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Plaintiffs’ lawyers who obtained the record $624 million class action settlement last year on behalf of shareholders of Countrywide Financial Corp. are scrambling to remake their deal after more than two dozen major institutional funds opted out, including the nation’s largest — the California Public Employees’ Retirement System.

Lawyers on both sides are expected back in court on Feb. 25 to seek final approval of the settlement. Because of the number and size of institutional investors that opted out, the value of the settlement was reduced to $601.5 million. Lead plaintiffs’ counsel Labaton Sucharow also cut back its request for attorney fees by nearly $1 million. But both sides insist that the deal remains fair and reasonable. In the revised agreement, the parties set aside $22.5 million for Countrywide to use as payment to resolve future settlements with the opt-out funds, according to court documents. They also point to a recent settlement between the U.S. Securities and Exchange Commission and three former senior executives of Countrywide that will provide an additional $48.1 million to shareholders in the class action.

Meanwhile, at least three of the institutional investors that opted out of the settlement, including funds for the states of Michigan and Oregon, filed separate lawsuits against Countrywide last month. They argue that the proposed settlement would not have adequately compensated them for the losses they incurred.

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