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Fee Allocation Dispute in Avandia MDL

January 18, 2013 | Posted in : Fee Award, Fee Dispute

A recent Bloomberg News story, “Glaxo Accord Said to Spur Lawyer Fight Over Fees,” reports that nine law firms are challenging a bid by lead attorneys for almost three-quarters of a $143 million attorney fee fund, including one seeking about $2,700 per hour, according to two people familiar with the matter.  Six law firms on the fee committee asked for 71 percent of the fund set aside by U.S. District Judge Cynthia Rufe for the Avandia cases before her.  The committee lawyers put the most time and money into efforts to collect evidence that Glaxo allegedly mishandled warnings about Avandia’s risk, Dianne Nast, a lawyer who led the group, said in an interview.

“These were the folks who were the most active in working on the case, so it’s only natural they are in line for a larger share of the fees,” Nast said.  The fee fund, between 6 and 7 percent of the total settlement, according to the people, means the total accord may be worth more than $2 billion.  As a result, the average payout for the 40,000 users of Avandia involved in the litigation would be about $50,000 – before legal fees.

Joseph Zonies, a Denver-based attorney who served as one of the lead lawyer in the Avandia cases before Rufe, is slated to collect more than $24.4 million, the highest recommended fee.  Zonies put in more than 18,000 hours of work on the case.  Plaintiffs’ lawyers in product liability cases work on a contingency fee basis.  While per-hour calculations may be much higher than attorneys who regularly work at an hourly rate, lawyers who work on contingency are often forced to spend millions of dollars of their own money to pursue a case and aren’t guaranteed payment in the end, unless they win or settle.

Lawyers who use MDL-collected evidence to help achieve a settlement in their cases are required to hand over a percentage of their fee, said Howard Erichson, a Fordham University law professor.  Those monies are used to compensate MDL attorneys for work on the case that benefits everyone in the litigation, Erichson said.  “MDL cases can involve an enormous amounts of work and the benefits to all claimants of that work can be enormous, Erichson said in an interview.  That’s why MDL fee funds can run into the hundreds of millions of dollars, he added.

NALFA also reported on this case in “Judge Approves $144M in Fees in Avandia MDL”