From the plaintiffs’ lawyers representing Elouise Cobell in a landmark class action in Washington, there are no apologies over their legal fee demand.
Led by Washington solo practitioner Dennis Gingold and a team of Kilpatrick Townsend & Stockton attorneys, the attorneys last week told a federal judge that class counsel deserve $223 million for steering a 15-year-old suit to a $3.4 billion settlement.
The amount is more than double the maximum $99.9 million the plaintiffs’ lawyers agreed to seek under the terms of the settlement, which resolves claims the government mismanaged billions of dollars held in trust flowing from the use of Indian land for oil, gas, timber and minerals. More than $1.5 billion in the settlement is tax-free compensation for potentially 500,000 class members.
In a fee petition, filed in Washington’s federal trial court on Jan. 25, Gingold and the Kilpatrick attorneys, who joined the litigation in 1999, asserted the $99.9 million fee. Now the lawyers argue that fee “is so far below” controlling law that it would discourage plaintiffs’ attorneys from getting involved down the road to enforce the government’s trust duties. Cobell’s attorneys figure at least $223 million would be appropriate.
The petition strives to put a dollar amount on the cost of success, providing a rare glimpse at legal strategy, the fee structure of a law firm and lost business opportunities over the course of the litigation. The settlement leaves the final decision on attorney fees to the presiding judge in the case.
“The results we achieved are substantial,” said Gingold, a banking lawyer by trade who was one of two attorneys who filed the Cobell suit in 1996. “What we are asking for is on the lowest end of the scale for attorneys who take cases on contingency fee basis. We shouldn’t be treated differently than anyone else.”
Among the highlights in the fee petition: Cobell’s lawyers said they invested nearly 141,000 hours — about $90 million based on hourly rates — between 1995 and December 2009, when the settlement was announced. Kilpatrick Chair­man William Dorris in Atlanta, who bills at $690 an hour, revealed in court records the hourly rates for nearly 100 current and former partners, associates and counsel in Washington; Winston-Salem, N.C.; and Atlanta, among other cities.
A fee award of $223 million would represent more than 90% of Kilpatrick’s gross revenue in 2009 of $245.5 million, according to financial data provided by NLJ affiliate The American Lawyer. The firm reported profits per partner of $615,000 in 2009.
Dorris is now the chairman of Kil­patrick, a 415-lawyer Atlanta-based firm that merged with the intellectual property shop Townsend and Townsend and Crew on Jan. 1. Dorris said the combined firm has more than 650 attorneys. He could not be reached for comment on the fee request.
In an affidavit, Dorris said the firm has committed substantial resources to the litigation. “At various times, it has required the full-time attention of a number of attorneys, and largely precluded their engaging in other work,” he said. “In committing to work on this case, the firm was undertaking significant risk, and we were aware that there was a substantial chance our firm would never be compensated for the work performed or the expenses advanced.”
Cobell’s lawyers had been working on a 14.75% contingency basis prior to the execution of the settlement. Gingold and the Kilpatrick attorneys, including partner Keith Harper, urged Senior Judge Thomas Hogan of the U.S. District Court for the District of Columbia to account for the contingency arrangement in determining attorney compensation.
The Justice Department, Gingold said, insisted on inserting a fee range — $50 million to $99.9 million — in the settlement agreement. Cobell’s lawyers described the so-called “clear sailing clause” as standard language commonly included in settlement agreements. The $99.9 million does not represent a cap because the presiding judge has authority to award greater compensation, Gingold said.
A lead attorney for the U.S. Justice Department, Robert Kirschman Jr. of the Civil Division, said the department would respond to the fee petition in February. Kirschman and Associate Attorney General Thomas Perrelli, who participated in settlement negotiations, declined to comment about the position the department will take.
Last year, Perrelli was the department’s face man trumpeting the deal on Capitol Hill, pitching the settlement to members of Congress. Perrelli said during one hearing that the department “will make appropriate arguments in support of the government’s position that as much of the settlement funds as possible should go to the class members.”
Gingold expects the department to challenge the $223 million attorney fee request, an amount he called fair given the duration, complexity and risk involved in pursuit of a favorable judgment.
In court papers, Gingold called the Cobell case the “most difficult, time-­consuming and risky engagement” he’s ever undertaken. He sank in nearly 49,000 hours, passing up other engagements in the financial arena for which he bills clients $925 an hour. He suspended his banking practice “because of the urgency and compelling nature of the human issues at stake” in the Cobell case.
During the past two years, he said, he declined to represent an unidentified investment firm in a case that involved “several global financial institutions.” Gingold also passed up an opportunity to represent a commercial bank in an action against the Federal Deposit Insurance Corp., and has deferred academic appointments and declined to teach a graduate-level business administration course.
“I’m not embarrassed at all by the fee,” Gingold said. “If somebody told a lawyer he would get an hourly rate when he settled, I don’t think a single competent lawyer would take a case like this. The risk is enormous.”
Cobell’s lawyers plan to meet with class members in the coming weeks, answering questions about the settlement and convincing any skeptics that the $223 million attorney fee award is not excessive.
Potential class members will receive, at minimum, $1,800. Taking the contingency arrangement into account, Gingold said, that’s about $17 a year over the course of the litigation. “Fewer than two car washes a year,” he said.
Mike Scarcella can be contacted at email@example.com.
KILPATRICK TOWNSEND & STOCKTON’S RATES
Hourly rates reported in a fee request for partners working on the Cobell case.
|Austin, G. William||1980||$625||Partner||Washington|
|Bertschi, Craig E.||1990||$580||Partner||Atlanta|
|Brewster, William H.||1987||$625||Partner||Atlanta|
|Charnes, Adam H.||1993||$545||Partner||Winston-Salem, N.C.|
|Clay, A. Stephens||1968||$675||Partner||Atlanta|
|Dial, Audra A.||1998||$475||Partner||Atlanta|
|Ferrario, Matias||2000||$425||Partner||Winston-Salem, N.C.|
|Fowler, Lynn E.||1986||$625||Partner||Atlanta|
|Garrett, C. Allen||1995||$475||Partner||Atlanta|
|Kaeding, Michael Aubrey||1997||$415||Partner||Atlanta|
|Lierly, Julie A.||1995||$520||Partner||Atlanta|
|Raider, Ron L.||1999||$450||Partner||Atlanta|
|Rothschild, Cynthia B.||1999||$450||Partner||Winston-Salem, N.C.|
|Singleton, Burleigh L.||1996||$475||Partner||Atlanta|
|Smith, David C.||1984||$525||Partner||Winston-Salem/Washington|
|Smith, Jerry N.||1986||$525||Partner||Atlanta|
|Taylor, Daniel R. Jr.||1976||$675||Partner||Winston-Salem, N.C.|
|Tyler, Michael W.||1982||$640||Partner||Atlanta|
|Zacks, David M.||1967||$730||Partner||Atlanta|