BOSTON (Legal Newsline) – Class action lawyers who were found to have misled a judge in a $300 million lawsuit are appealing the order that slashed their cut.
Class counsel Lieff Cabraser filed its appeal Jan. 26 in Boston federal court of at least three adverse rulings in the long-running State Street securities class action. The settlement seemed simple - $300 million for the class, with 25% going to their lawyers – but drew scrutiny after media coverage from the Boston Globe.
Last year, Judge Mark Wolf issued a 159-page order that cut lawyer fees from $75 million to $60 million.
“Many of the representations made to the court in support of the request for attorneys' fees by (Labaton Sucharow) and (Thornton Law Firm), and to a lesser extent by Lieff, were untrue,” Wolf wrote.
Lieff Cabraser lost out on $1.1 million in fees because of the order and appealed it last year. However, the U.S. Court of Appeals for the First Circuit found it did not have jurisdiction over the issue because Wolf’s order was not final yet.
There were no objectors in the State Street case but the Center for Class Action Fairness, now a part of the Hamilton Lincoln Law Institute, and CCAF founder Ted Frank got involved in 2016 after the Boston Globe reported plaintiff lawyers had overstated their fees by double-counting some $4 million 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.
After hearings in 2019 at which Labaton and Lieff Cabraser strongly objected to nearly every charge against them, Judge Wolf in February 2020 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.
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.
Lieff Cabraser is also appealing a recent order that granted more than $60,000 to CCAF for its work on behalf of class members. That money is to be paid from the common fund, not the lawyers’ fees.