is used to analyze the relationship between attorney fees and the independent variables.

As the coefficients of this model can be hard to interpret, we examined the marginal effects of the independent variables in order to get an idea of the effect that a change in one variable has on attorney fee percentage, holding all others constant.


From Table 1, we see that the ratio of the actual settlement to the mean predicted settlement has a positive and statistically significant effect, possibly highlighting how a better-than-expected outcome is rewarded in attorney fees.  In terms of magnitude, we find that a 0.1 increase in this ratio results in an additional 0.1% in attorney fee percentage.

One interesting question that our data does not let us answer is whether higher-than-predicted settlements reflect a particularly strong prosecution of the case by plaintiffs counsel or case factors favorable to the class that are not captured by our model.  Overall, we find that the variables in the model using attorney fee percentage as the dependent variable can explain nearly 20% of the total variation in attorney fee percentage.

Looking at the individual variables beyond the ratio of the actual to predicted recovery, the logarithm of the settlement value is unsurprisingly the strongest predictor of attorney fees, with higher settlement values being associated with a lower attorney fee percentage, consistent with prior research.

On the other hand, the time-to-resolution variable had a small and statistically insignificant effect, with each year contributing an additional 0.22% in attorney fee percentage.  Thus, to the extent that courts are rewarding plaintiffs counsel — or plaintiffs counsel are willing to ask for more — through the fee percentage, that would appear to be based more on results than time spent.

When analyzing the motion variables, we find that the filing of a motion to dismiss has a statistically significant negative effect on attorney fees.  Meanwhile, the effect of a motion to dismiss being denied or partially granted is positive and statistically significant, contributing an additional 1.5% in attorney fee percentage and again potentially showing that plaintiffs counsel is rewarded for achieving outcomes favorable to the class.

As over 90% of settled cases have a motion to dismiss filed, this means that cases where the motion to dismiss is denied or partially granted tend to have a 1.5% higher attorney fee percentage relative to cases that settle before a court decision was reached in the motion to dismiss.

The filing of a motion for class certification has a small and not statistically significant effect on attorney fees.  However, the effect of a motion for class certification being granted is positive and statistically significant, contributing an additional 1.6% in attorney fee percentage, again consistent with the idea that plaintiffs counsel is being rewarded for achieving outcomes favorable to the class.

We also performed this analysis using total attorney fees and expenses as a percentage of the settlement size as the dependent variable.  Under this model, the explanatory variables explain roughly 40% of the total variation in total attorney fees and expenses.

While the results look similar for several of the variables analyzed, there are a few notable differences. For example, the time-to-resolution variable was statistically significant in this model, with each year contributing an additional 0.62% in attorney fee percentage and expenses.  In other words, plaintiffs counsel appear to be compensated for actual expenses, but are not being compensated through the fee percentage for time spent.

The filing of a motion for class certification was also positive and statistically significant, contributing to an additional 2.8% in attorney fee percentage and expenses.


Our analysis of settled cases shows that in addition to the settlement size, plaintiffs counsel in securities class actions appear to be rewarded for good settlement outcomes relative to a statistical prediction, with certain outcomes for the motion to dismiss and motion for class certification also affecting attorney fees awarded.

As a starting point, this means that in securities class actions, attorney fees are not just based on "the amount of money involved in a settlement," but also to at least some degree on the difference between that amount of money and the expected amount of money based on characteristics of the case.

That said, it is possible that analyses such as those described here may also be useful for purposes of estimating or cross-checking proposed fees given certain characteristics or outcomes in a case, particularly if one would like to reward successful advocacy by plaintiffs counsel. 

As noted above, however, while our proxy variable for attorney performance and strength of case incorporates several quantitative factors that drive settlement values, it may not account for other qualitative strengths and weaknesses of a case.

Nevertheless, given that there are some areas that we can measure, it may make sense to see how a proposed settlement compares to a statistical prediction as part of the consideration of the relevant amount of attorney fees.

Edward Flores is a senior consultant at NERA Economic Consulting.

Meta Class Counsel Lowers Fee Request Amid Judicial Criticism

November 6, 2023

A recent Law 360 story by Bonnie Eslinger, “Meta Tracking Class Lowers Atty Fee Bid After Judge Criticism”, reports that counsel for Facebook users took another shot at getting approval for the fees they'll receive from Meta's $37.5 million deal settling class claims that it tracked 70 million users' locations, dropping the request by $500,000 since the judge said their $9.3 million request is "not going to happen."  In a renewed motion for attorney fees and expenses filed, class counsel noted that while they initially asked for a 25% cut of the settlement, at the court's urging, they've reduced their request to 23.5%.

The request argues, however, that in light of class counsel's "tremendous effort" and "tremendous recovery" compared to similar class settlements, they shouldn't have to deviate from the one-quarter award that's usually considered a benchmark for such cases.  "But, to demonstrate their unflagging commitment to the interests of the class and their respect for the court, class counsel now request only 23.5% of the common fund," the motion states, later adding that the percentage calculates out to $8.8 million.  The five-year case was not easy to litigate, the plaintiffs' lawyers told the court.

Beyond the briefing to fight Meta's motions to dismiss in the case, "counsel faced a formidable opponent that resisted discovery at every turn," the motion states.  The lawyers for the class invested considerable time and effort to get the evidence they sought from Meta, which was represented by "two of the top defense firms in the world," Gibson Dunn & Crutcher LLP and previously Munger Tolles & Olson LLP, the motion underscores.  Last month, the judge overseeing the case held off giving final approval to the deal, criticizing the 1.3% claims rate as too low and saying the $9.3 million attorney fee request is "just not going to happen."

In the revised attorney fee request, the lawyers for the class also addressed the court's concerns about the fact that time spent on a related case that was dismissed was included in the attorney fee calculation, that the fees of too many lawyers were included in the request, and that additional support was needed to justify counsel's hourly rates.

As to the first concern, class counsel said the two cases "were inextricably intertwined" as of December 2019, when the lawyers who filed each complaint agreed to work together and the cases were related for purposes of coordination.  A significant portion of the discovery requests were done by the lawyers in the dismissed case, the filing adds.  In addition, "numerous factual and legal theories developed" in the dismissed case were used in the case that settled, now before the court, the motion states.

However, in light of the court's comments at the hearing, class counsel told the court that it removed some of the hours specifically associated with the now-dismissed complaint, although it kept some of the time associated with the discovery.  With regard to the court's second concern about the billing including too many lawyers, the motion states that it removed all hours from the tab for attorneys who billed for under 40 hours of work.  The cuts resulted in 1,307 fewer hours and removed from the original fee motion, class counsel told the court.

In their motion, class counsel also argues that the $37.5 million deal is "substantial" and compares to similar data privacy settlements, for which the lawyers were given at least 25% of the fund.  The attorney fee request also highlights the fact that class counsel worked on a contingent basis.  "With no guarantee of recovering anything for their efforts, plaintiffs' counsel advanced 9,839.5 hours and $309,524.79 in expenses, while facing unusually heightened risks of no recovery, for over four years," the motion states.

The filing also argues to the court that class counsel's hourly rates are consistent with market rates.  Documents submitted to the court showed hourly rates for the highest paid lawyers at each class counsel firm that included $997 per hour for Sabita Soneji, a partner with Tycko & Zavareei LLP; $1,050 for Barrett Vahle, a partner with Stueve Siegel Hanson LLP; $1,000 for Franklin Azar of Azar Firm; and $940 for Ivy Ngo of the Law Office of Ivy T. Ngo.

Class Counsel Seek $94M in Fees in DuPont PFAS Settlement

October 17, 2023

A recent Law 360 story by Adrian Cruz, “Attorneys Seek $94 Million From DuPont PFAS Settlement”, reports that attorneys representing municipalities suing DuPont and other chemical companies over contaminated drinking water from PFAS chemicals have asked a South Carolina federal judge for $94 million in attorney fees.  In a memorandum, the group of attorneys from FeganScott LLC, Douglas & London PC, Napoli Shkolnik PLLC and Baron & Budd PC said their request of $94.8 million in fees is only 8% of the $1.19 billion settlement that was reached with Chemours, DuPont and Corteva in June.  The attorneys added that the 8% request is significantly below the 25% limit allowed by the Fourth Circuit.

Some of the reasons cited for the attorneys' fee request include a workload of nearly 415,000 combined billed hours, the novelty and complexity of the questions being asked throughout the litigation progress, the added challenges posed by the COVID-19 pandemic, and the end result, which settled one of the nation's largest multidistrict litigations, which they said benefits over 100 million Americans due to the drinking water improvements that will be made as a result.

"The DuPont settlement was the result of a years-long, multitrack effort by plaintiffs' counsel who expended hundreds of thousands of combined hours on multiple fronts, including settlement efforts, litigation efforts and MDL case administration, without any guarantee of a recovery," the memorandum said.  "This three-pronged approach was necessary given the highly complex nature of this MDL involving so many defendants, and in order to meet the challenges and obstacles presented by this MDL, including, of course, litigating in the midst of a global pandemic."

Along with the $94.8 million in fees, the attorneys also requested $2.1 million in costs, noting that the amount covers about 10% of the total out-of-pocket costs spent on the litigation.  The attorneys added that because of the case's size and the involvement of large corporations, it was a risky one for the firms involved as they ultimately spent over $21 million without any guarantee of recouping those costs.

"Considering the expense and time involved in prosecuting this case against well-resourced defense counsel on a purely contingent basis, with no guarantee of a positive result and ever-mounting litigation costs in excess of $21 million, risky cases such as this are not for the faint of heart," the memorandum said.  "Whereas many shied away from this litigation, the court-appointed counsel poured their heart and soul into this litigation and should be rewarded accordingly."  In June, the municipalities reached a $10.3 billion settlement with 3M, which was also sued for its role in manufacturing products using PFAS and the ensuing water contamination that allegedly happened as a result of the chemicals.

"Addressing the PFAS settlements with DuPont and 3M, this wasn't just a case for us at the PEC [plaintiffs' executive committee], but a long, uphill battle spanning half a decade," plaintiffs' attorney Paul Napoli told Law360.  "For five strenuous years, we worked relentlessly without immediate compensation, pouring significant financial resources into the case.  This endeavor saw us navigating vast expanses of documents, managing an overwhelming amount of data, and facing formidable defenses that often seemed insurmountable.  Our proposed 8% fee is not just competitive within the industry, but it reflects the hardships we faced, the risks we took, and the substantial investments we made."

Lead plaintiffs’ counsel spent nearly 415,000 hours on the litigation, according to their fee motion, with a lodestar of more than $300 million, far more than what they were asking for in the DuPont settlement.  The lodestar is the number of hours spent on a case multiplied by the average hourly rate of the lawyers.

In a declaration attached to the fee motion, Vanderbilt Law School Professor Brian Fitzpatrick said the fee request was below the norm, even for settlements worth $1 billion or more.  The average award in 36 class action settlements of that size, between 2006 and 2023, was 12.1%, he wrote.  “Arguably, an even greater percentage fee is warranted,” the motion says, “but class counsel recognizes that their efforts to resolve these claims against DuPont parallel the claims being resolved against 3M.  To request a different percentage of the fund simply because of the size of the fund was not deemed justified.”

The motion states that the fees would be considered common benefit fees and deducted from retainer fees that firms already received through their own contingency contracts.  Lead plaintiffs’ lawyers also asked for $2.1 million in costs relating to the DuPont settlement, about 10% of their total expenses when including the 3M deal.

$185M Fee Award in $725M Meta Privacy Class Settlement

October 13, 2023

A recent Law 360 story by Lauren Berg, “Facebook Users’ Attys Get $185M In $725M Meta Privacy Deal”, reports that counsel representing a class of more than 200 million Facebook users will take home nearly $181 million in fees and $4 million in costs after a California federal judge granted final approval to the $725 million deal resolving privacy claims over the Cambridge Analytica data harvesting scandal.  U.S. District Judge Vince Chhabria put his final stamp of approval on the $725 million settlement that the preliminarily certified class reached with Meta Platforms Inc. in December.  Judge Chhabria also awarded class counsel $180.4 million in attorney fees, which equals 25% of the settlement fund, and almost $4 million in costs, according to the simultaneously filed orders.

The fee and costs take into account amounts previously awarded to class counsel as sanctions, according to the order, including in February when Meta and its attorneys at Gibson Dunn & Crutcher LLP were ordered to pay $925,000 over their "unusually egregious and persistent" misconduct delaying discovery and gaslighting of opponents in seeking to extract a lower-priced settlement.

"The court does not take lightly the concern that a fee award equaling 25% of the settlement fund can be inappropriate in cases involving a massive monetary recovery for the class," Judge Chhabria said in the order.  "In many such cases, the 25% benchmark will be too high."  "As a result, the court has viewed the proposed fee award with greater skepticism, and less deference to the 25% benchmark, than in a typical case," he added.  "That said, the court finds that the attorneys' fee award is fair and reasonable under the percentage-of-the-recovery method."

The fee amount represents a 1.99 lodestar multiplier for roughly 150,000 hours of attorney work done over the past five years, which is below average in settlements of comparable size, the order states.  The judge said the settlement is a substantial portion of the maximum amount of damages the class could have recovered after trial and an appeal.  Novel legal issues and complicated facts, as well as Meta's resources and "aggressive approach to litigation," created a risk that the class would take home nothing — a risk shouldered by Bleichmar Fonti & Auld LLP and Keller Rohrback LLP, according to the order.  "The magnitude of the settlement fund is due more to the efforts of counsel than the size of the class," Judge Chhabria said.

The parties secured preliminary approval of the $725 million deal in March, before asking for final approval in July, in which the users touted the nearly 6% claims rate as "well above claims rates approved in other large settlements."  But objectors told the court later that month that the deal was overly broad and unfairly favorable to certain Facebook users.

Class members Stewart Harris and Ryan Cino argued that the likelihood that someone's data was compromised "almost certainly depends" on how many Facebook friends they had, which means users with fewer friends are getting just as much compensation despite having faced less risk.  And Sarah Feldman argued the settlement is too small, saying the potential damages in the case could be $6.25 billion.

At a final approval hearing in September, however, Judge Chhabria lauded the high rate of class participation, saying he was "blown away" that over 17.7 million valid claims have been submitted in what may be the largest response to a U.S. class action.  The judge granted final approval to the settlement, finding that more than 93% of the target audience of 253 million Americans had received notice of the settlement.  He also overruled the settlement's objectors.