By Nate Raymond
Sept 28 (Reuters) - Plaintiffs' law firms at the center of
the $2.43 billion class action settlement with Bank of America
Corp are expected to apply for $150 million in attorneys fees, a
spokesman for the Ohio attorney general said Friday.
The sum, while hefty, amounts to 6 percent of the
settlement, a relatively modest contingency fee rate for what is
the largest recovery in a securities class action arising out of
the financial crisis. Law firms including Bernstein Litowitz
Berger & Grossmann, Kessler Topaz Meltzer & Check, and Kaplan
Fox & Kilsheimer are expected to split the sum.
The firms have yet to file a formal fee request, which, like
the settlement, would be subject to approval by U.S. District
Judge Kevin Castel in Manhattan.
But Dan Tierney, a spokesman for Ohio Attorney General Mike
DeWine, whose state's pension funds were lead plaintiffs in the
case, said the fee is expected to be $150 million.
The law firms either declined to comment on the fee award or
referred requests for comment to the spokesman for the Ohio
The litigation itself centered on allegations that Bank of
America made false statements and omitted facts related to its
2008 acquisition of Merrill Lynch, subsequent losses it suffered
and a plan to award $5.8 billion in bonuses. Bank of America's
stock subsequently fell when facts about the merger emerged, the
Bank of America denied the allegations.
Experts in class action attorneys fees said the expected
fee, while large, was within the range of past massive class
action settlements, if not smaller percentage-wise.
The fee, which would be subject to court approval, works out
to 6 percent of the settlement fund. The percentage is lower
than the median in a securities class action settlement of more
than $500 million, or 11.1 percent, according to Renzo Comolli, a
senior consultant with NERA Economic Consulting.
"Typically, the larger the settlement, the smaller the
percentage for the fee," said Joseph Grundfest, a professor at
Stanford Law School and former commissioner on the U.S.
Securities and Exchange Commission.
If approved, the fee would rank as the sixth-largest ever in
a federal securities class action, Comolli said.
The largest came in 2008, when plaintiffs' law firms,
including what is today Robbins Geller Rudman & Dowd, were
awarded $688 million, or 9.52 percent, of the $7.2 billion
recovered in Enron Corp shareholder litigation.
Kessler Topaz is already splitting a $305 million fee
awarded earlier last year by the Delaware Court of Chancery, the
largest fee that court has awarded, in a shareholder lawsuit
brought on behalf of Southern Copper Corp that resulted in a $2
billion judgment for the company.
The Delaware Supreme Court last week said it wouldn't
revisit the $305 million fee.
The case is In re Bank of America Corp Securities,
Derivative, and Employee Retirement Income Security Act (ERISA)
Litigation, U.S. District Court for the Southern District of New
York, No. 09-MDL-2058.
For the plaintiffs: Max Berger and Steven Singer, Bernstein
Litowitz Berger & Grossmann; Robert Kaplan and Frederic Fox,
Kaplan Fox & Kilsheimer; and David Kesser and Gregory Castaldo,
Kessler Topaz Meltzer & Check.
For Bank of America: Brad Karp, Theodore Wells, Daniel
Kramer, Walter Rieman, Marc Falcone and Audra Soloway of Paul,
Weiss, Rifkind, Wharton & Garrison; Mitchell Lowenthal, Lewis
Liman and Jennifer Kennedy Park of Cleary Gottlieb Steen &
Hamilton; and Peter Hein and Eric Roth of Wachtell, Lipton,
Rosen & Katz.
(A previous version of this story misspelled Mr. Comolli's first name. It is Renzo).
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