A recent Law 360 story by Jeff Montgomery, “Chancery Delay $21.6M Class Deal, Fee OK in Presidio Suit” reports that a Delaware vice chancellor put off final approval of a $21.6 million settlement for a class challenge to the sale of tech services provider Presidio Inc., agreeing with the deal but ordering clarifications and saying he wanted to ponder a proposed $5.3 million attorney fee. Vice Chancellor J. Travis Laster said class attorneys had achieved "a very good result" after more than 2½ years of litigation over the company's $2.1 billion sale to an affiliate of private equity firm BC Partners.
The suit accused Presidio of snubbing a competing offer under pressure from BC Partners and controlling shareholder Apollo Global Management Inc. The Firefighters' Pension System of the City of Kansas City, Missouri Trust agreed to the settlement after mediation and a recommendation from the mediator. "I'm going to go ahead and approve the settlement" pending "tweaks" of the agreement, the vice chancellor said. "I'm going to think more about the attorney fee issue and put a number in when I get the final order."
At issue were sections of the settlement that the vice chancellor viewed as redundant, murky or unnecessary and — in the case of the fee — a question of "how good is good" when considering an award that amounted to about 25% of the total settlement. The share would stand near the upper end of Chancery Court awards for settlements before trial but after extensive litigation.
J. Daniel Albert of Kessler Topaz Meltzer & Check LLP, counsel to the class, told the vice chancellor that the court has approved a 25% fee for cases "procedurally less developed" than the Presidio action, and said that "for policy reasons, the court should want to incentivize these types of results." The fee reflected about 9,250 hours of attorney work that involved nearly $233,000 in expenses, with a fee translating into a $578-per-hour rate "well below" that seen in similar litigation, Albert said.
The lawsuit initially named the board members, outside directors and Apollo as defendants, but in January 2021 Vice Chancellor Laster dismissed them from the suit. "I do understand your argument that when you get up to 100% or more of the [potential] trial result you should get the high end" of fee award ranges, he said, adding that he also understood the potential for expenses lost to "front end" books and records demand litigation in support of the case.
The fee, Albert argued, exceeded what the settlement motion described as the "likely provable damages under plaintiff's primary theory of liability against the defendants: that the auction between BCP and CD&R was tainted by the alleged tip-off of CD&R's offer price to BCP by LionTree."