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Category: Interim Fees

Kirkland Seeks $13M in Fees in Tossed 3M Bankruptcy

June 26, 2023

A recent Law 360 story by Henrik Nilsson, “Kirkland Seeks $13M Fees in 3M Unit’s Tossed Bankruptcy”, reports that Kirkland & Ellis LLP sought an Indiana federal judge's approval for nearly $13 million in fees and expenses for the firm's representation of 3M subsidiary Aereo Technology's bankruptcy case between February and April, days after the judge tossed the case upon finding the company financially healthy.  Kirkland's request is its third interim fee application and comes on top of more than $30 million in total compensation the court has already approved for the firm's representation of Aearo Technologies LLC, which filed for Chapter 11 to address 230,000 liability claims of its allegedly faulty Combat Arms Earplugs Version 2, or CAEv2.

Kirkland seeks $12,641,180 in fees and $277,065 in expense reimbursement for the period Feb. 1 through April 30, saying the firm has spent significant time and resources responding to dismissal motions, settlement talks and a Seventh Circuit appeal.  "This has required a significant expenditure of time and effort due, in part, to the vast number of Combat Arms claims alleged against the debtors, in parallel with the debtors' intensive preparations for the hearing on the dismissal motions," the firm said.

In total, Kirkland attorneys and paraprofessionals spent more than 11,777 hours during the fee period, according to the request.  The firm said that it spent almost 8,000 hours for a total of $8.1 million on litigation involving adversary proceedings and contested matters between February and April.  Kirkland dedicated 1,454 hours for a total of $1.7 million to develop a disclosure statement and reorganization plan in connection with the Chapter 11 cases, according to the request.

Kirkland charged Aearo a blended hourly rate of $1,073.30 during the fee period.  The firm said the compensation is warranted given the complexity of the case and the time expended.  "During the fee period, [Kirkland] provided extensive and important professional services to the debtors in connection with these Chapter 11 cases," the firm said.  "These services were often performed under severe time constraints and were necessary to address a multitude of critical issues both unique to these Chapter 11 cases and typically faced by large corporate debtors in similar cases of this magnitude and complexity."

$12M in Attorney Fees ‘Only The Beginning’ in Kwok Chapter 11 Case

June 7, 2023

A recent Law 360 story by Craig Clough, “Paul Hastings’ $12M Kwok Chapter 11 Fee Bill ‘Only The Beginning’,” reports that, calling it one of the most "complex and challenging" individual Chapter 11 cases ever filed, Paul Hastings LLP asked a Connecticut bankruptcy judge for $12.3 million in attorney fees covering eight months of work on exiled Chinese billionaire Ho Wan Kwok's case, adding the request is "only the beginning."

An interim fee application covering fees from July 8 through Feb. 28 done on behalf of the bankruptcy trustee in Kwok's case also includes nearly $349,000 in expenses for the firm, which said it took the case on a contingency basis and waited until the trustee recovered enough to pay the amount requested in the application, including two luxury yachts and $33 million held in escrow.  Kwok, also known as Guo Wengui, declared Chapter 11 bankruptcy in February 2022, citing $100 million to $500 million in liabilities, and he was arrested in March on allegations that he operated a multifaceted $1 billion fraud scheme.

"These Chapter 11 cases likely rank among the most complex and challenging Chapter 11 cases ever filed by an individual debtor," Paul Hastings said.  "The lead debtor — Mr. Ho Wan Kwok — is at the center of a vast maze of companies and assets purportedly owned by the individual debtor's family members or close business associates, but who, in reality, have no financial interest in, or control over, the companies and assets they purport to own because, in reality, the individual debtor owns and controls these companies and assets."

Trustee Luc A. Despins of Paul Hastings and the firm have faced a number of challenges in the case outside its complexity, including street protests of the firm orchestrated by Kwok and death threats against Despins, according to the filing.  "While the trustee and Paul Hastings will not be intimidated by these actions, they did require Paul Hastings to incur, among other expenses, hundreds of thousands of dollars in cyber security measures," Paul Hastings said.  "To be clear, Paul Hastings is not seeking reimbursement of these expenses in this application."

Attorneys Seek $13M in Fees in Pork Antitrust Settlement

August 22, 2022

A recent Law 360 story by PJ D'’Annunzio, “Attys Seek $13M Payout For Pork Antitrust Deal With Eateries reports that attorneys representing commercial pork buyers asked for $13.2 million in fees for their role in negotiating a $42 million settlement between a group of restaurants and Smithfield Foods in multidistrict litigation over an alleged meat industry scheme to inflate prices.  In a memorandum, a class of commercial and institutional indirect pork purchasers urged the court to award fees using a "percentage of the funds" calculation, in this case, 31% of the gross settlement proceeds.

"The $42 million settlement before the court is the result of extensive work done by counsel for the CIIPPs on a contingent basis," the memorandum said.  "Counsel has worked for over four years and have invested thousands of hours to pursue the CIIPP claims.  Counsel for the CIIPPs request an interim award of attorneys' fees for the work done to achieve this settlement."  Minnesota U.S. District Judge John R. Tunheim preliminarily approved the $42 million settlement between Smithfield and the pork purchasers in an April order.

In addition to the money, Smithfield agreed to cooperate in prosecuting claims against the remaining defendants, which include big names like Tyson Foods and Hormel Foods Corp., in the large-scale litigation.  The purchasers' memorandum said four years of litigation resulted in roughly 16,800 attorney hours and 2,560 hours for legal assistants and other professionals.

"Given the excellent results achieved, the complexity of the claims and defenses, the real risk of nonrecovery, the formidable defense teams, the delay in receipt of payment, and the substantial experience and skill of counsel, the requested multiplier on the lodestar and the resulting fee is reasonable compensation for the work done by counsel for the CIIPPs," the purchasers said.  Additionally, the purchasers asked for an award of $7,500 to each plaintiff representative.

Attorneys Win $55M in Fees in Chicken Antitrust Class Action

December 2, 2021

A recent Law360 story by Lauraann Wood, “Attys Win $55M Fee in Purchasers’ Chicken Price-Fixing Suit,” reports that an Illinois federal judge has awarded more than $55 million in fees to class counsel who've settled direct purchasers' chicken price-fixing claims against some major producers including Tyson Foods Inc., applauding their "exemplary" performance in a case they pursued without full confidence they'd succeed.  U.S. District Judge Thomas Durkin said that the fee award is proper for counsel at Lockridge Grindal Nauen PLLP and Pearson Simon & Warshaw LLP, who've secured more than $170 million in settlements so far for direct broiler chicken purchasers, because they invested "massive resources of time and money" into their clients' antitrust case "when no other counsel expressed interest, with little assurance of success."

For instance, the purchasers' counsel filed the first complaint in the antitrust case, which has since swelled to include two other plaintiff classes and more than 20 defendants "represented by some of the most prominent law firms in the country," Judge Durkin said.  The attorneys have also "shepherded the case through extensive discovery" and dedicated more than 100,000 hours so far to pursuing their clients' claims, he said.

Counsel also defeated those companies' bids to dismiss the direct purchasers' claims, and the 92-page dismissal decision in their favor "was a relatively close call," Judge Durkin said.  The issues raised in those dismissal proceedings also show that they're not guaranteed to succeed at class certification or summary judgment, "let alone trial," he said.

Counsel also pursued their clients' case without being able to "piggy back" off of a preceding government investigation, the judge said.  Instead, their work appears to have been the impetus for a U.S. Department of Justice investigation into potentially anti-competitive conduct in the chicken industry, which has since led to some criminal indictments, he said.  "A substantial award is warranted here as a proper incentive for high quality counsel to take on complex cases, requiring a massive investment of time and money, with such a high risk of non-payment," Judge Durkin said.

The judge also awarded class counsel $4.5 million for expenses and $15,000 as incentive awards for each of the case's five named direct purchasers.  The firms' fee total represents a third of their current settlement total after deducting those expense and incentive awards, according to his order.

The direct purchasers are one of three plaintiff groups pursuing claims that poultry giants including Tyson Foods Inc. and Pilgrim's Pride Corp. conspired with their competitors to drive up the price of broiler chickens.  They've settled their claims against Tyson, Pilgrim's and certain other chicken producers, but several others are still defending themselves against the accusations.  End-user consumers in the suit, who make up one of those separate plaintiff groups, have also asked Judge Durkin for an interim $59 million fee award as their first payment for working their clients' case for several years.

The consumers' motion raises similar arguments as those addressed in the direct purchasers' April fee bid, asserting their requested fees and expenses are warranted given the time and resources they've pumped into a case that had no government investigation to guide them.  However, one consumer has objected to the request so far, arguing it's inflated by $3 million and should be rejected.

Court Considers Sliding Scale for Attorney Fees in Antitrust Action

August 7, 2021

A recent Law 360 story by Celeste Bott, “Court Mulls Sliding Scale for Fees in Chicken Antitrust Suit”, reports that the Illinois federal judge overseeing price-fixing litigation against major broiler chicken producers said he's considering awarding fees on a sliding scale as class counsel seeks an interim payment of $57 million in attorney fees from a $155 million settlement.

U.S. District Judge Thomas Durkin, when granting final approval in June for a combined deal reached by a group of broiler chicken buyers and Tyson Foods and Pilgrim's Pride, held off on approving a bid by class counsel for that interim fee payment and for litigation expenses of $4.5 million, saying he may need more information before making a decision.

In a minute order, Judge Durkin said he was likely to apply a sliding scale approach in awarding class counsel fees, citing the Seventh Circuit's approach in In re Synthroid Marketing Litigation , where the amount being awarded fees went down as the settlement amount went up.  "Several courts in this district have applied the scale suggested in Synthroid.  The court's current intent is to apply such a scale to the fee award in this case," Durkin said in the order.

For example, that approach was used by an Illinois federal judge in awarding fees to class counsel who won a $34 million settlement on behalf of Chase Bank customers who claimed they were contacted on their cellphones without their permission, in one of the cases Judge Durkin cited in the district.  He ordered class counsel for the direct purchaser plaintiffs to file a brief addressing whether the application of a sliding scale is appropriate in the case and what the sliding scale should be if the court chooses to apply one, asking them to focus on any recent authorities on the issue, preferably in antitrust cases, the district and circuit.