By Nate Raymond
NEW YORK, Jan 29 (Reuters) - Securities class action law
firms earned $653 million in fees and expenses related to
federal court cases last year, up 4 percent from 2011, a report
released on Tuesday said.
The fees were awarded out of the $3.3 billion recovered in
class actions last year. Aggregate settlement amounts also
increased, up 22 percent from 2011, according to the report by
NERA Economic Consulting.
The trends reflect larger settlements cut during the year,
which typically do not yield as high fees on a percentage basis
as smaller settlements.
Bruce Vanyo, a partner at Katten Muchin Rosenman, said that
when awarding contingency fees, federal courts typically review
the hours plaintiffs' firms put into a case, even if the
attorneys' work is not really billed hourly.
That sum typically is then multiplied, but the fees
themselves still are tied to the hours.
"So in the bigger settlements, the numbers don't add up as
much," he said.
The largest fee award in 2012 came in litigation filed in
2004 against American International Group that resulted in two
partial settlements totaling $822.5 million.
The court awarded a little more than $100 million in fees in
the case to firms led by Labaton Sucharow and Hahn Loeser &
Other large fee awards last year included $55 million from a
$200 million settlement with Motorola Inc, $53.55 million for a
$315 million settlement with Bank of America Corp's Merrill
Lynch and $35.39 million for a $294.9 million settlement with
Bear Stearns, now owned by JPMorgan Chase & Co.
The median proportion of fees to settlement has also been
declining markedly, NERA said. In a settlement recovering $100
million to $500 million, fees and expenses were 18.2 percent of
that recovery from 2010 to 2012, compared to 24.2 percent from
1996 to 2009, the report said.
The one exception was for settlements with more than $1
billion recovered. In those cases, 12.6 percent of the recovery
went to fees and expenses, compared to 8.3 percent from 1996 to
Even so, the biggest settlement announced last year, a $2.45
billion settlement with Bank of America Corp, is set to provide
the plaintiffs' firms with almost half the median amount for
those big cases, 6.56 percent.
If approved, the firms stand to earn $159 million in fees
and $17.5 million in expenses. The case was co-led by Bernstein
Litowitz Berger & Grossmann, Kessler Topaz Meltzer & Check and
Kaplan Fox & Kilsheimer.
The report also found a decline in securities class action
filings, in line with data in other reports by Cornerstone
Research and Advisen.
NERA counted 207 lawsuits filed in 2012, down from the 221
average seen over the last five years.
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