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A recent $12.6 million settlement in an asbestos suit might have been the end of Kalkus v. U.S. Gypsum Co. But in the high-stakes class action world, the lawyers were left fighting over $3.79 million in awarded fees. Last week, the Pennsylvania Superior Court, in an unpublished memorandum opinion, addressed the calculation of attorney fees in class actions after one of the four law firms in the case appealed the trial court’s division of fees. Newberg-Kronfeld of Philadelphia charged in the appeal that the trial court had misapplied Rule 1716 of the Pennsylvania Rules of Civil Procedure, “Counsel Fees.” The trial court had awarded 45 percent of the fees pool of $3.79 million to Newberg-Kronfeld; 30 percent to Greitzer & Locks, also of Philadelphia; and 12.5 percent each to Ness Motley Loadholt Richardson & Poole of Barnwell, S.C., and Speights & Runyan of Hampton, S.C. In the end, and because of the broad discretion permitted the trial court in fee distribution, the appellate court concluded that the trial court had not erred. In its appeal, Newberg-Kronfeld charged that the court had incorrectly applied Rule 1716, “Counsel Fees.” Ness Motley cross-appealed. The rule on fees doesn’t specifically apply to class actions, but rather says the court may consider a number of factors “in all cases where the court is authorized under applicable law to fix the amount of counsel fees.” Under the rule, the court must consider the following factors: � The time and effort reasonably expended by the attorney in the litigation. � The quality of the services rendered. � The results achieved and benefits conferred upon the class or upon the public. � The magnitude, complexity and uniqueness of the litigation. � Whether the receipt of a fee was contingent on success. “Here, the trial court acted properly in not applying Rule 1716 directly. Rule 1716 is a broad, but not exclusive, list of five appropriate factors, and it allows the trial court to consider ‘other things’ in conjunction with the listed factors. The order in which the factors are listed does not indicate their respective priority or weight.” In Kalkus, each firm was permitted to explain its contribution to the case at a hearing before the trial court. The trial court told the firms it would give primary consideration to the significance of the services rendered, as well as to a list of 11 additional factors. Ultimately, the appeals court said, “the reasonableness of attorneys’ fees is for the sound discretion of the court.” The methodology used for fee calculation is also within the trial court’s discretion, the court said. The panel of Judges Joseph A. Del Sole, J. Michael Eakin and Maureen Lally-Green explained that two methods are commonly used to calculate fees in class actions: the “percentage of recovery” method, which resembles a contingency fee because it awards a variable percentage for the class, and the “lodestar” method, in which the number of hours worked are multiplied by a “reasonable rate.” “The lodestar method is appropriate in fee-shifting cases [when fees are assessed against the unsuccessful litigant], while the percentage of recovery method is appropriate in common-fund cases [when fees are taken from the fund or damage recovery],” the court said. Although a court may use both methods to cross-check each other if it is helpful, the percentage-of-recovery method is preferred in common-fund cases, which Kalkus was, the court said. The court also noted that work done on another case “may be transferred to the benefit of the pool.” But that question depends on the individual case, the court said. “It may not be appropriate to value this equivalently; then again, it might be entirely appropriate,” the opinion says. Howard J. Bashman of Buchanan Ingersoll, who represented Ness Motley and Speights & Runyan in the appeal, said he and his clients “have not yet reached a final decision on whether to ask the Superior Court to designate the opinion as ‘for publication.’” He said that his clients had “achieved their main goal” and that the cross-appeal was a protective move to allow the firms to seek a greater share of fees in the event that the Superior Court reallocated the fee award.

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