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Judge Stands By Fee Split in Wells Fargo Class Action

November 2, 2017 | Posted in : Fee Agreement, Fee Allocation / Fee Apportionment, Fee Request

A recent Law 360 story by Dave Simpson, “Court Won’t Nix Fee Split in Wells Fargo Case Dispute” reports that an Iowa federal judge declined to set aside a decision that requires one of the firms that handled a $25 million class action against Wells Fargo & Co. to give half its fee award in the case to one of its co-counsel, ruling that an arbitration agreement between the firms is not within the court’s jurisdiction.  U.S. District Judge Robert W. Pratt said that Reese LLP’s gripes over the amount of work done by Finkelstein Blankinship Frei-Pearson & Garber LLP’s do nothing to cancel out an arbitration agreement it signed with the firm.

“FBFG and Reese LLP — neither of whom are parties to this class action — present a separate dispute over their independent contractual obligations to each other as set out in [their arbitration agreement],” Judge Pratt said.  “That dispute is not amenable to resolution by this court in this case.  Rather, FBFG and Reese LLP have properly engaged in arbitration and discrete litigation concerning confirmation of the arbitration award in the state and federal courts of New York.”

The decision rejects Reese’s July motion, in which it told the court that Finkelstein Blankinship had not done enough work to justify taking 50 percent of Reese’s share of the Wells Fargo settlement.  Reese claimed that the fee-sharing agreement between Reese and Finkelstein Blankinship contradicted the settlement terms and asked the court to set aside an arbitration panel’s decision to uphold the agreement.

Judge Pratt shot down that argument as well, ruling that the agreement does not conflict with the settlement terms.  “FBFG’s request for fees is directly and exclusively related to the legal services rendered, whether or not the claimed fee and the amount of work are proportionate,” he said.

Reese’s July motion was swiftly opposed by Finkelstein Blankinship, Reese’s co-counsel Scott & Scott Attorneys at Law LLP, and Reese’s former partner Kim E. Richman, now of the Richman Law Group, who has also sued Reese in New York state court concerning Richman’s share of the fees from the case.

The firms all represented homeowners in a class action accusing Wells Fargo of ordering unnecessary property inspections and charging delinquent borrowers that concluded in 2015 with a $25.75 million settlement, the attorneys in which have been tied up in Reese’s fee dispute with FBFG, according to Scott & Scott.

The case is Edward Huyer et al. Wells Fargo & Co. et al., case number 4:08-cv-00507 in the U.S. District Court for the Southern District of Iowa.