Posted Sep 24, 2012 04:46 pm CDT
A well-known Wilmington, Del., law firm and its Pennsylvania-based co-counsel are poised to collect one of the biggest legal-fee awards ever made in a securities class action, after the Delaware Supreme Court on Friday rejected a motion for reargument of the massive payout, which at last report totaled about $305 million.
Approved last year by Chancellor Leo E. Strine Jr., who serves as chief judge of the state’s highly regarded chancery court, the original $285 million award to Prickett, Jones & Elliott and Kessler Topaz Meltzer & Check is racking up interest at the rate of $212,000 daily while the defendants in the Southern Peru Copper Co. case protest the massive legal fee, according to Reuters. Southern Peru is now known as Southern Copper Corp.
The award is believed to be the largest attorney’s fee ever approved by the chancery court, the article says. The state’s highest court OK’d the award in an en banc decision last month.
While $300 million is substantially less than the $688 million in attorney’s fees and costs earned by plaintiff’s lawyers in Enron Corp class actions and the $493 million payday for Tyco International attorneys, the lawyers in those cases accounted for almost ten times as many hours as the plaintiff’s attorneys in the Southern Peru Copper case, the news agency notes.
Ronald Brown of the Prickett firm told Reuters in a voicemail that defendant Grupo México has posted a bond to cover the cost of the judgment and that it could also be satisfied by canceling shares of Southern Copper stock held by Grupo México, if the judgment isn’t satisfied within 20 days.
Partner Bruce Angiolillo of Simpson Thacher & Bartlett argued on appeal for the defendants. He and Grupo México did not immediately respond to requests for comment by Reuters.
In its Friday opinion (PDF) the supreme court said that the trial judge has discretion to set attorney’s fees and, absent an abuse of that discretion, as demonstrated by arbitrary, capricious or “clearly wrong” decision-making, the fee award will not be disturbed.
The supreme court reaffirmed its own explanation of how attorney’s fees should be calculated, in Sugarland Industries Inc. v. Thomas, 420 A.2d 142 (Del. 1980), and noted that the chancery court found that its Southern Copper award conformed with a goal of creating “a healthy incentive for plaintiff’s lawyers to actually seek real achievement for the companies that they represent in derivative actions and the classes that they represent in class actions.”
In the Southern Peru case, the Friday opinion says, “the Court of Chancery carefully weighed and considered all of the Sugarland factors. The record supports its factual findings and its well-reasoned decision that a reasonable attorneys’ fee is 15% of the benefit created. Accordingly, we hold that the Fee Award was a proper exercise of the Court of Chancery’s broad discretion in applying the Sugarland factors under the circumstances of this case.”
A dissenting judge said that the trial court stated the relevant Sugarland standards in its analysis but did not apply them, instead applying “its own world views on incentives, bankers’ compensation, and envy” and focusing on “the perceived need to incentivize plaintiffs’ lawyers to take cases to trial.”
ABAJournal.com: “New Del. Chancery Chief Awards $1.26B in Stock Suit, Raps Wachtell Ex-Partner re ‘Unfair’ Valuation”
ABAJournal.com: “Big Payday for Shareholder Suit Lawyers: Del. Chancery Court Awards $285M Attorney’s Fee”
ABAJournal.com: “Top Del. Court OKs Record $300M Attorney Fee Award; Objector Said It Pays Counsel $35K Per Hour”