New Twist: Fee Award Too Low

The 7th U.S. Circuit Court of Appeals in Chicago has rejected a class action award, but not because of exorbitant fees. Indeed, the court questioned whether Milberg Weiss was undercompensated when it represented shareholders of the now-defunct MarchFirst Inc.

The Chicago Tribune characterized the decision as a rare victory for class action lawyers, "who have been vilified for taking excessive cash fees while their clients receive awards of little economic value."

In the underlying case, Sutton v. Bernard, No. 00 C 6676, Milberg Weiss asked for $5.04 million, with amounted to less than a third of the $18 million settlement. The lower court judge ruled the fees were excessive and cut the amount in half.

But the 7th Circuit, acting on a Milberg Weiss appeal of the fee award, rejected the judge's fee method, opining (PDF) that U.S. District Judge John F. Grady didn't consider any factors except the amount. The 7th Circuit panel ruled that Judge Grady should have considered market value price for the legal services.