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Three law firms­—Labaton Sucharow; Lieff Cabraser Heimann & Bernstein; and Thornton Law Firm—have admitted they double counted hours in a securities class action suit against State Street Bank that netted them $75 million, and have agreed to pay up to $2 million to cover the cost of an investigation into whether they overcharged for their work.

At a hearing in Boston federal court on Tuesday, U.S. District Judge Mark Wolf reportedly appointed Gerald Rosen, a recently retired federal judge, to conduct a probe of the plaintiffs firms’ fee request in connection with a $300 million settlement of securities claims against State Street.

Wolf’s appointment of Rosen as special master was reported earlier by the Boston Globe, which has published a series of articles raising questions about political donations made by lawyers at Thornton, as well as whether plaintiffs lawyers in the State Street case inflated their billing rate estimates while asking for legal fees.

The underlying litigation accused State Street, defended by Wilmer Cutler Pickering Hale & Dorr, of overcharging pension fund clients in connection with foreign currency trades. The $300 million settlement secured final approval in early November, with the judge also signing off on $74.5 million in attorney fees and an additional $1.26 million in expenses.

Lawrence Sucharow of Labaton confirmed on Wednesday that his firm, Lieff Cabraser and Thornton Law, have all agreed to provide up to $2 million to cover Rosen’s work on the investigation into the firms’ fee request. Sucharow said in an email that the class representative in the case made a statement in court on Tuesday “strongly supporting the fee petition, and expressing his deep appreciation for the work of class counsel.”

“We look forward to working with the special master to resolve any questions relating to the fees awarded for achieving a $300 million recovery for the class in this case,” Sucharow said.

The special master appointment comes in light of a letter that Labaton sent to Wolf in November, in which the firm acknowledged “inadvertent errors” in declarations that the three firms had submitted to report their billed hours on the case as part of the fee request.

The mistakes related to “staff attorneys” who were paid on an hourly basis and worked temporarily for the three firms, primarily doing document review. Labaton said that hours worked by 17 of these staff attorneys were counted in both the Labaton and Thornton reports accompanying the fee request, while hours worked by six other staff attorneys were counted on both Thornton’s and Lieff Cabraser’s reports.

The double counting led the firms to overstate the time worked by more than 9,000 hours, which amounted to billing an additional $4.1 million, according to Labaton’s letter. The firm maintained that even with the mistakes, the plaintiffs’ total fee of about $75 million remained reasonable.

The judge, however, ordered more of an inquiry. Citing the Labaton letter and a Boston Globe article published in December about the firms’ fee request, Wolf in February issued an order that said he’d like to bring Rosen in as a special master to investigate.

“The acknowledged double-counting of hours by staff attorneys and the matters discussed in the article raise broader questions about the accuracy and reliability of the representations plaintiffs’ counsel made in their calculation of the lodestar generally,” Wolf wrote in the Feb. 6 opinion. “These questions—which at this time are only questions—also now cause the court to be concerned about whether the award of almost $75,000,000 in attorneys’ fees was reasonable.”

Copyright The American Lawyer. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Three law firms­— Labaton Sucharow ; Lieff Cabraser Heimann & Bernstein ; and Thornton Law Firm —have admitted they double counted hours in a securities class action suit against State Street Bank that netted them $75 million, and have agreed to pay up to $2 million to cover the cost of an investigation into whether they overcharged for their work.

At a hearing in Boston federal court on Tuesday, U.S. District Judge Mark Wolf reportedly appointed Gerald Rosen, a recently retired federal judge, to conduct a probe of the plaintiffs firms’ fee request in connection with a $300 million settlement of securities claims against State Street.

Wolf’s appointment of Rosen as special master was reported earlier by the Boston Globe, which has published a series of articles raising questions about political donations made by lawyers at Thornton, as well as whether plaintiffs lawyers in the State Street case inflated their billing rate estimates while asking for legal fees.

The underlying litigation accused State Street, defended by Wilmer Cutler Pickering Hale & Dorr , of overcharging pension fund clients in connection with foreign currency trades. The $300 million settlement secured final approval in early November, with the judge also signing off on $74.5 million in attorney fees and an additional $1.26 million in expenses.

Lawrence Sucharow of Labaton confirmed on Wednesday that his firm, Lieff Cabraser and Thornton Law, have all agreed to provide up to $2 million to cover Rosen’s work on the investigation into the firms’ fee request. Sucharow said in an email that the class representative in the case made a statement in court on Tuesday “strongly supporting the fee petition, and expressing his deep appreciation for the work of class counsel.”

“We look forward to working with the special master to resolve any questions relating to the fees awarded for achieving a $300 million recovery for the class in this case,” Sucharow said.

The special master appointment comes in light of a letter that Labaton sent to Wolf in November, in which the firm acknowledged “inadvertent errors” in declarations that the three firms had submitted to report their billed hours on the case as part of the fee request.

The mistakes related to “staff attorneys” who were paid on an hourly basis and worked temporarily for the three firms, primarily doing document review. Labaton said that hours worked by 17 of these staff attorneys were counted in both the Labaton and Thornton reports accompanying the fee request, while hours worked by six other staff attorneys were counted on both Thornton’s and Lieff Cabraser ‘s reports.

The double counting led the firms to overstate the time worked by more than 9,000 hours, which amounted to billing an additional $4.1 million, according to Labaton’s letter. The firm maintained that even with the mistakes, the plaintiffs’ total fee of about $75 million remained reasonable.

The judge, however, ordered more of an inquiry. Citing the Labaton letter and a Boston Globe article published in December about the firms’ fee request, Wolf in February issued an order that said he’d like to bring Rosen in as a special master to investigate.

“The acknowledged double-counting of hours by staff attorneys and the matters discussed in the article raise broader questions about the accuracy and reliability of the representations plaintiffs’ counsel made in their calculation of the lodestar generally,” Wolf wrote in the Feb. 6 opinion. “These questions—which at this time are only questions—also now cause the court to be concerned about whether the award of almost $75,000,000 in attorneys’ fees was reasonable.”

Copyright The American Lawyer. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.