A recent Law 360 by Hayley Fowler, “Milberg Nets $85K in Fees on NC Data Breach Deal with CPAs,” reports that a North Carolina judge awarded about $85,000 in attorney fees — a reduced amount — to Milberg Coleman Bryson Phillips Grossman PLLC after the firm secured a class action settlement with an accounting office over a data breach that affected nearly 16,000 clients.  Chief Judge Louis A. Bledsoe III of the North Carolina Business Court said in an order that the hourly rates sought by three Milberg partners who worked on the case were slightly higher than average for the state.  But he said their ability to secure a speedy settlement against the accounting office of Gerald O. Dry PA had "required high legal skill" meriting an award of attorney fees.

"This case revolves around rapidly evolving legal questions of digital security, data breaches and digital privacy, which are at the cutting edge of the interplay between new technology and the law," Judge Bledsoe wrote.  "Pursuing these actions is therefore complicated, difficult and fraught with risk, for both clients and attorneys, and such was the case here."  Taking into account comparable hourly rates in similar complex business disputes, the judge awarded the firm roughly $85,000 in fees and costs — down from the $110,000 Milberg had sought.

The fee award comes on the heels of Judge Bledsoe's decision to grant final approval of a class action settlement Milberg secured on behalf of roughly 15,855 clients of Gerald O. Dry PA whose personal information was allegedly compromised in a data breach announced last year.  Gerald O. Dry PA reached an agreement to settle the proposed class action almost immediately, court documents show, and the parties received early approval in November.

Under the terms of the agreement, Gerald O. Dry PA will reimburse out-of-pocket expenses related to the data breach of up to $400 per class member, lost time of up to five hours at $20 per hour, and monetary losses of up to $5,000.  Those benefits are capped at $200,000 total.  The accounting firm also agreed to give class members two years of identity theft protection services with a potential retail value of more than $3.4 million, as well as implement a host of new cybersecurity protections, including a new firewall, antivirus software and third-party verification, among others.

Milberg had based its $110,000 fee request, which it said represented about 26% of the total deal, on a total settlement value of $419,189.  The firm highlighted "substantial hurdles" and the complex nature of cybersecurity law it faced in pursuing the case, saying that it was never guaranteed the class would be certified and that the requested rates were in line with similar data breach class action settlements in other states.

But Judge Bledsoe said Friday he would not consider rates charged in other jurisdictions when the "relevant locality is North Carolina."  "The North Carolina state courts have generally not approved hourly rates as high as those sought" by the three Milberg partners, the judge said, though he conceded that "hourly rates have risen since many of the North Carolina state cases that speak to reasonable rates were decided."

Taking all of that into account, Judge Bledsoe reduced the hourly rate of lead counsel David Lietz to $700, down from his requested rates of $919 per hour for work performed in 2022 and $979 per hour for work performed this year.  Milberg partners Scott Harris and Gary Klinger were, by comparison, awarded $575 an hour. Harris had initially sought $764 per hour for last year's work and $829 per hour for this year's work. Klinger had requested an hourly rate of $850.

In addition to the partner-level fees, Judge Bledsoe signed off on the requested hourly rates for an associate and four paralegals, finding them to be more in line with recent state business court fee decisions in comparable suits.  The resulting fee award of $85,252 takes into account those adjusted rates as well as roughly $1,000 in expenses and costs.