The Wall Street Journal reports on Center for Class Action Fairness's founder Ted Frank's objection to a Citigroup class action settlement.
Attorneys for a group of plaintiffs who sued Citigroup Inc. want to bill their clients as much as $550 an hour for contract lawyers who sifted through reams of documents in the case.
Ted Frank, a litigator who often objects to class-action settlements, is taking issue with the nearly $100-million cut plaintiffs' attorneys are seeking of a proposed settlement between Citigroup and investors who claim the bank hid the extent of its exposure to toxic mortgage debt. Mr. Frank says the requested share—16.5% of the $590 million settlement—is based in part on bloated billing for thousands of hours of mostly routine legal work, and would be a windfall that rewards the lawyers at the expense of their clients.
But Mr. Frank and others say that much of the work contract lawyers perform in such cases requires no special expertise, and that plaintiffs' firms use their labor to artificially inflate legal fees. “We have not heard from a single paying client in the New York area who pays $500 an hour for contract attorneys,” Mr. Frank, a Citigroup shareholder, said at a hearing on the fee request last week in Manhattan federal court before Judge Sidney H. Stein.
Mr. Frank's efforts in the Citigroup case are funded by a nonprofit group he founded called the Center for Class Action Fairness. A handful of other parties have also filed objections to the settlement on other grounds; a ruling on the settlement is expected in coming weeks.
Read the full article at The Wall Street Journal.