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A combination of attorney generosity and sharp judicial oversight has produced exceedingly low fees in the Swiss Bank Holocaust case. Under normal circumstances the $1.3 billion global settlement of World War II-era claims against the Swiss government and businesses would generate between $120 and $150 million in attorney fees, estimated Burt Neuborne, a professor at New York University School of Law and a pivotal member of the executive committee appointed to control the class action. Four of the 10 lawyers who served on the executive committee have agreed to work pro bono or have donated their fees to charity. And a fifth member has agreed to turn over a third of his $1.2 million fee to Holocaust survivors who helped advance the litigation but lack legal documentation to establish an entitlement to recovery. Looking to the pro bono contribution of two of the firms who did much of the work in the case, U.S. District Judge Edward R. Korman of the Eastern District of New York, who helped hammer out the settlement in the summer of 1998, has refused to authorize a fee enhancement, which several of the attorneys working in the case had sought. Both Milberg Weiss Bershad Hynes & Lerach and Cohen, Milstein, Hausfeld & Toll worked without fees as did Neuborne. Additionally, Lieff, Cabraser, Heimann & Bernstein agreed to donate nearly all of its $1.6 million in fees to fund a Holocaust Remembrance Chair. The firm gave the remaining $100,000 of its fee award to Greta Beer, a class member in In re: Holocaust Victim Assets Litigation, 96-4849, who was exceptionally active in the litigation but whose records relating to family funds deposited in a Swiss bank have been destroyed. Similarly, executive committee member Edward D. Fagan recently agreed to share $400,000 of his fee with five families that lacked records to demonstrate that Swiss banks held their families’ deposits. Melvyn I. Weiss said his firm had decided not to request fees for work related to the settlement, but that an application would be submitted for post-settlement work, though the proceeds would be donated to charity. Neuborne credited Weiss’ work in obtaining a tax exemption from Congress for the interest earned on settlement funds as the key factor that enabled Judge Korman to increase a portion of the settlement by $45 million. Excluding funds donated to charity, the awards either approved by Judge Korman or recommended by Neuborne come to a total of approximately $5.3 million, or .4 percent of the $1.3 billion settlement fund created in the case. Typically, fee awards in common fund cases in the Second Circuit range from 10 percent and 15 percent of the settlement amount. Judge Korman had asked Neuborne to review the fee requests and recommend appropriate award amounts. LOWER THAN GERMAN AWARD The fees approved in the Swiss case are significantly lower on a percentage basis that those awarded as part of the global settlement of Holocaust-related claims against German entities. Lawyers involved in that negotiation received a total of $59.9 million, or 1.2 percent, of the $5 billion German fund. The amount of lawyer time donated in the Swiss case was clearly substantial, even if it is not susceptible to precise calculation. Michael D. Hausfeld, of Cohen Milstein, estimated that billings for the hours his firm put into the case would have come to “several million dollars.” Likewise, Neuborne estimated that his billing would have come to “at least $2 million” had he been billing on an hourly basis. In November 1999, Milberg Weiss submitted a fee application valuing its work up to that point at $1 million. In that request, which was subsequently withdrawn, the firm stated it would donate its fees to charity. At issue in the fee application decided by Judge Korman earlier this month was a request from the co-chairman of the executive committee, Robert A. Swift, for a fee multiplier of 2.29 times his straight hourly billing. Judge Korman rejected the request from Swift and others who joined with him in making the application because the class had the benefit of two of the “most highly regarded and able class action lawyers in the United States” — Weiss and Hausfeld — available to work for it for free. “The existence of competent pro bono counsel make a risk multiplier inappropriate because market inducement was not required to attract dedicated attorneys,” Judge Korman wrote. Moreover, he added, in light of the availability of skilled pro bono counsel, “a reasonable client” would not have agreed to a percentage compensation arrangement, and it is “arguable whether [a reasonable] client would have agreed to pay any fee.” Swift, who like some of the other lawyers donated part of his time in the case, asked the court to reimburse him for a “lodestar” amount (hours of work multiplied by billing rate) of $854,422. The application of a 2.29 multiplier would have brought his fee award to $2 million. Though Judge Korman rejected the request for a “risk” multiplier, he recognized Swift’s contribution to the case by granting him an “excellence” multiplier to boost his fee award to $1.1 million. Swift, citing ethical limitations, refused to comment on Judge Korman’s ruling, though he noted that he had objected to putting nearly two-thirds of the settlement fund aside for the payment of bank claims, or $800 million, as being unnecessarily high. He also protested Judge Korman’s selection of Neuborne to “opine on what lawyers should receive,” when he knew that lawyers working on the case were divided into factions. Neuborne responded that he had “played it down the middle,” and denied having a connection to either Weiss or Hausfeld. TENTATIVE SETTLEMENT Shortly after Judge Korman rejected Swift’s application for a 2.29 multiplier, a second attorney who had also been seeking a multiplier negotiated a compromise on his fee request with Neuborne. At a conference on Nov. 7 with Judge Korman and Neuborne, attorney Edward D. Fagan, who had been on the executive committee, agreed to accept $1.2 million, rather than the $3.4 million he had been seeking. (The $3.4 million figure was reached with a 2.29 multiplier on a $1.5 million lodestar amount, according to Neuborne.) Fagan also agreed to give $400,000 of his fee award to five families who had worked closely with the attorneys in the case, but who would have been unable to recover funds because they lacked proper documentation. In an interview, Fagan said he had withdrawn his request for a multiplier, and that it had been based on old numbers submitted in 2000. Fagan declined to say specifically when he withdrew the request for a multiplier. When asked whether Fagan had previously withdrawn his request for a multiplier, Neuborne said the first time he was aware of the withdrawal was at the Nov. 7. conference. Judge Korman has yet to issue an order implementing the tentative accord. FEE AWARDS LONG DELAYED The fee awards in the Swiss bank case have been a long time coming. The first fee applications were submitted in November 1999. But Judge Korman stated that he did not want to issue fee awards until at least $200 million had been distributed to Holocaust survivors or the relatives of victims. To date, about $350 million has been distributed, and in the last two months, Judge Korman has started to issue fee awards. So far, about $50 million has been paid to families whose relatives placed funds in Swiss bank for safekeeping but either perished in the Holocaust or were unable to retrieve them after the war. Sufficient documentation has been submitted to allow the payment of about 400 bank claims out of a potential universe that has now been narrowed to 12,000. The settlement sets aside $800 million for the payment of bank claims, the amount of which has yet be determined by a commission headed by former Federal Reserve Chairman Paul A. Volcker. SLAVE LABOR CAMPS Another $150 million has been distributed to 115,000 Holocaust survivors who worked in slave labor camps. The agreement provides for a payment of $1,450 to each person forced to work by the Nazis. The German settlement provides for an additional payment of $7,500 to those people. In all, the settlement allocates between $200 and $300 million for the payment of slave laborers. An additional $145 million has been distributed to service organizations to provide food, medicine and other necessaries to the poorest survivors. The $145 million is compensation for what the settlement describes as “looted assets.” In many instance, those looted assets were gold and silver objects that were melted down by the Germans and deposited in Swiss banks in order to purchase war materials.at the bottom of the story do this: Related chart: Attorney Fees in the Swiss Bank Holocaust Case

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