The Sunbeam Fee Feast

Lawyers feasting on $27.5 million in legal fees awarded so far in the Sunbeam shareholders class action case have begun skirmishing over the money. A breach became apparent in a federal lawsuit filed in West Palm Beach, Fla., against a Philadelphia lawyer by the four firms that serve as co-lead counsels. The four firms claim solo Myron Harris is trying to rip them off by claiming more in legal fees than he earned.

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Lawyers feasting on $27.5 million in legal fees awarded so far in the Sunbeam shareholders class action case have begun skirmishing among themselves over the money. A breach became apparent two weeks ago in a federal lawsuit in West Palm Beach, Fla. filed against a Philadelphia lawyer by the four firms that serve as co-lead counsels in the Sunbeam litigation — including the Boca Raton office of Milberg Weiss Bershad Hynes & Lerach, the heavyweight plaintiff’s firm with nearly 200 lawyers in seven offices around the country. The other firms are New York’s 20-lawyer Wolf Popper, and 55-lawyer Berger & Montague and 16-lawyer Barrack Rodos & Bacine of Philadelphia. The four firms claim solo practitioner Myron “Mike” Harris is trying to rip them off by claiming more in legal fees than he truly earned. Harris claims he is due $159,800. The four law firms, whose authority as co-lead counsels allows them to divvy up the legal fees, determined Harris should get $40,000. “Harris has objected to the fee allocated to him and, despite co-lead counsel’s efforts to negotiate with him and his attorney, has repeatedly threatened to sue co-lead counsel in Pennsylvania state court if not paid 90 percent of his claimed … $159,800,” according to the complaint signed by Milberg Weiss partner Abraham Rappaport. Rappaport declined further comment. The complaint asks U.S. District Judge Daniel T.K. Hurley of the Southern District of Florida to approve the $40,000 appropriation to Harris. The four law firms have a similar request pending with Hurley’s colleague in Miami, U.S. District Judge Donald M. Middlebrooks, who presides in the Sunbeam class action case. Harris has until July 22 to respond in Middlebrooks’ court. The reason the request is before both judges could not immediately be determined. That $119,800 difference of opinion involves less than one-half of one percent of the $27.5 million in legal fees awarded last November during a partial settlement of the Sunbeam class action. The fees represent 25 percent of the $110 million fraud settlement paid to shareholders by the beleaguered accounting firm Arthur Andersen LLP. In an interview, Harris denied any impropriety and accused the four law firms that are suing him of greed. “These guys are attempting to keep money for themselves on the backs of the small class action lawyers who were involved in the case. It’s unfair,” Harris said. “Other counsel are dissatisfied with how they were treated, but whether they are going as far as I am in fighting this, well, I can’t answer that.” The settlement with Andersen was the first reached by Sunbeam shareholders. Late last month, as the Miami Daily Business Review reported two weeks ago, the final settlement in the class action was reached when two insurance companies that provided liability coverage to Sunbeam’s directors and officers, agreed to pay shareholders $13.5 million. If approved by the court, that last settlement will bring the total recovery for shareholders to $141 million. At the time he awarded fees out of Andersen’s settlement money, Middlebrooks said that they “shall be allocated among plaintiffs’ counsel in a manner which fairly compensates plaintiffs’ counsel for their respective contributions to the prosecution of this action.” Thirty-seven law firms sought fees as a result of the Andersen deal. To collect, lawyers had to provide affidavits to the co-lead counsels detailing hours worked, billing rates and expenses. The co-lead counsels rated the claims based on reasonableness, the skill and experience of the lawyers and other considerations before slicing the pie. “Co-lead counsel made it clear, however, that the affidavits were being requested for informational purposes only, and that fees would be allocated on the basis of benefit provided to the class by the work performed,” according to the complaint against Harris by the co-lead counsel firms. According to the complaint, Harris submitted a billing rate of $450 an hour and an affidavit claiming his office spent more than 400 hours on the litigation. Harris said his rates varied from $350 to $450 an hour. The law firms balked at paying Harris what he demanded after determining, as the complaint says, that “serious questions exist as to whether much of the time Harris claims to have expended on the shareholder action was justified.” As evidence, the firms note in the complaint that the shareholder lawsuit Harris filed against Sunbeam in May 1998 was “substantially identical” to another shareholder complaint filed against Sunbeam 16 days earlier. Likewise, the firms contend Harris billed for a “grossly excessive” amount of time reading court papers and newspaper clippings. Harris disputes the firms’ claims. He points out that he submitted periodic reports to the co-lead law firms for four years, and not once did anyone object to his bills. Indeed, Harris said, his bills were among the claims for fees submitted to the court by the law firms in order to obtain the $27.5 million award. “What they’ve done is unjust enrichment,” said Harris’ lawyer, Stephen Chawaga, a partner in Philadelphia’s Monteverde McAlee & Hurd.

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