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Townsend and Townsend and Crew is getting less than half the attorney fees it sought for winning a $1.1 billion California consumer class action against Microsoft Corp. Last week, San Francisco Superior Court Judge Paul Alvarado awarded 35 firms $112.4 million in fees and costs, saying the $270 million requested was unwarranted given the relatively low level of risk it faced in pursuing the case. Townsend, which served as lead counsel, sought $92.5 million in fees. Alvarado agreed with Microsoft that attorneys had relied on evidence and theories put forth in the U.S. Department of Justice case and other private litigation against Microsoft. “These earlier actions provided class counsel with detailed roadmaps to the theories they borrowed from those actions,” Alvarado wrote. “By definition, claims that are based on earlier actions and investigations are not novel or pioneering. They are also less complex and easier to pursue when plaintiffs’ counsel has access to vast quantities of work product, analysis and evidence, as was the case here,” Alvarado said. Attorney fees in class actions are determined either as a percentage of the plaintiff award or by a lodestar method. The lodestar is the number of hours expended multiplied by counsel’s hourly rate, which the court may enhance by a multiplier. Lawyers for the class had requested a blended multiplier of 5.05 times the lodestar for a total of $270 million in attorney fees. That would have included multipliers for some firms, including Townsend, as high as 5.75. Microsoft proposed a multiplier of 1.5, which would have resulted in about $76 million in attorney fees for the firms. Alvarado set the multiplier at 2.0. Consequently, Townsend would collect about a third of the $92.5 million it had requested. “This case cannot fairly be characterized as ‘truly pioneering or high-risk,’ the showing necessary to support a multiplier above 2.0,” Alvarado concluded. Townsend partner Eugene Crew, lead attorney in the litigation, said he and his colleagues had not decided whether they would appeal the decision. “Obviously we’re disappointed, but I say that with the greatest of respect for Judge Alvarado,” Crew said. “I do believe we undertook a substantial risk.” “We thought the judge did a careful and thoughtful job and properly applied California law,” said Microsoft attorney Robert Rosenfeld, a partner at Heller Ehrman White & McAuliffe. “Plaintiffs got a significant multiplier and a fair result.” The California action, a consolidation of 27 consumer suits, the first of which was filed by Townsend, alleged that Microsoft’s illegal conduct denied consumers competitive prices and free choices among software products. Microsoft settled the suit in January 2003 for $1.1 billion in a voucher offer to 14 million Californians who indirectly purchased Microsoft software from 1995 to 2001. Alvarado granted final approval of the settlement agreement in July. Alvarado noted that more than 170 class members submitted written objections to class counsel’s proposed fee, arguing that it was excessive. One class member objected to the allocation of fees to Lieff Cabraser Heimann & Bernstein, but Alvarado found that the firm provided some assistance in the case and should be compensated.

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