Attorney Fees

7th Circuit limits attorney fees in lawsuit against faxing lawyer to percentage of actual claims

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Class-action lawyers who sued on behalf of accountants who received unsolicited legal newsletters aren’t entitled to fees based on the total $4.2 million in funds that is available to claimants, a federal appeals court has ruled.

Instead the lawyers are entitled to fees based on the number of accountants who step forward to claim $500 in damages, according to the Chicago-based 7th U.S. Circuit Court of Appeals. Crain’s Chicago Business covered the July 8 decision (PDF), written by Circuit Judge Frank Easterbrook.

The defendant is Illinois lawyer Gregory Turza, who violated the federal Telephone Consumer Protection Act by sending unsolicited faxes that contained no opt-out provision. Statutory damages are $500 per fax, or a total or $4.2 million for 8,430 faxes sent to the accountants. Any unclaimed money was to revert to Turza.

A federal judge had set attorney fees at $1.4 million, representing a third of the total pot of money, or $167 for each $500 in damages. The judge erred, according to the appeals court.

“If a given recipient cannot be located, or spurns the money, counsel are not entitled to be paid for that fax,” the appeals court said. “Awarding counsel $167 per fax when the class members gets nothing would be equivalent to treating the act as a fee-shifting statute and requiring Turza to pay the class’s attorneys just because he lost the suit.”

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