BOSTON (Legal Newsline) - An Arkansas pension fund has retained a law firm with expertise in criminal and corporate investigations as arguments over $75 million in class action attorney fees continue in federal court.
The Arkansas Teacher Retirement System (ATRS) is the lead plaintiff in a class action lawsuit against State Street Bank, which was accused of bilking clients on foreign exchange trades. A $300 million settlement should have ended the issue in 2014, but questions continue over the $75 million in fees asked for by the attorneys for the plaintiffs.
Attorneys for the retirement systems are fighting to keep under seal parts of a report by a special master that seems to include allegations the law firms overbilled. These alleged activities were uncovered by the Boston Globe.
In the most recent filing, most of the parties, including Special Master Gerard Rosen, have asked for more time to allow those involved to suggest redactions to the report before it is made public. The parties asked for a June 12 deadline.
Some details about the fees have emerged. The Globe reported that one firm, Thornton Law Firm, allowed Michael Bradley, the brother of Thornton partner Garrett Bradley, to bill more than 400 hours at $500 an hour. Michael Bradley's normal work is as a public defender.
A Globe series of articles also revealed that Garrett Bradley listed 24 staff attorneys with hourly rates of $425, a total of $4 million in costs. One of the lawyers said he was paid an hourly rate of only $30, and 23 were found to be listed as lawyers for the other firms working on the case.
Questions have also been raised over the billing by another firm, Labaton Sucharow, which did not join, or sign, the most recent filing asking for more time before the report is put on the public record.
“The conduct of Labaton and the other lawyers you selected has been called into question,” Judge Mark Wolf said at a May 31 hearing. "The special master, as you know, recommends that what, by my standards, is a significant amount of money be returned by those lawyers and distributed to the class."
In an affidavit filed Wednesday in the U.S. District Court for Massachusetts, George Hopkins, executive director of the retirement system, revealed the agency has retained Thomas Hoopes of Boston’s LibbyHoopes law firm, which advertises itself as specializing in white collar crime, internal corporate investigations, and complex civil litigation.
"I have sought and obtained advice from separate and independent legal counsel whose conduct is certainly not at issue in this case," Hopkins wrote in the affidavit that argued the retirement system should remain as lead plaintiff in the case.
"If ATRS continues to represent the customer class, ATRS would continue to seek legal advice from Mr. Hoopes and his firm on issues raised in the special master's report and recommendations and related proceedings."
He added, "I do firmly believe that we all can learn from this case, including a little more ‘trust but verify.'
“However, trusting those who have not previously given us cause to distrust does not create a failure of duty. Imperfection may or may not signal more.
"Still, hindsight is 20/20 and hindsight will certainly lead to refinements in best practices, at least for class representatives both sophisticated and less sophisticated as there is no instruction manual on how to be a class representative.
"But that does not prevent ATRS from continuing to do our best to be both fair and vigorous on behalf of those we serve.”
Jeff Stubblefield, chairman of the board of trustees for the pension fund, said he believes "the judge is taking another look as far as the attorney fees and as far as I know we will abide by his decision."
The attorneys "probably made some errors and that is the reason having to take a microscopic look to see whether everything is to his satisfaction," Stubblefield told Legal Newsline. "The only thing not settled is payments to legal representatives."
Stubblefield added that the action began before he took over as chair. He described the case as "very complex," and one involving thousands of documents.
Labaton Sucharow issued a written statement Thursday denying any wrongdoing over fees.
"The $300 million settlement achieved by the class representative and the attorneys was an excellent result, praised by the court," the company stated. "This recent development involves a payment made to an attorney who originally referred our firm to ATRS.
The firm added, "Referral fees are legal and common, and Massachusetts permits lawyers who refer clients in a case to receive a referral payment. In the State Street case, class counsel provided such a referral payment which was made from the attorney's fees awarded to class counsel. We complied with all disclosure requirements."