Multi-million dollar attorneys’ fee awards in complex class action cases are not unusual. Those who litigate them can spend literally thousands of hours engaged in discovery, motion practice, pre-trial preparation, and more. Often taken on a contingency fee basis, such lawsuits can take years to resolve with no guarantee of success for those who bring them. So when these types of cases settle, the parties negotiate over payment of attorneys’ fees and expenses incurred by those prosecuting the action. Courts then must approve such payments per Rule 23.
This past week, U.S. District Judge Paul L. Friedman approved a whopper -- a total of $90,835,000.00 to class counsel who reached a settlement on the claims of tens of thousands of African-American farmers who were discriminated against by the U.S. Department of Agriculture in the provision of farm loans, subsidies, and other agricultural benefits and who made untimely attempts to participate in a prior consent decree to resolve their claims. You can read the decision in In Re Black Farmers Discrimination Litigation, Misc. No. 08-0511 (PLF), 2013 U.S. Dist. LEXIS 96932 (D.D.C. July 11, 2013), here. The fee award represented 7.4% of the value of the “common fund” awarded to members of the plaintiff class. By our estimate, this is the biggest fee award of the year to date in a discrimination lawsuit.
What makes this decision unique, beyond the eye-popping figure itself, is the fact that the fee petition was granted even though the plaintiffs’ attorneys did no work at all on discovery; the case was stayed except for the limited purpose of briefing class certification; the parties engaged in settlement discussions soon after the litigation began; and no attorney time was spent on pre-trial preparation or trial. Id. at *17-18.
Given all this, how could it be that in excess of $90 million dollars’ worth of legal work was done on behalf of the class? According to the updated fee request, more than 80,000 attorney hours and 160,000 paralegal hours were expended in negotiating and preparing 20 drafts of a settlement agreement (work that the Court believed encouraged Congress to fully fund the settlement), working with a claims administrator and ombudsmen appointed by the Court to oversee smooth and fair implementation of the settlement, organizing and convening meetings around the country with claimants, assisting them in preparing claims forms, and facing “novel challenges” such as “devis[ing] a fair and efficacious manner of resolving a potentially very large number of claims with funds drawn from a limited pool.” Id. at *18-19.
As Judge Friedman explained, “An exclusive focus on the lack of discovery, merits briefing, and trial gives short shrift to the unbelievable logistical challenges that confronted class counsel in designing and implementing the claims resolution process in this case. . . .” Id. at 19.
In other words, logistics matters. A whole lot.