In The News . . . . Lawyers Having Conflicts With Class Representatives Over Incentive Payments Denied Fees In Entirety in BAR/BRI Settlement

 

Nonconflicted Attorneys Get Award of Fees; Conflicted Attorneys Do Receive Reimbursement of Over $1.2 Million in Expenses.

     In our April 26, 2009 post, we reported on Rodriguez v. West Publishing Co., 563 F.3d 948 (9^th Cir. 2009), where class representative incentive agreements creating conflicts of interests required reconsideration of fee awards to both objectors and class counsel in the BAR/BRI bar review class action case. (The incentive arrangement provided that five named plaintiffs would get payments on a sliding scale basis—the amount went up depending on the ultimate settlement, but incentive payments were capped if the settlement figure reached $10 million. This arrangement had never been disclosed to the class or the district judge during the class certification stage of the case.)

     Now, U.S. District Judge Manuel L. Real has reconsidered the fee issues and determined that the conflicted lead class counsel was entitled to no fees at all, although awarding lead conflicted counsel over $1.2 million in reimbursable expenses. District Judge Real found that this ethical violation was serious enough, despite the fairness of the overall settlement, to result in the forfeiture of attorney’s fees altogether on both contractual and quantum meruit claims. (Image Technical Service, Inc. v. Eastman Kodak, 136 F.3d 1354 (9^th Cir. 1998); Huskinson & Brown, LLP v. Wolfe, 32 Cal.4^th 453 (2004).)

     Judge Real did award substantial fees to nonconflicted attorneys representing the class, although reducing the lodestar by 10% in order to account for excessive fees and noncompensable work (and denying the multiplier requests). He also awarded $8,125 respective fees to two of objectors’ attorneys.

     It has been reported that McGuireWoods LLP (counsel awarded nothing) have asked Judge Real to reconsider his ruling.

     Judge Real’s order was filed February 3, 2010 in Rodriguez, and can be found on-line (as well with other background on the case) at The Wall Street Journal website. See the February 12, 2010 article entitled “The Class Gets $49 Million, But the Lawyers Get Nothing.”