The Association of U S West Retirees



Treasury to Hedge Funds: Let's Have a Little Chat About the Risks of Your Game
For Everyone Else?
By Nathan Koppel
The Wall Street Journal
Saturday, March 11, 2006

Underpaid Lawyers?

When it comes to class-action lawyers, familiarity does indeed breed contempt.

St. John's University law professor Michael Perino recently completed a study of legal fees in securities-fraud settlements from 1997 to 2005.  He found that judges who see lots of class actions, such as those in New York and San Francisco, award lawyers $738,000 less in fees per case, on average, than judges elsewhere.

Mr. Perino surmises that experienced judges may be jaded and more apt to think, "The attorney effort in a case was not overwhelming."  The message for plaintiff lawyers:  The real action is in Nebraska, Iowa and North Dakota.

But maybe not Denver.  Class-action kingpin Bill Lerach's San Diego firm is seeking $96 million in fees for securing a $400 million securities-fraud settlement with Qwest Communications International Inc.  A few days ago, Qwest shareholders filed an objection in Denver federal court, calling the firm "jackals."  The firm had disclosed spending about 54,000 hours on the case, meaning it is asking for about $1,750 per hour.  The objectors' lawyer, Curtis Kennedy, says he gets up to $450 an hour.  "They want four times my rate," he says.

Michael Dowd, a Lerach partner, says the firm's fees take into account the risk that it wouldn't have gotten anything if its clients didn't recover.  "We have spent five years on this case and haven't earned a dime yet," he says.

A hearing is scheduled May 19.

Document Dump

U.S. District Judge Lewis Kaplan wasn't happy with all the documents attorneys filed in federal court in Manhattan to get former KPMG LLP partner David Greenberg released on bail.

Mr. Greenberg has been in jail since getting indicted last October for his role in creating questionable tax shelters. Prosecutors said he had told a witness he had up to $20 million in an account in his wife's name and planned to "take off" if indicted.

During a hearing on Wednesday, Judge Kaplan dropped the foot-high stack of papers on his bench and told Mr. Greenberg's attorney Richard Strassberg that they constituted "a gross abuse of the court." Mr. Strassberg said his detailed filing showed no hidden money. But Judge Kaplan wasn't convinced: "For all I know [Mr. Greenberg] owns 15% of General Motors," he said. The records were like a "game of Three-Card Monte."

Mr. Strassberg apologized, but added that he had excluded an additional "couple of feet" of canceled checks. Judge Kaplan shot back: "We could've heated the courthouse with those."

Then the judge granted Mr. Greenberg's bail.

--With Randall Smith, Aaron Lucchetti, Serena Ng and Paul Davies

Write to Nathan Koppel at