BOSTON (Legal Newsline) - Plaintiff lawyers whose fees were trimmed by more than $6 million after serious allegations of double-billing and other improprieties emerged in the State Street securities class action have urged the court to reject a fee request from the organization that took a lead role in uncovering the scandal.
Lieff Cabraser, Labaton Sucharow and the Thornton Law Firm filed briefs with U.S. District Judge Mark L. Wolf in Boston on Oct. 20 opposing a fee request by the Hamilton Lincoln Law Institute’s Center for Class Action Fairness. The organization frequently represents objectors in class actions who seek a reduction in attorney fees that can be applied to the proceeds available to class members.
There were no objectors in the State Street case but CCAF and its founder Ted Frank got involved in the case in 2016 after the Boston Globe reported plaintiff lawyers had overstated their fees by double-counting some $4 million attributed to lawyers Lieff Cabraser and Labaton Sucharow “lent” to the far smaller Thornton firm. That was followed by revelations Labaton had paid $4.1 million to Damon Chargois, a Texas lawyer who did no work on the case but had introduced Labaton to influential officials in Arkansas. An Arkansas state teacher pension fund served as lead plaintiff in the State Street case.
At the judge’s invitation, CCAF filed a request on Sept. 29 seeking $60,690 in fees, “a sliver of the 25%” or $1.6 million it said would normally be entitled to for its role in obtaining $6.1 million of the reduction in plaintiff attorney fees. The organization also wants to be appointed guardian ad litem for the class, which CCAF says needs representation given the misdeeds of their court-appointed attorneys.
Plaintiff lawyers originally filed for a $75 million share of the $300 million settlement over State Street’s foreign exchange trading activities. After a lengthy investigation in which the lawyers had to pay millions of dollars in their own legal fees and fees to a court-appointed special master, Gerald Rosen, Judge Wolf trimmed the total fees awarded to all counsel to $60 million. Since then, Lieff Cabraser and Labaton have mounted a fierce battle to recover their fees that has even forced the judge hearing their case to consider hiring his own lawyer to represent the court in an appeal before the First Circuit.
Frank said the plaintiff attorneys willingly expended millions of dollars fighting the investigation into their billing practices and now the court’s reduction in fees.
“Fortunately for the class, the court’s final result was closer to what we proposed as an amicus appointed at the court’s request than what the special master proposed,” Frank said in an emailed response. “Our results speak for themselves: we’ve won hundreds of millions of dollars and landmark precedents for class members over the years with a shoestring budget of under a million dollars a year, including tens of millions of dollars in Lieff Cabraser cases alone.”
The special master, in an Oct. 20 filing, said he won’t comment on whether CCAF is entitled to any fees. He reiterated his recommendation that if the organization is paid, the money shouldn’t come from the class’ share of the settlement.
“The class is not responsible for the misrepresentations that necessitated the Special Master’s investigation or the new fee award,” Rosen wrote in that filing. “Under no circumstances should the class members be penalized by redirecting their recovery in order to reimburse” CCAF, he said.
In their filing, the plaintiff lawyers say CCAF has no formal role in the proceedings and isn’t entitled to any fee.
“If the Court wanted to appoint CCAF, it would have done so,” they wrote. “It did not. Now, after voluntarily participating in these proceedings with no expectation of compensation and no official responsibility, CCAF cannot be awarded attorneys’ fees.”
The class members in this case were sophisticated investors including large pension funds, the lawyers argue, and none objected to the fees. They criticized “CCAF’s attempts to shoe-horn itself into the position of a settlement objector” without legal authority, the firms argued.