Posted Aug 01, 2013 06:05 pm CDT
A federal judge has slashed by 27 percent the attorney fees awarded to the winning lawyers in a $590 million settlement of a Citigroup Inc. securities class action because of “waste and inefficiency” and billable hourly rates that were “significantly inflated.”
Even after the cut, lead plaintiffs counsel Kirby McInerney will get $70.8 million, some of which will be paid to other law firms, for achieving what U.S. District Judge Sidney Stein termed an “impressive recovery,” according to Forbes and Reuters.
And Stein also said it was appropriate for the law firms to charge a markup for work done by contract attorneys rather than simply billing them as an expense, at cost, as Ted Frank of the Center for Class Action Fairness had sought.
Using a so-called lodestar approach that takes into account factors such as the difficulty of the case and the degree of success achieved by the plaintiffs in multiplying actual charges for legal fees, Stein OK’d a maximum rate of $200 per hour for contract attorneys, apparently before a lodestar multiplier was applied, according to the article.
He nixed proposed rates for contract attorneys, many of whom were inexperienced lawyers hired through legal temporary agencies, that were as high as $550, creating a “blended” hourly rate of $466, compared to $402 for regular law firm associate attorneys. One of the other law firms working with Kirby McInerney in the case had tried to bill $550 per hour for a lawyer paid $15, the judge said. (The actual cost to the law firm presumably may have been significantly higher, since temp agencies ordinarily charge a markup for providing qualified attorneys to work for law firms.)
Stein’s fee award order was filed Thursday in federal court in Manhattan.
Reuters reports that partner Ira Press of Kirby McInerney, who represents plaintiff investors in the case, did not immediately respond to a request for comment.
ABAJournal.com: “Does Legal Fees Motion in $590M Citigroup Case Include $1K Per Hour for Low-Paid Contract Lawyers?”
ABAJournal.com: “Law firm billing contract lawyers at $1K hourly must reveal what they were paid, federal judge says”
ABAJournal.com: “Expert in legal-fee fight blasts ‘make believe’ game over cost of contract lawyers to do doc review”