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Decades later, litigation stemming from the major savings-and-loan failures marches on. Winston & Strawn filed a lawsuit in the U.S. District Court for the District of Columbia last month against the Federal Deposit Insurance Corp. for about $575,000 of the approximately $1.1 million it says it is owed for defending Portland, Ore.-based Benj. Franklin Federal Savings & Loan against a $1.2 billion Internal Revenue Service tax claim. Winston attorneys — led by Thomas Buchanan, the head of the litigation department in the firm’s D.C. office — successfully settled the IRS’ tax claim last fall for $50 million. As Franklin’s receiver, the FDIC agreed that Winston, which was hired by the thrift’s shareholders, would take the lead on the tax litigation. The firm agreed to do the work at a greatly reduced rate of $125 per hour, with the understanding that it would get a “success fee” of twice its normal rate if it obtained a favorable outcome, Buchanan says. That fee structure represented a big risk for Winston, as the IRS claim involved extremely complex issues of “first impression,” Buchanan says. On May 17, the FDIC, without explanation, told Buchanan it was denying Winston’s claim for the success fee, despite the fact that the majority of Franklin’s shareholders agreed that Winston was entitled to the money.”The FDIC wants to have a neutral party bless it,” Buchanan says, so no one can claim it overpaid the lawyers. The FDIC did not return calls seeking comment.
Alexia Garamfalvi can be contacted at [email protected].

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