BOSTON (Legal Newsline) – The future of a prominent class action law firm's fight to reinstate more than $1 million in fees from a controversial settlement is in question.
That’s because the U.S. Court of Appeals for the First Circuit wrote last week that it is unsure whether it has jurisdiction over the appeal of Lieff Cabraser, which had its yield from a settlement with State Street reduced by $1.1 million earlier this year. The firm is appealing Boston federal judge Mark Wolf’s February decision.
“Upon review, it appears that this court may not have jurisdiction to consider the appeal because the order in question may not be final,” Second Circuit clerk Maria Hamilton wrote.
In the next month, Lieff Cabraser will have to file papers that show why Wolf’s order can be appealed now. Wolf has said he will appoint a lawyer to represent the court’s position.
Lieff Cabraser appeals his February opinion trimming the firm’s fees for its involvement in a scandal that included double-billing of attorney hours and failing to halt a suspicious $4 million payment to an attorney who did no work on the case.
Lieff Cabraser helped negotiate a $300 million settlement of the securities lawsuit against State Street and was initially awarded $75 million in fees, along with co-counsel including Labaton Sucharow and the Thornton Law Firm.
Then the Boston Globe published a story revealing how the law firms had miscounted an accounting to the court for hours racked up by attorneys they swapped among themselves. That was followed by revelations Labaton had paid $4.1 million to Damon Chargois, a Texas lawyer whose only role in the case was to introduce the New York-based securities litigation firm to officials at the Arkansas Teachers Retirement System, which served as a lead plaintiff in the State Street case.
After hearings last year at which Labaton and Lieff Cabraser strongly objected to nearly every charge against them, Judge Wolf in February ordered their fees cut by about 26% on top of the millions of dollars they paid for the special master to investigate their behavior in the case. The judge said Lieff Cabraser “was seriously deficient in its performance as counsel” in the case for signing off on a fee request that included a misleading analysis of fees paid in similar class actions and for failing to catch the payment to Chargois. The order would cut Lieff Cabraser’s fees by about $1.1 million to $15.2 million.
Only Lieff Cabraser has appealed the fee cut.
The lead lawyer for Thornton, Garrett Bradley, is a former Massachusetts state representative who paid his brother, normally a $53-an-hour court-appointed criminal defense attorney, more than $200,000 at $500 an hour in the State Street case.
The Thornton firm billed $19 million in the State Street case even though it has few partners and Bradley acknowledged on the stand he couldn’t recall handling any cases in Massachusetts federal court.
Most of the hours reported by the firm were actually worked by lawyers the larger securities law firms lent to Thornton, in a common arrangement designed to compensate local counsel with connections with institutional plaintiffs or the court where the case is being heard.