Ethics and the Criminal Defense Attorney
Never Again

fed. court averts fee crime

It may not be a crime to ask for $609 million dollars in legal fees for one class action lawsuit, but at times I wish it were.  Nonetheless, as I've been known to carp about courts accepting contingent legal fees that are too high, I want to go on record praising the 5th Circuit panel (judges Cabranes and Wesley), who rejected the $609 million request by class counsel in the Visa/MasterCard Debit-Card Antitrust suit. (decision, Wal-mart v. Visa, Jan. 4, 2005; New York Sun article, Jan. 18, 2005; Overlawyered post).

Lloyd Constantine, who heads class counsel Constantine & Partners, was featured in a guest post here a month ago.  Acknowledged as a premiere antitrust attorney, Constantine is quoted in the NY Sun article saying "If you’re just asking the question in a vacuum ‘Is $609 million too much for a bunch of lawyers to be compensated for doing a case?’ I’d say absolutely, that’s a ridiculous amount of money.”  I believe the lower and appeals courts were correct to find the amount ridiculous in context, too -- including his assertion that a sliding scale fee percentage is inappropriate.   Brooklyn Judge John Gleeson was not as polite as the appellate jurists, when he ruled on the fees (per the Sun):

  “Lead counsel’s request to be paid almost 10 times their hourly rate is absurd,” Judge Gleeson wrote. “It is fundamentally unreasonable and wholly out of character for a group of counsel whose commitment to the corner store merchants they represent has, until now, been admirable and unflagging.”

    Judge Gleeson ridiculed the suggestion that the $220 million fee he awarded would be insufficient to motivate other lawyers to bring meritorious but risky cases. “If it amounts to punishment,I am confident there will be many attempts to self-inflict similar punishment in future cases,” the judge wrote.

Those readers who like a little irony can join me in smiling at this quote from the Constantine law firm Profile:

"The firm's billing rates and total fees are typically significantly less than those charged by larger firms."

Thumbs Down, are deserved, I submit, for the three professors hired by Constantine to bless his fee request.  As the Sun reported:

   To make their case for $609 million in fees, the plaintiffs’ lawyers retained several renowned law professors as experts: Arthur Miller of Harvard, John Coffee Jr. of Columbia, and Harry First of New York University. All filed declarations saying the plaintiffs’ lawyers should be awarded a substantial percentage of the settlement, even in so-called megafund cases,to preserve their incentive to press for the largest possible fund for the class.

It's interesting that none of the professors even mentioned the dollar figure requested by class counsel in their submissions.  I join in the opinion of Prof. Lester Brickman:

“This is a round-up of the usual suspects. These are some of the most prominent lawyers who are law professors, who are frequently hired to bless the fee. Their blessing comes at a commensurate price, but their blessings are certainly worth the price they charge.”

Like the district court, the 5th Circuit correctly sought "to compensate plaintiffs’ counsel handsomely, and at the same time limit the percentage of the award so that plaintiffs’ counsel would not receive a windfall detrimental to the class.”   Any lawyers who need a larger incentive to pursue cases of similar risk and complexity are in the wrong profession, and should find a line of business that does not involve fiduciary duties and ethical limitations on fees.   

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