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Reuters News Covers NALFA's Attorney Fees Conference

October 29, 2013 | Posted in : Contingency Fees / POF, Fee Award, Fee Award Factors, Fee Jurisprudence, Fee Request, NALFA News, Study / Report

NALFA hosted The Attorney Fees Conference – 2013 at the San Francisco Bar Association on October 25, 2013.  The program had a morning session that focused on attorney fee disputes and an afternoon session that addressed attorney fee awards.  The conference featured 20 panelists, including 3 judges.  The program was a major success.  Two reporters were there covering the event.  Andrew Longstreth, a reporter from Reuters Legal, wrote the following news story:

Consensus forming in awarding of class action fee awards

By Andrew Longstreth

SAN FRANCISCO (Reuters) - In approving class action fee awards, U.S. judges now are taking extra steps to make sure plaintiffs' lawyers are not excessively compensated, say experts who appeared on a panel at the San Francisco Bar Association on Friday.

Most courts award fees based on a percentage of a fund obtained for the class, said Francis Scarpulla of Zelle Hofmann Voelbel & Mason, who specializes in antitrust class actions.

But he said judges now make sure the percentage is only a modest multiple of an attorney's lodestar, which is a calculation of a reasonable hourly rate times hours spent on the case.

The main guiding principle of judges who evaluate fee requests, he said, is to make sure lawyers do not receive "windfall profits."

"Nobody is going to get 10 to 20 times their (lodestar)," Scarpulla said.

Scarpulla was speaking on a panel at a conference on attorneys' fees hosted by the National Association of Legal Fee Analysis.

Without the promise of a large fee award, plaintiffs' lawyers argue that important cases for society would never be brought.

Complex class actions can cost millions of dollars to litigate and plaintiffs' lawyers have to front those costs with no guarantee they will recoup them. Often, plaintiffs' lawyers working on contingency must spend years on a case without getting paid.

An award equaling 25 percent of a fund is used as a benchmark in some jurisdictions, but ultimately, it is within the judge's discretion to award more or less, Scarpulla said. Among the factors the judge can consider are the results achieved and the risk involved in taking the case on contingency.

Scarpulla cited a decision issued in August by the 7th U.S. Circuit Court of Appeals, written by then-Chief Judge Frank Easterbrook, upholding a fee award amounting to 27.5 percent of a $200 million settlement.

"You have to look at what the lawyers did and what the lawyers accomplished," Scarpulla said. "If it turns out to be 27 percent, so be it. It's the judge's discretion."

116 AWARDED $310 MILLION

Scarpulla's law firm was among 116 that were awarded $310 million earlier this year for their work in obtaining more than $1 billion in a price-fixing case against makers of display panels used in consumer electronics.

The fees in that case were scrutinized by a court-appointed special master, Martin Quinn, who joined Scarpulla on the panel.

Quinn said he sought declarations from all the law firms detailing the time spent on the case. But he told them not to send him detailed billing statements. If something looked "screwy," he said he asked for more information.

"Nobody is going to go through hundreds of thousands of bills," he said.

Another panelist, William Downes, a former federal district judge in Wyoming who is now an arbitrator, recalled approving a fee request for $10.5 million in a securities class action. The request equaled 25 percent of the entire fund for the class.

"For this country boy from Wyoming, that was a breathtaking amount of money," he said.

After Downes checked the lodestar of the attorneys who worked on the case, he concluded the fee would be a multiplier of 2.78. Ultimately, he considered the request reasonable given the risks involved and the skill that was needed to obtain the settlement.

Downes said that recent decisions by the Supreme Court, including Comcast v. Behrend, that have made it harder to bring class actions may justify larger fees given the obstacles plaintiffs' lawyers face.

"The Supreme Court is making certifying a class and keeping a class certified very difficult," he said. "That might argue in favor of giving a premium to a law firm serving as lead counsel above 25 percent."