$16.3 million in lawyer fees OK
Qwest judge refuses to reduce bill filed in class-action suit

By John Accola, Rocky Mountain News
Wednesday, August 31, 2005

A Denver District Court judge overseeing a $50 million class-action settlement from Qwest Communications shot down a shareholder group's request to limit plaintiff attorney fees to $10 million.

Judge John Coughlin gave short shrift to arguments presented by the Association of U S West Retirees, which asked the court - at the very least - to delay settlement approval until attorneys submitted detailed documentation of their hours and expenses.

At a fairness hearing Tuesday, the judge ruled the class counsel, led by Los Angeles law firm Lerach Coughlin, was entitled to $15 million, or 30 percent of the settlement, plus an additional $1.3 million in out-of-pocket expenses.

"There weren't any other lawyers in the United States that took the gamble that these people did - not one other law firm anywhere," Coughlin said about Lerach spearheading the case.

Lerach submitted to the court last week a work summary showing it and three other plaintiff law firms logged 15,000 hours, the equivalent of $6.5 million in legal fees.

The association, however, wanted proof of each firm's time records and questioned several six-figure expenses, including $176,000 for meals, hotel and travel and $105,000 for photocopying.

"That's 25 cents a page using your own office copy machine," Denver attorney Curtis Kennedy, representing the retirees, said Tuesday after the hearing.  "Don't we at least get a discount for volume?  Why not 5 cents a page?"

But the judge noted that those standing on the sidelines while the case was hotly litigated for five years included the 20,000-member retiree association.  He suggested the association just as easily could have initiated the shareholder suit alleging Qwest breached its fiduciary duty by failing to pay a second-quarter dividend after the merger with U S West in 2000.

"A lot of lawyers had a crack at it but didn't do it," said Coughlin, adding that Lerach and Qwest attorneys spent an "astronomical" amount of time on the case.

The suit sought $273 million in damages, plus interest and attorney fees, for U S West shareholders as of June 30, 2000.

Lerach attorneys said that's how much the two telcos saved by not making good on a 53 cents-per- share dividend that U S West directors promised to shareholders before the companies merged five years ago.  Also named as defendants were former U S West and Qwest directors, including Sol Trujillo and Joe Nacchio.

Qwest agreed to settle in June, just two days before the scheduled trial.

But last month, the association filed its objections over attorney fees, complaining that the more than $16.3 million Lerach had requested would leave just $33 million to be distributed among the thousands of plaintiff shareholders they represented.

"While attorneys seek to make multimillions of dollars, the class of shareholders . . . stand to receive less than 10 cents per share," said the association in its Aug. 5 motion, prepared by Kennedy.

Kennedy wrote that the case and its accompanying settlement had a "stink like a three-day-old unrefrigerated dead fish."

Kennedy was less descriptive Tuesday, but no less passionate.

He said the blanket $15 million contingency award represented 2.3 times what the plaintiff lawyers actually put into the case.  Paralegal time alone would be compensated at the rate of more than $400 an hour.

"Times are changing," he told the judge. "Shareholders are beginning to feel they need to step up and object . . . that these attorney fees are getting out of hand."

Lerach attorney Michael Dowd argued that his firm deserved an incentive for taking on a complicated case that could have gone to trial with no assurance of winning.

"We were the ones at risk . . . all by ourselves," he said.

accolaj@RockyMountainNews.com or 303-892-2666