In the world of mega class actions, it hardly raises
an eyebrow if the lawyers who secure a $100 million
settlement walk away with 30 percent of the fund, or
$30 million. But when Eastern District of Pennsylvania
Judge John R. Padova took a close look at just such a
fee request in a class action antitrust suit over the
pricing of the anti-depressant drug Paxil, he
concluded that the lawyers were simply asking for too
much in light of the relatively small number of hours
they had logged on the case. If the lawyers were paid
the full amount they requested, Padova said, they
would end up earning more than 23 times their ordinary
hourly billing rates for the 4,239 hours they worked.
After surveying fee awards in other mega class actions,
Padova concluded that a "multiplier" of 23.59 is
"unprecedented," and that most fees resulted in a
multiplier in the single digits. Padova's decision
was the result of a so-called "lodestar cross-check."
Although class-action settlement fees are routinely
awarded on a "percentage-of-the-fund" basis, courts
are also required to perform a lodestar cross-check
in which they compare the fee to the amount the
lawyers would have earned at their ordinary billing
rates. Having concluded that a multiplier of more than
23 was too high, Padova was forced to decide on his
own what a reasonable fee would be. As a result,
Padova cut the request by one-third and awarded the
lawyers $20 million, noting that it still resulted in
a multiplier of more than 15.
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Shannon P. Duffy, The Legal Intelligencer, Law.com,
05/26/2005. For complete story, search
http://www.law.com
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