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A federal judge in Manhattan has cut in half a request for attorney fees in a securities class action that resulted in a $300 million settlement. “[I]t is not thirty times more difficult to settle a thirty million dollar case as it is to settle a one million dollar case,” Southern District Judge Loretta A. Preska wrote in awarding $12 million in attorney fees in In re Bristol-Myers Squibb Securities Litigation, 03-2251. New York’s Bernstein Litowitz Berger & Grossman and Boston’s Berman DeValerio Pease Tabacco Burt & Pucillo had asked for 7.5 percent of the settlement amount, or around $22 million, for serving as co-lead plaintiffs’ counsel in a suit against pharmaceutical giant Bristol-Myers over its $2 billion investment in biotechnology company ImClone. The suit also alleged that improper accounting practices by Bristol-Myers led to a restatement of earnings in 2002. The suit was dismissed last March, a decision that had been under appeal. Bristol-Myers agreed to the settlement in July. The company shortly after settled for $150 million an action brought by the U.S. Securities and Exchange Commission in New Jersey federal court. The suit charged that Bristol-Myers executives had made overly optimistic, false and misleading statements about the company’s investment in ImClone, whose cancer treatment drug Erbitux was not accepted in 2001 for fast-track approval by the Food and Drug Administration. The drug was later approved but the FDA’s initial decision sparked a round of selling by figures including ImClone chairman Sam Waksal and media mogul Martha Stewart, both of whom were convicted of crimes related to their selling of ImClone stock. The suit also charged that Bristol-Myers had engaged in practices designed to inflate its reported revenue. Those practices were targeted by the SEC and the company announced in 2002 that it would restate some of its earlier financial statements. Lead plaintiffs in the class action were four public pension funds, the Teachers’ Retirement System of Louisiana, the Louisiana State Employees’ Retirement System, the General Retirement System of the City of Detroit and the Fresno County Employees’ Retirement Association. Preska said in her decision that the case “fell along the low end of the continuum of risks” for the plaintiffs’ lawyers. She noted in particular that the statements about ImClone at issue in the case were in the public record as were the restatements. “Lead counsel merely drafted complaints setting out roughly chronologically the material in the public record and alleging Defendant’s knowledge and scienter,” she wrote. “Neither the facts nor the legal and accounting theories were complicated. Among securities class actions, this case as a whole was neither unique nor complex.” Preska also said the plaintiff lawyers’ fees should be lowered because the attorneys benefited from the existence of an SEC action based on similar facts. “That the complaint had been dismissed with prejudice and, while the appeal was pending, the parties reached a settlement agreement that was executed just five days before filing and simultaneous settlement of the SEC action suggests that it was the Company’s desire, prompted by the SEC, to put its house in order that caused the settlement, not any action on the part of Lead Counsel,” the judge wrote. Giving the lawyers the amount they requested, she said, would provide the lawyers a “windfall.” Daniel Berger and Erik Sandstedt were the Bernstein Litowitz partners who worked on the case. Sandstedt said Friday that he was disappointed by the judge’s decision but even more dismayed by the language in the decision. He noted in particular a statement Preska made in a footnote that the 7.5 percent fee negotiated between the lawyers and their clients was not presumptively fair because the clients were “mere figureheads” for lawyers seeking fees. “With all due respect to the judge, the intimation that the institutional lead plaintiffs are ‘mere figureheads’ is completely untrue,” said Sandstedt. “In fact, our institutional clients take their responsibilities extraordinarily seriously.”

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