A federal judge has slashed what he called an "unusual" request for additional fees by Milberg for a 2006 settlement of a securities class action against Nortel Networks Corp.
Milberg, along with its Canadian co-counsel and the settlement's claims administrator, asked for $2.77 million in fees and expenses not included in their 2007 fee applications. Southern District of New York Judge Richard M. Berman, citing the "very substantial" $38 million in fees and expenses already awarded to Milberg and Koskie Minsky, based in Toronto, approved only 41 percent of the request.
The settlement stemmed from lawsuits filed in 2001 over an accounting scandal at Nortel, a Canadian-based manufacturer of telecommunications equipment.
A spokeswoman for Milberg said lead partner Sanford P. Dumain was not available for comment. Murray Gold, a partner at Koskie Minsky, did not return a request for comment.
Judge Berman's decision in In re Nortel Networks Corp. Securities Litigation (paid registration required), 01-cv-01855, is the latest development in attempts to recover fees for participation in the $2.4 billion settlement. Berman in 2007 rejected a request by Milberg for 8.5 percent of the settlement, or about $101 million, and instead set fees at 3 percent.
Milberg, which represented an Ontario public employee pension fund, appealed the award, which it deemed insufficient. But the 2nd U.S. Circuit Court of Appeals upheld Berman's award in 2008.
Milberg most recently requested an award for what it said was nearly $1.8 million in fees and expenses for work done from September 2006 through June 2010 after the firm filed its initial fee request. Koskie Minsky meanwhile sought $377,136 Canadian ($359,672 U.S.) in fees and expenses. The claims administrator, The Garden City Group, sought $656,700.
But Berman concluded that additional fees to the firms should be reduced or denied because their time sheets did not substantiate additional payments and because a significant portion of the fees were covered by the $34 million already awarded.
Berman also chastised Milberg and Koskie for improper staffing or inadequate documentation on the work it had done since September 2006. In particular, the judge noted that 97.2 percent of the time invoiced was billed to six partners for matters including downloading documents from the Web, updating spreadsheets and sending copies of documents to other lawyers on the case. Milberg's partners alone billed $425 to $725 an hour.
"It is clear that a significant portion of the work done by senior attorneys could have been performed by more junior attorneys or paralegals at lower billing rates," Berman said.
He also took issue with hours billed by paralegals, about 41 percent of the total bill with rates of $225 to $400 at Milberg. Berman said the time entries for the paralegals "are too imprecise and vague for meaningful review much less reimbursement," including for items described as "project work" and "further legal research."
In addition, about half the fees the firms sought from September 2006 to May 2008 were for tasks typically necessary to resolving a class action, Berman said. That was covered by the original award, which "was not designed or intended as a simple 'installment payment,'" he said.
But Berman said he recognized Milberg had to devote time to deal with unanticipated post-settlement issues, including reviewing disputed proof-of-claim files at the court's direction. As a result, Berman said the other half of the fees in that period were compensable.
In terms of expenses, Berman took issue with the classification of $389,400 paid to another Canadian law firm, Fraser Milner Casgrain, which was hired to handle a separate fee dispute. Berman said no showing was made as to how Fraser Milner improved the settlement and Milberg did not provide the Canadian firm's time sheets.
Berman also cut the amount Garden City would receive to just over $558,000, calling one-third of the fees and expenses insupportable. Garden City had already been awarded more than $10.8 million.