Feature
Victory for Attorneys Involved in Class Action Suits By Joshua Nave Good news this week for class action plaintiff’s attorneys out of New York. In Re Comverse Technology a federal judge has upheld a 25% attorney’s fee on a $225 million settlement in a class action case dealing with backdated securities.
The plaintiffs’ attorneys, New York’s Pomerantz, Huadek, Grossman and Gross, will receive a $56 million fee for its work in arranging the settlement. The judge ruled against a complaint brought by a state retirement fund in Pennsylvania that objected to the fee as being unreasonably large. The court took into account several factors, most notably the size of fee awards in similar cases, the amount of work the firm put into the case, and the fee agreement negotiated between the firm and the lead plaintiff. The court took particular notice of the fact that the original fee agreement called for a 30% fee but after the settlement was reached the parties renegotiated it down to 25%. The judge noted that it was clear prior to the start of litigation that if successful the award in the case would be substantial and that the lead plaintiff could have opted to negotiate a sliding fee scale but opted for a straight percentage. In determining the correct fee for the class attorney in a class action suit, the court is attempting to match prevailing market rates and the judge
a large settlement is the best indication of the prevailing market rate. The court was not in a better position to judge the market rate of the firm’s services than the parties involved in this case, and that determination is strengthened when the award is cross checked against the amount of work the attorneys put into the case. Also of great importance to the court was a determination that encouraging class action suits was in line with public policy. Citing past cases to show that class action suits in securities fraud cases supplements SEC actions and that fees should be high enough to encourage attorneys to accept the risks behind litigating complex and expensive cases, the court declined to substitute its own judgment on the appropriateness of a fee when the fee agreement was vigorously negotiated between counsel and lead plaintiff. All in all this is a win for attorneys involved in class actions.
noted that a pre arranged fee agreement in anticipation of
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