Tyco shareholder Richard Gielata filed a lawsuit Tuesday against the law firm Grant and Eisenhofer in a district court in Wilmington, Del., for exorbitant legal fees in an earlier case involving the electronics components company.
Gielata alleges the lawyers requested hundreds of millions more in fees than they should have for handling a 2007 case in which two Tyco executives inflated revenue and were later imprisoned for fraud. A Securities and Exchange Commission investigation confirmed the revenue inflation and also revealed that Tyco had hidden millions in executive compensation. Grant and Eisenhofer settled the case for $3.2 billion, charging nearly $500 million in legal fees.
Gielata claims Grant and Eisenhofer entered into a fee agreement in January 2004 with the Teachers Retirement System of Louisiana, a group invested in Tyco and one of the lead co-plaintiffs. Gielata alleges the contract, which limited the firm’s fee request to $210 million, or 7.8 percent of the settlement, had been hidden for years. The actual fee requested by the firm was 14.5 percent.
Gielata is asking for class status for the 300,000 claimants, a jury trial and $215 million in damages as well as legal fees and expenses. The suit names Eisenhofer as the sole defendant.