The Association of U S West Retirees



U S West retirees lose appeal over legal fees
By Greg Avery
Denver Business Journal
Friday, July 13, 2007

Lead lawyers for U S West retirees and shareholders were entitled to the $15 million they were paid from a $50 million legal settlement they reached in 2005 after a five-year battle with Qwest Communications International Inc. the Colorado Court of Appeals ruled Thursday.

The court affirmed a Denver District Court ruling that the fees awarded to the legal team headed by attorney Adele Brody were appropriate, largely because they were working on contingency -- meaning they would have received no payment had they lost.  A 30 percent fee is normal in contingency cases and Brody's reward for assuming such legal risks does not "shock the conscience," the ruling said.

The retirees and shareholders had appealed their attorney's fee, saying it was excessive by at least $5 million.

The original suit came in 2000 after Qwest's merger with U S West nullified $270 million in dividends U S West said it would pay shareholders June 30, 2000.

Joseph Nacchio, then CEO of Denver-based Qwest as it was acquiring U S West, got the dividend date pushed back to July 10, 2000, when U S West would no longer exist because the merger had closed and the dividend would no longer have to be paid.

After nearly five years of discovery, class-action certification and legal negotiation, Qwest settled and agreed to establish a $50 million settlement fund for suing shareholders.  Lead counsel for the plaintiffs asked for, and got court authorization to receive, $15 million of the money plus $1.3 million in costs.

Citing precedents, the appeals court found the lead attorneys were entitled to be compensated for work that benefited not just the client who hired them but also the 763,000 other participants of the class-action suit who could claim a part of the fund.

The court also must factor in the legal skill required by what the attorneys accomplished and the amount of time that the firm was unable to take other clients in considering whether the fees could be considered "reasonable" under the law, the appeals court wrote.

The dividend nullification case required "astronomical" time and labor over five years -- a little more than 15,770 billable hours -- research into matters never before settled in court and pitted Brody against a "well prepared and 'extremely talented'" group of lawyers for the telecommunications firms, the judgment said.