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