SAN FRANCISCO — Now that plaintiffs in a giant class action over price-fixing in the LCD market have inked a $30 million deal with Toshiba, the main question remaining is how big a check to write the lawyers.
More than 150 law firms involved in the long-running multidistrict litigation before U.S. District Judge Susan Illston stand to reap hundreds of millions in fees — with four Bay Area plaintiffs firms profiting most.
All told, defendants including Toshiba, Samsung, Sharp and Epson have agreed to pay more than $1.5 billion to settle with purchasers of the thin-film transistor liquid crystal display screens, or TFT-LCD screens. The agreements come in two distinct class actions on behalf of direct and indirect purchasers of the screens and screen-containing products.
Attorneys representing indirect purchasers, led by San Francisco-based Zelle Hofmann Voelbel & Mason and the Alioto Law Firm, are seeking more than $300 million — 28.5 percent of the $1.1 billion settlement fund in that case. Attorneys general for eight states in the indirect purchaser litigation have separately asked for 1 percent of the pie.
Meanwhile, Illston has already approved $121.5 million in payments to counsel for the direct purchaser class, led by San Francisco’s Pearson, Simon, Warshaw & Penny and Lieff Cabraser Heimann & Bernstein.
Those fees amount to 30 percent of $405 million in settlements obtained as of late 2011. The new Toshiba settlement and an agreement reached with AU Optronics Corp. could yield more than $20 million in additional attorney fees.
Toshiba went to trial against direct purchasers and a federal jury awarded plaintiffs $87 million — trebled under antitrust law to $261 million. Under the terms of an agreement made public Monday, Toshiba would pay just 11 percent of that sum and the jury verdict would be vacated. Lawyers for both sides said the deal makes sense because Toshiba would not have to pay anything if it won arguments that the verdict should be offset by prior settlements with various defendants.
But if that’s the case, Illston wanted to know why Toshiba would offer to pay anything at all.
“This is the crux of what concerns me,” Illston told Toshiba’s counsel at a hearing Friday. “What are you paying the 30 million for? You’re paying it to wipe the jury’s verdict out.”
Toshiba attorney Christopher Curran of White & Case in Washington, D.C., insisted the company isn’t trying to buy its way out of the jury’s verdict. But Toshiba wants to end costly litigation.
Illston will consider preliminary approval of the settlement next month, and motions for attorney fees will follow.
The U.S. Court of Appeals for the Ninth Circuit uses a 25 percent benchmark to review fee awards in contingency cases. Lead lawyers for the indirect purchasers are urging Illston to deviate from the 25 percent standard as she did previously, citing the length and complexity of the litigation.
According to a fee request filed this month, the legal team collectively devoted more than 300,000 hours to the class action with “no guarantee that any fees would be awarded.”
“People forget we’ve been doing this for six years,” said Joseph Alioto, co-lead counsel for the indirect purchasers. “We paid our own costs. When we went to take depositions in Korea, Taiwan and Japan, we paid for it.”
Alioto said he expects each claimant to receive a minimum of $25.
The settlement achieved for indirect purchasers is the largest ever in a price-fixing class action and doesn’t include coupons or charitable donations in lieu of payment, said Jack Lee of San Francisco’s Minami Tamaki, who serves as the court-appointed class liaison counsel.
“You won’t find a lot of things that you can fault on it,” Lee said. “Nobody’s got their pet charity in line for what’s left over.”
Once granted, attorney fees will be split among more than 100 law firms across the country with the help of a court-appointed special master. The firms are seeking reimbursement for approximately $8 million paid to third parties like experts, but are swallowing “soft costs” for travel, meals, copies and other expenses, Lee said.
Each firm calculated its “lodestar” amount — a figure representing the number of hours spent on the case multiplied by applicable rates. Circuit courts use the lodestar as one factor in evaluating whether attorney fees are reasonable and routinely uphold fees multiple times higher than the lodestar where litigation is complex and risky.
Alioto’s lodestar filing indicated he worked more than 7,000 hours on the class action between 2007 and 2012 at would-be billing rates of $1,000 to $1,500 an hour. The total lodestar for the firms representing the indirect plaintiffs fell between $118 and $160 million, meaning law firms could collect two to three times their estimated billings for work on the case.
Berkeley attorney Lawrence Schonbrun, executive director of Class Action Watch, which frequently challenges fee requests, called the fee request “suspect.”
“Where you have a lot of firms involved, you have all these issues of duplicative work. You have issues of not careful time-keeping practices. You have issues of legitimacy of the hourly rates of the lawyers involved,” Schonbrun said. “Those are all issues that should get the attention of the judges.”
He scoffed at claims that plaintiffs lawyers took a risk by working for years on contingency. “How risky could it be if 100 law firms were eager to get into it?”
A hearing on attorney fees is set for November.
Last year, Illston gave a friendly reception to the first fee request from counsel for direct purchasers.
“I think you have done really quite an excellent job in this case of handling what has been a really enormous and cumbersome process,” said Illston, a former plaintiffs lawyer. “I know that you’ve struggled mightily over a long time to get this result.”