$75 Million Was The Tentative Class Counsel Fee Recovery, But $4 Million In Suspect Lodestar Billings Raised A Flag For Further Review.
In Arkansas Teacher Retirement System v. State Street Bank and Trust Co., Case No. 11-cv-10230-MLW (D. Mass. Feb. 6, 2017) (Doc. #117) (Memorandum and Order), a Massachusetts federal district judge issued an interesting order in a class action case, one likely prompted by some media articles and lead class counsel sending a letter to the district judge admitting to an overstatement of the lodestar request.
What happened here was that the district judge had approved a $300 million settlement and used the common fund method of recovery to tentatively award class counsel attorney's fee of almost $75 million, 25% of the common fund but critically cross-checked against a $41.323 million lodestar together with a 1.8 multiplier.
But wait, the story does not end here as you likely surmised. After some media flurry, class counsel wrote a letter to the district judge indicating that the lodestar might have been inflated to the tune of $4 million because staff attorneys were paid very small rates but billed out at much higher rates. This brought into question the hourly rates that class counsel attributed to staff attorneys in calculating the "cross-check" lodestar. The district judge proposed to appoint a special master to examine the reasonableness of claimed fees, even proposing a judicial candidate who could be an appropriate special master if the parties got past one possible "conflict of interest."
So, it looks there will be more examination of the fee issue …. but see our BLOG COMMENT BELOW.
BLOG COMMENT—What we liked about this case, especially, is that the proposed special master did file an affidavit about the possible "conflict of interest" concern. However, we liked paragraph 15 of the proposed special master's affidavit, which said: "That this affidavit is made under pain and penalty of perjury." There you go—that may say it all!