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A California appeal court has reversed a $5 million fee award to the Lerach firm and two others, ordering a trial judge to recalculate the figure to see whether it is fair and reasonable. “The trial court was not required to accept at face value the parties’ assurances that the settlement was in fact fair and reasonable, or that they negotiated fees only after the substantive terms of the settlement agreement were set,” 1st District Court of Appeal Justice William Stein wrote in Friday’s unpublished decision. Justices James Marchiano and Douglas Swager concurred. The case stems from a 1995 suit in which the state of California and the city of San Francisco accused BankAmerica Corp. of failing to return more than $1 billion in unclaimed property associated with bonds. The bank ultimately paid $187.5 million to settle the suit. While that case was pending, attorneys for Milberg Weiss Bershad Hynes & Lerach — now with San Diego’s Lerach Coughlin Stoia Geller Rudman & Robbins — filed a shareholder’s derivative action against former members of the bank’s board of directors. In 2001, a settlement was reached that required certain changes in the way BofA ran its operations. No money was awarded, but a San Francisco Superior Court judge granted Lerach and two other firms — San Francisco’s Bushnell, Caplan & Fielding and Los Angeles’ Rossbacher & Associates — $5 million in fees. Thirty out of 780,000 shareholders filed objections, particularly to the fees. Mill Valley, Calif., lawyer Charles Chalmers said Friday that the stockholders, including his clients Angelo and Mary Perone, felt that corporate change wasn’t a substantial benefit and that the lawyers “shouldn’t get anything.” The court noted the firms’ expertise in the field but also said it couldn’t “ignore that there appears to have been very little real benefit conferred on the corporation and shareholders” as a result of the suit. That’s a factor the court needs to consider in approving fees, the justices said. “It was perfectly proper for the court to conclude that the settlement was reasonable in large part because it avoided any further costs of litigation,” Stein wrote. “It would not be proper, however, for the court to consider the benefit from avoiding further costs of litigation as providing any support for a finding that the litigation conferred a benefit.” When told of the ruling, Chalmers shouted, “All right!” and then laughed loudly. “It’s definitely a victory,” he said. “How big I don’t know, and it means we’ll have to fight some more.” The ruling is Robbins v. Alibrandi, A104324.

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