Judge Cuts Lerach Fees by $2.7 Million

Four years after Bank of America agreed to settle a shareholder derivative suit and pay the plaintiffs’ lawyers $5 million in fees and expenses, a San Francisco Superior Court judge has slashed those fees by almost half, to $2.7 million.

The recent order out of Judge Tomar Mason’s courtroom looks like bad news for the three plaintiff firms who worked on the case — the firm now known as Lerach Coughlin Stoia Geller Rudman & Robbins, plus San Francisco’s Bushnell, Caplan & Fielding, and Los Angeles’ The Rossbacher Firm.

The back story started with a whistle-blower action in 1995 against BankAmerica Corp. (now Bank of America Corp.), according to a 2005 appeals court opinion. The shareholder suit came on its coattails a couple of years later, claiming that the problems alleged in the first suit were the result of board members’ mismanagement.

The whistle-blower suit settled for $187.5 million in 1998, and in 2001 BofA agreed to settle the shareholder suit, promising to change some practices and pay the plaintiffs’ $5 million legal fees. But some shareholders objected, and the fee arrangement went up to the First District Court of Appeal. It told the superior court judge to re-evaluate, saying that “although a negotiated fee may represent a reasoned business decision to settle,? a judge can’t approve a negotiated fee that exceeds “a fair and reasonable fee for the attorneys’ contributions.?

This time around Judge Mason declined to apply a multiplier, though she still accepted the rates and hours proffered by the plaintiff lawyers in Robbins v. Alibrandi, 988043. The biggest winner out of her ruling seems to be BofA’s insurance company, which was actually on the hook for the fees.

— Pam Smith

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