Compliance Insights discusses the case in which lawyers representing class members in a case against Citigroup, charge exorbitant fees and hourly rates.
The Citigroup settlement, in which the bank agreed to pay $590 million, is facing new problems. Investors won a class-action lawsuit after alleging they were misled by the company's disclosures. But the fighting doesn't stop there. Now the plaintiffs' lawyers, who have requested a $100 million fee, are facing opposition from Ted Frank, a well-known class action reform activist, on the grounds that it is based on excessive rates for contract attorneys hired for document review work. On his behalf, the Association of Corporate Counsel sent a letter to the Manhattan federal judge who will decide on whether to approve the fee.
Mr. Frank, who is a Citi shareholder, said in a brief field on Friday that temporary attorneys are typically billed to corporate clients at under $100 an hour. He argued that $17 million of the time entries have no description except a vague "document review" notation. Rather, up to 30% of the hours attributed to all the lawyers on the case was for after they had agreed to the settlement in May 2012. The plaintiffs' lawyers either paid their contract lawyers more than the market rate or "padded the actual rates with the sort of unjustifiable profit margins that paying clients would refuse," he said.
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