Law.com’s Alaina Lancaster discusses the fairness hearing of the Wells Fargo derivative settlement, where HLLI filed an objection on behalf of a shareholder opposing excessive attorneys’ fees:
As you might have guessed, the dispute has the fingerprints of Ted Frank of the Hamilton Lincoln Law Institute’s Center for Class Action Fairness all over it. Frank initially raised the issue in his motion opposing the attorney fees, pointing out that the co-lead counsel paid contract attorneys between $40 and $50 an hour but requested about $415 an hour to cover their investment.
“The unreasonableness of co-lead counsel’s fee request is confirmed by the lodestar crosscheck,” Frank wrote in his opposition to the motion. “Using these rates, the lodestar figure is exaggerated by at least $5.5 million, but the precise amount is unclear due to counsel’s failure to submit daily billing records. This means the lodestar multiplier is actually about 4.04.”
With that kind of markup, Tigar said the use of contract lawyers could be considered a profit-seeking scheme. Heimann argued that the work and the overhead costs for staff and contract employees are the same in regard to training, supervision and providing workspaces. Tigar said the law firm wouldn’t contract out staff if it weren’t more profitable.