The Wall Street Journal reports how Judge Stein sided with Ted Frank's argument that lawyers in class action lawsuits place large markups on their frees.
Back in the spring, litigator and class-action activist Ted Frank raised quite a stir over what he says is a standard practice in big securities lawsuits: plaintiffs’ firms charging clients hefty markups for contract lawyers, who typically earn $30 to $75 an hour for sifting through documents.
The issue came up during a fee request in a shareholder lawsuit against Citigroup Inc. in which the plaintiffs’ lawyers sought a nearly $100 million cut of the $590 million settlement. That’s about 16.5%, a share based in part on part on billing clients the so-called “market rate” for contract lawyers, which in this case ran as much as $550 an hour.
Mr. Frank objected to the fee request, calling it a windfall that would reward the lawyers for bloated billing at the expense of their clients.
Judge Stein didn’t agree with all of Mr. Frank’s objections. But he did determine that “a reasonable client” would not pay nearly as much for a contract lawyer as the fee request proposed, and concluded that the appropriate blended hourly rate for their services is this case should be $200, not $466.
Read the full article at the Wall Street Journal.