retirees file complaint over fees
At issue is law firm's $98 million slice out of $400 million
By Jeff Smith
Rocky Mountain News
Tuesday, March 7, 2006
Qwest Communications retirees on Monday bashed as "extremely
outrageous" attempts by attorneys to collect $98 million in
fees from a $400 million shareholder class-action
settlement. The Association of U S West Retirees complained
in a filing in U.S. District Court in Denver that the
shareholders' lead law firm - Lerach Coughlin Stoia Geller
Rudman & Robbins LLP of San Diego - is requesting fees
equivalent to $1,750 an hour.
Lerach Coughlin also is "trying to pull a fast one" by
asking for $10 million to cover work done by in-house
accountants paid by the law firm, according to the filing by
the retirees group's attorney, Curtis Kennedy.
"It is all too obvious that lead counsel are the mere
jackals to the government's lions, feasting after both the
United States Securities Exchange Commission and the United
States Justice Department made the kill," Kennedy wrote.
But "unlike the jackal, they seek the lion's share" of the
The proposed $400 million settlement would resolve the major
consolidated shareholder lawsuit against Qwest regarding
alleged securities fraud between 1999-2002. Qwest
previously settled alleged misdeeds with the SEC for $250
million, money that also will be distributed to eligible
Lerach Coughlin spokeswoman Kathleen Walsh said in a
statement Monday that the law firm will wait for the
decision from the court on its request for 24 percent of the
$400 million settlement, plus $2.2 million for out-of-pocket
But Walsh added: "Lerach Coughlin has vigorously litigated
this case for a period of over four years. Lerach Coughlin
took on a substantial risk in this case with no assurance of
success. However, the result is an excellent settlement in
an extremely complex and difficult case. And the lead
plaintiffs and class representatives support the fee
A hearing to determine the fairness of the proposed
settlement and attorney fees is scheduled for May 19. But
the retirees group is asking for a delay and more court
scrutiny, contending it's premature to hold a final hearing
because of insufficient documentation.
"While the reward for success should justifiably be
substantial, that does not necessarily equate to rates that
are forty or fifty times higher than the average wage
earner," Kennedy, the retirees attorney, said in the filing.
For example, the retirees said, Lerach Coughlin is asking
for $394,891 to cover "meals, hotels and transportation,"
without giving any receipts.
Kennedy also claimed the law firm is asking for $6.9 million
of fees for work performed by an unidentified "document
clerk," who is shown as getting hourly rates of $135 to
He also said Lerach Coughlin had failed to provide a phone
number or e-mail address on its notice to class-action
members, hampering their efforts to clarify how the
settlement would be distributed.
Since Lerach Coughlin didn't disclose details about its fee
until more than six weeks after the class notice was mailed,
a stockholder now would have to download the documents
electronically at a cost of up to $66.72, according to the
"Lead counsel's dearth of disclosures in the class notice
reflects a very cavalier approach to seeking an exorbitant
amount of attorneys' fees and expenses in shareholder
lawsuits settled well before trial on the merits," Kennedy