Fee Dispute Hotline
(312) 907-7275

Assisting with High-Stakes Attorney Fee Disputes

The NALFA

News Blog

Category: Fee Recommendation

$28.4M in Attorney Fees to Pennsylvania Opioid Counsel

December 21, 2023

A recent Law.com story by Aleeza Furman, “Judge Greenlights $28.4M in Contingency Fees to Firms Representing Pa. Opioid Plaintiffs”, reports that lawyers for Pennsylvania plaintiffs who signed onto a major 2022 opioid settlement are set to receive a cumulative $28.4 million in contingency fees from the deal.  Judge Barry Dozor of the Delaware County Court of Common Pleas, who oversees Pennsylvania’s coordinated opioid litigation, approved the fee awards Dec. 14.  The fees are slated to be paid out of the Pennsylvania Opioid Fee Fund—a chunk of money allotted for lawyers from Pennsylvania’s $1.07 billion share of the $26 billion global settlement between state and local governments and Johnson & Johnson, Cardinal Health, McKesson and AmerisourceBergen.

Dozor’s Dec. 14 order greenlit recommendations from retired Judge Joel Schneider, a special master charged with overseeing the allocation of the Pennsylvania Opioid Fee Fund.  Schneider divided $28.4 million in contingency fees among 11 law firms to be paid in annual increments over the course of five years.  The awards range from around $4,000 (to Philadelphia-area Levy Baldante Finney & Rubenstein) to $10.7 million (to Pensacola, Florida-based Levin Papantonio Rafferty).

The 11 firms Schneider listed are designated payees, which will go on to distribute portions of their respective awards among the host of other plaintiffs firms with clients involved in the settlement, according to one attorney involved in the litigation.

Saltz Mongeluzzi Bendesky partner Patrick Howard, who represents plaintiff Delaware County,  said Dozor’s order marks the first of two determinations regarding fees from the opioid fee fund.

Howard said the fund includes one portion for contingency fees—what Dozor just approved—and one portion for common benefit fees to be determined in 2024.  Howard said the second portion of fees would be awarded to a smaller group of lawyers who were actively involved in the litigation.  Dozor also already approved a $16.65 million payout from the fund in December 2022 reimbursing costs and expenses firms incurred in the litigation.

According to Howard, the fee determinations are part of a broader winding down of Pennsylvania’s long-running opioid litigation.  He said attorneys are currently hammering out the allocation details of a second wave of multibillion-dollar settlements with pharmacies and other drug companies, and most parties’ claims are resolved.  “As far as litigating against defendants,” Howard said, “I would say 95% of the commonwealth’s litigation is over.”

Judge: Vague Billing Justifies 10 Percent Cut in Attorney Fees

November 29, 2023

A recent Law 360 story by Beverly Bank, “’Vague’ Billing Justifies 10% Cut in Atty Fees, Judge Says”, reports that a federal magistrate judge recommended slashing an Iron Workers' benefits funds' request for attorney fees in a case over an employer's unpaid contributions, saying there are "vague" billing entries from the plaintiffs' counsel as part of a $2.2 million judgment.

U.S. Magistrate Judge Kimberly G. Altman issued a report and recommendation, suggesting the district court cut a nearly $111,000 attorney fee request from Iron Workers Local No. 25's benefit funds by 10%.  The attorney fees dispute is connected with U.S. District Judge Nancy G. Edmunds' order, requiring Next Century Rebar LLC to pay more than $2.2 million in unpaid contributions with interest and liquidated damages.  The company filed a notice of appeal to the Sixth Circuit.

"Portions of the trustees' itemized hourly work are described insufficiently to prove that the work 'was performed with reasonable diligence and efficiency,'" Judge Altman said.  The judge said many of the funds' billing entries linked to an audit are "vague," necessitating a drop in proposed attorney fees from around $110,900 to roughly $99,800.  Judge Altman did not disturb the funds' request for more than $18,200 in costs.

The judge pointed to billing entries connected with an audit, saying some entries about the correspondence and emails with the auditor "provide the court with little information as to the necessity of the work."  The benefit funds requested around $110,900 in October, saying the plaintiffs' counsel spent 388.8 attorney hours in pursuing the case.

Next Century Rebar called billing entries linked to the attorney fees request "excessive, duplicative, and vague" as part of the company's Oct. 30 response. The company challenged the funds' bid for fees over review of the audit.  "Excessive review of the audit is ongoing throughout the time entries of multiple persons without any detail or reason for the excessive amount of time spent reviewing, re-reviewing, and again revisiting the audit report," Next Century Rebar said.

The company said the funds were seeking fees for clerical work that could have been undertaken by a legal clerk or assistant to the plaintiffs' attorneys.  Judge Altman found that some of Next Century Rebar's complaints about the clerical work entries were valid and warranted lower attorney fees.  "Next Century has highlighted instances where parts or all of the described work was clerical in nature and could have been handled by paralegals or other staff at much lower rates," the judge said.

The judge took on arguments from Next Century that the request related to audit costs of about $13,000 was "outrageous," saying the company didn't raise evidence to back up this claim.  Judge Altman said an affidavit "from an attorney that worked closely on this case and on the review of the audit" corroborated the cost of the audit.

Eleventh Circuit Upholds 40 Percent Attorney Fee Reduction

October 11, 2023

A recent Law 360 story by Madison Arnold, “11th Circ. Oks Lower Atty Fees in Food Not Bombs Case”, reports that the Eleventh Circuit upheld a decision to cut attorney fees from about $1.5 million to just under $600,000 in a civil rights case involving a group that shares food with homeless populations against the city of Fort Lauderdale.  A three-judge panel found that Fort Lauderdale Food Not Bombs was wrong in challenging both the reduction in its counsel's requested hourly rates and the reduction in the requested number of hours reasonably expended.

"We cannot conclude that the magistrate judge's findings with respect to the reasonable hourly rate are clearly erroneous," the panel wrote.  "The findings are supported by ample evidence, including the hourly rates either awarded to, or requested by, the appellants' attorneys in recent prior cases ... the expert opinion of the city's expert, and the awards to other attorneys in comparable cases in the Southern District of Florida."

Food Not Bombs is an all-volunteer movement, but not an organized nonprofit, that recovers food planned to be discarded and shares meals with the hungry, according to its website. It hosts weekly food sharing at Stranahan Park, a public park in Fort Lauderdale where people without homes congregate.  The city chapter and some of its members sued the city in January 2015, alleging that a zoning ordinance and park rule effectively banned them from engaging in First Amendment conduct.

They argued that sharing food to communicate a political message, which criticizes the money spent on war around the world, was expressive conduct.  After a drawn-out legal battle, a final judgment was finally entered in December 2021, finding that the way the city applied its park rule to deter expressive food sharing violated the movement's First Amendment rights.  Each of the five plaintiffs received a judgment against the city of $2,500 in addition to attorney fees.

Food Not Bombs sought $1,527,636 in attorney fees, arguing that its counsel needed substantial skill, experience and expertise in civil rights cases and had qualifications that showed that expertise.  A magistrate judge, however, found that the 2,505 of work hours Food Not Bombs' attorneys said they worked on the case should be reduced about 40% across the board.

The judge also decided that the hourly rate requested for each of the attorneys was higher than what they were awarded or requested in past cases.  For example, Kirsten Anderson and Jodi Siegel were awarded a blended rate of $375 per hour from the Middle District of Florida in 2021. In the Food Not Bombs case, Anderson requested a rate of $565, and Siegel asked for $785.  The magistrate judge eventually landed on $375 for Anderson and $500 for Siegel, as well as lower rates for the other attorneys. Those attorneys appealed to the Eleventh Circuit, citing their success as reason for a larger payout.

"Their combined legal skills convinced this court, twice, that their clients' food sharing with others for a political purpose is protected by the First Amendment, that the city's enforcement of a park rule to restrict their activities was unconstitutional, and that the district court erred in its summary judgment opinions," the attorneys argued.  They added that they "achieved not only what was sought at the complaint stage — a declaration, injunction and damages — but also obtained two precedential opinions from this circuit that will influence the law in this subject area for years to come."

However, the court found no error in the magistrate judge's decision, saying that in his findings of fact, the judge relied on the parties' experts' opinions, applicable law and rates awarded within the district, among other standards.  "The magistrate judge also relied on his own knowledge and experience, 'having considered the length, extent and novelty of the litigation involved in the instant case,' and on the prior awards to these attorneys for plaintiffs in other cases," the panel said.

$267M Attorney Fee Award Appealed in $1B Dell Settlement

October 2, 2023

A recent Law 360 story by Jeff Montgomery, “Pentwater Appeals $267M Atty Fee Award in Dell Case in Del.”, reports that a private equity investor in Dell Technologies Inc. is appealing a Chancery Court's record $266.7 million fee award to class counsel that secured a $1 billion settlement for stockholders who sued over a $23.9 billion stock swap in 2018.  Pentwater Capital Management filed notice of appeal without a transcript late Friday with the Delaware Supreme Court, challenging both the attorney fee award and a $50,000 incentive award granted to Steamfitters Local 449 Pension Plan, the lead plaintiff for the suit filed in November 2018.

Vice Chancellor J. Travis Laster set the fee at $266.7 million on July 31, trimming a request of $285 million.  He said in his July 31 decision and order that eight funds that had invested in Dell but were not part of the class suit, recommended a lower fee, citing concerns about "windfall" profits in the case of large awards.

Pentwater — holder of 1.6% of the Dell Class V tracking stock at issue in the Chancery Court suit — branded the fee award as massive and a potentially "dangerous" precedent. In a Chancery Court brief opposing the fee, Pentwater argued that "the requested fee in absolute and percentage terms is disproportionate to the value conferred on class members."

Settlement of the overall case prevented a trial on claims targeting Dell's effort to exchange Class V stock — created to finance much of Dell's $67 billion acquisition of EMC Technologies in 2016 — for shares of Dell common stock.  The Class V shares generally traded at only 60% or 65% of the price of VMware, a business in which EMC owned an 81.9% equity stake when Dell acquired EMC.  Public shareholders, the class had argued, were shortchanged by $10.7 billion when, in December 2018, Dell Technologies paid $14 billion in cash and issued 149,387,617 shares of its Class C common stock for the Class V shares.

When the challenged conversion closed on Dec. 28, 2018, VMware stock closed at $158.38 per share, and Class V stockholders received just $104.27 per share, fueling objections that the Dell Class C stock to be received for Class V shares had been overvalued.

In his fee opinion, the vice chancellor noted that class attorneys provided hundreds of examples of contingent fee agreements to support their original request for $285 million.  However, he noted, none of the objectors provided examples, except for Pentwater, and that example was "not for a Delaware case."  Vice Chancellor Laster also observed in his July 31 decision that investment funds that had recommended a lower amount, including Pentwater and seven others, had "a strong economic motivation for seeking a lower fee award."

The vice chancellor's decision elaborated on the idea that the investment funds that didn't go to the trouble of suing had a financial motivation now to object.  Following a 10% fee trend in federal securities actions, he noted, would have given them an extra $49 million for the equity holders, rather than sharing it with the class.  Five law professors suggested in a friend-of-the-court brief that a 15% fee would be appropriate, which still would have added $35.78 million to the objectors' recovery, the vice chancellor's decision noted.

"Having sat back and done nothing, the objectors now claim that a fee award without a sizable reduction would 'not yield equitable results,'" the vice chancellor wrote in an August filing confirming the $266.7 million fee award.  "That assertion masks self-interest with an appeal to equity.  Wanting more money for yourself is understandable, but it is not grounds for a fee objection."

Fee Examiner Says $200M in Fees ‘Remarkable’ But Justified

June 21, 2023

A recent Law 360 story by Rick Archer, “FTX Examiner Says $200M in Fees ‘Remarkable’ But Justified”, reports that the fee examiner in the FTX Chapter 11 case has told a Delaware bankruptcy judge that the professionals in the case have racked up more than $200 million in bills since November, a figure she said was "remarkable" but justified by the chaos created by the cryptocurrency giant's collapse.  In a report, fee examiner Katherine Stadler said the charges so far from the law firms and financial consultants retained by FTX and its unsecured creditors are for the most part justified by the professionals' scramble to deal with the "smoldering heap of wreckage" left by FTX.

"Without question, the fees incurred to date are remarkable, but so is the professionals' performance," Stadler said.  FTX filed for bankruptcy on Nov. 11 after weeks of turmoil caused by the failure of its FTT digital token, which led to a run on the bank as customers rushed to withdraw their cryptocurrency holdings from the platform.  Subsequent internal investigations revealed that about $65 billion in FTX assets were transferred to Alameda Research — a cryptocurrency hedge fund founded and controlled by former FTX CEO Sam Bankman-Fried — through a back door in the platform, leaving a shortfall in customer funds.

Stadler said the size of the case and the alleged role of management malfeasance in the collapse were both unremarkable.  "What makes these cases extraordinary, however, is the largely unregulated financial system in which the debtors (and other similar financial technology companies) operate, combined with their global scope, the complete absence of corporate records, and the non-existence of even the most basic corporate governance," she said.

As a result, the firms involved found themselves in an "'all-hands-on-deck' crisis," she said, resulting in missteps like deploying teams that later proved to be too large and retaining experts that ultimately were not needed, but nothing "wholly unreasonable in the moment."  "They did not have the luxury of carefully considering staffing decisions, developing the most efficient teams, or deploying resources with military precision," she said.

The report specifically dealt with the first 90 days of the case, during which 242 attorneys billed nearly 35,000 hours, Stadler said.  She reported that a total of about $88.8 million in fees and expenses had been billed through Jan. 31, including $42.1 million from FTX counsel Sullivan & Cromwell LLP and $28.5 million from its financial adviser, Alvarez & Marsal. Paul Hastings LLP, lead counsel for the unsecured creditors committee, billed $5.5 million. The committee's forensics investigation consultant, AlixPartners, billed $3.2 million.

Stadler recommended that a total of $85.1 million in fees and expenses be approved at the fee hearing scheduled for June 28.  She also recommended that a $2.4 million bill from Ernst & Young for tax services for FTX be deferred to the next fee application period, saying she had not completed her review, and said the other firms had stipulated to about $1.3 million in reductions of their bills.