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Leo Strine Jr., a Delaware Chancery Court Chancellor, provided cautionary words to the firms of Prickett Jones & Elliott and Kessler Topaz Meltzer & Check. Stine claimed that the firms were too slow when it came to prosecuting a derivative lawsuit back in 2005, according to Reuters.
Strine awarded attorney’s fees in the case that total almost $300 million, coming in at $285 million, or $35,000 per hour for the more than 8,000 hours the firms worked on the case. The $285 million award by Strine is 15 percent of his original calculation, which was for $1.9 billion. Strine did say that as he recalculated the numbers, interest will add $100 million to the recovery for the shareholders, which would then add $15 million to the award of attorney’s fees.
“Limiting fee awards in large cases would create a strong disincentive to take the huge risk of trying large cases,” the brief said. “For example, how would lawyers be incentivized to take a potential billion dollar case to trial if they know that if they win a billion dollars they will get the same fee award as they would have if they settled the case for $200 million? It is clear that such a declining percentage approach would misalign the interests of the lawyers and those they represent.”
The defendants in the case have argued that Kessler Topaz and Prickett Jones should not be receiving any more than four times what their hourly bills would have been, which is roughly $13 million.
“The magnitude of plaintiff’s counsel’s request is unprecedented in this court,” a brief from Southern Cooper said. “To put it in perspective, the requested fee is equivalent to about 57 percent of the Delaware Division of Corporations’ total annual revenue. Moreover, research did not reveal any case anywhere in which counsel has been awarded anything close to an effective hourly rate that is more than the median American household makes in a year.”
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Strine decided to grant such high fees because he wanted to send a message to the lawyers in the Southern Cooper case and to the entire class action bar of securities.
Strine also talked about rewarding the lawyers for the plaintiffs for their risk taking. He then chided the lawyers for the defense for their envious ways when the risks of the plaintiff lawyers pay off in recovery. Strine went on to declare that is lawyers will litigate big cases using discovery and trial, then Delaware will make sure those lawyers are compensated for the work that they perform.
Strine made sure his points were heard loud and clear by awarding a $300 million attorney fee to the attorneys on the case. Lawyers from the law firms involved did not return comment to Reuters regarding the attorney’s fees.
