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A US district court judge has approved an award of $688m (£391m) in legal fees – the largest award in class action history – to plaintiffs lawyers that obtained $7.2bn (£4.1bn) for former Enron shareholders, reports The Am Law Daily.

Judge Melinda Harmon ruled on Monday (8 September) that class counsel should receive 9.52% of the total recovery, including interest. As counsel to the suit’s lead plaintiff, the Regents of the University of California, San Diego firm Coughlin Stoia Geller Rudman & Robbins is poised to pocket a substantial amount of the record legal fees.

Judge Harmon called the $688m award no ‘windfall,’ but a “reasonable fee earned by an extraordinary group of lawyers who achieved the largest settlement fund ever despite the great odds against them.”

According to Harmon’s ruling, Coughlin Stoia spent 289,593.35 hours on the case billing at a blended rate of $456 (£259) per hour. Coughlin Stoia’s work – and fee arrangement – received praise from some unlikely legal circles.

“You are looking at an agreement from which a very well-informed plaintiff – the University of California, which has a legal team the size of many large corporate legal departments – negotiated a deal that incentivised the plaintiffs lawyers to go out and get the largest possible recovery,” says John Coffee, a professor at Columbia Law School and frequent class action critic.

“If you gave them a declining percentage of recovery – like 30% of the first $100m and then 20% of $1bn and 2% thereafter – I do not think you would have had a settlement that came to $7.2bn.”

Patrick Coughlin, a name partner and chief trial counsel for Coughlin Stoia, says the firm kept a minimum of a dozen lawyers on the case at all times – a team that was responsible for more than 85% of the overall time billed by plaintiffs counsel.

“It was a lot of hard work against some of the best law firms in the country, so it is nice to be appreciated,” Coughlin says. “We took nearly 400 depositions, there were dozens and dozens of experts, motions to dismiss, motions for summary judgment, and of course class certification. We were in [Harmon's] court almost every other week doing something on this case because it literally involved every big bank in the world.”

Coughlin says the firm negotiated the following rate with the University of California: 8% for the first $1bn in recovery, 9% for the second billion, and 10% for anything above $2bn. The result was a blended rate of 9.52%.

Coffee credits the University of California and Coughlin Stoia with crafting a contract that did not adopt a fee formula whereby the plaintiffs firm would take a declining percentage as the overall recovery increased. In doing so, the incentive to continue with the case was maintained.

“Because, remember, this case was lost,” Coffee says. “The Supreme Court and the Fifth Circuit tossed this case out and that was the kind of risk that was always involved here.”

Coughlin Stoia faced a veritable murderers’ row of defence firms in obtaining recoveries for Enron shareholders. The following is a list of defendants that have settled, the settlement amounts, and their respective counsel:

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