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.

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.

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.

A recent Law 360 article by Robert M. Fishman, “3 Tips For Working With Bankruptcy Fee Examiners” provides practice tips for working with outside bankruptcy fee examiners.  This article was posted with permission.  The article reads:

The appointment of a fee examiner and the fee examination process in any given bankruptcy case seem to generate a variety of questions.

Will a fee examiner process be better for the case — read: me — than having the judge address the reasonableness and appropriateness of fees?  Will there now be three parties — the fee examiner, the court and the U.S. Trustee — scrutinizing my fees as well as criticizing my staffing, timing and approach to the case?  What will the nature and approach of the fee examiner be in my particular case?  Will the appointment of a fee examiner speed up the review and payment process?

Fee examiners are most often appointed in larger cases.  In such cases, the ability of the court to make the time to review, analyze and rule on fee applications may be a concern.  This is especially true if that court is one in which a large number of substantial cases are currently pending.

The number of parties that will be submitting fee applications to the court also plays a role in the consideration of whether a fee examiner is appropriate in a particular case.  Multiple law firms, financial advisers and other professionals for the debtor and one or more committees, creates a substantial burden on the court in terms of reviewing and ruling on fee applications.

A request for the appointment of a fee examiner can either come from the parties in the case or directly from the court.  Some courts routinely appoint a fee examiner in large, complex cases, while others do so only upon the request of one or more parties in interest.

The selection of the particular fee examiner can originate from any of three places.  Once a court decides to appoint a fee examiner, the court may: (1) select its own fee examiner; (2) appoint one that has been suggested, or agreed to, by the principle parties in the case; or (3) defer to the Office of the U.S. Trustee for the selection.  Courts are often happy to utilize a qualified fee examiner that has been agreed to by the main parties in the case.

In light of the current number of pending large cases, particularly in a few, specific jurisdictions, the burden of the fee review and allowance process is going to be substantial.  Further, I anticipate that the upcoming months may see an even greater number of small, medium and large cases filed, which will place an even greater strain on the system's ability to efficiently and timely process fee applications for numerous professional firms.

As a result, I believe that both courts and the affected parties will look to the appointment of fee examiners to ease that burden and provide a more timely and efficient practice for processing fee applications.  In evaluating candidates for fee examiner appointments, the following questions may be pertinent.

Is the candidate:

An experienced practitioner with actual bankruptcy case experience or an analyst who identifies typical problematic situations and focuses on them;

A reasonable, big picture type of examiner or a more granular, item-by-item examiner;

One that believes that he has been appointed to:

Cut fees (to a specific or general degree), or

Determine if the applicable rules have been followed and the services and expenses are actual, reasonable and necessary in the context of the particular case; or

One who generally gives deference to the billing partner involved or is more apt to substitute his/her own judgment for that of the billing partner as to how to staff cases or how much time it should take to write a brief?  As an attorney discussing fee application issues with fee examiners, I have discovered that examiners have a wide range of approaches and attitudes.

In my role as a fee examiner discussing fee application issues with countless professionals, I have found that they also exhibit a broad range of approaches and attitudes.  My experience both as an attorney submitting numerous fee applications subject to review by fee examiners, and as an appointed fee examiner in both large and medium-sized cases has led me to a view on the preferred type of fee examiner and how best to work with them.

Understanding where your fee examiner fits into the above criteria is essential to both having a realistic expectation of how you will be dealt with and knowing how best to interact with the fee examiner.   So, what lessons have I learned? Here are what I have found to be the three most important guidelines for a successful relationship with a fee examiner.

Every Case has Ground Rules

They include the Bankruptcy Code, the applicable local rules and the cases interpreting the same.  Importantly, the ground rules also include the process that the fee examiner intends to utilize — and most likely have the court bless — to govern the timing, organization and review of the fee applications.

One of the best pieces of advice I can give an applicant is to present the fee application in the way requested by the fee examiner.  Independent creativity is often not rewarded.  Most fee examiners have a method to their madness.

Choose the Right Person to Prepare the Fee Application.

The fee application or invoice must be prepared — or at least thoroughly reviewed — by someone who understands the case and is able to explain the issues handled by the firm and the staffing decisions that were made in support of providing the necessary services.  Many issues that fee examiners raise come from an inability to truly understand what has taken place and why things were handled in the manner in which they occurred.

Most fee examiners are willing to be at least somewhat deferential to the billing partner when presented with a cogent and rational explanation of what happened and why.  This approach tends to be even more effective when the explanation is part of the original application rather than offered only in response to concerns raised by the fee examiner.

It Doesn't Pay to Fight with a Fee Examiner

First of all, most fee examiners aren't out to get anyone.  They are merely trying to apply the rules in an even-handed way to provide for the allowance of reasonable compensation for actual and necessary services.  Every fee application or invoice has potential issues, such as too many professionals working on a project, too much time spent working on an issue or overqualified professionals providing basic services.

Also, a firm cannot be compensated for fighting fee objections in court, where raised by a fee examiner of a party in interest.  Be rational and open minded.  Fee examiners want to reach agreements and resolve differences of opinions by consent.  They will almost always compromise on the amount of reductions necessary to address any point they are raising.

The right fee examiner can be a valuable asset in a case.  They are likely to allow for a more timely resolution of interim fees.  A fee examiner who is also an experienced practitioner will likely speak the same language as the applicant and have a good feel for what it takes to perform the services for which the applicant seeks payment.  In short, a good and experienced fee examiner should really be your ally in making the process move quickly and efficiently, and in obtaining a fair and reasonable outcome for everyone.

Robert M. Fishman is a NALFA member and a member at Cozen O’Connor in Chicago.  He served as the fee examiner in the city of Detroit Chapter 9 case.