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Plaintiffs' Counsel Wins Suit, Gets Chastised for Excessive Fees and Expenses

The Fulton County Daily Reporter (via law.com) has an interesting story on the just-ended successful corporate class action against Coca-Cola (which was found to have committed "fraud on the market" by inflating its income. Plaintiffs may have succeeded, but their lawyers did not emerge unscathed: U.S. District Judge Willis B. Hunt chopped many millions from their claimed fees and expenses. For example, regarding expenses, the Judge found itemized travel expenses, at an estimated $1,365.95 per person per night, excessive. The court observed, "This Court is not troubled by the apparent fact that Coughlin [Class counsel Coughlin Stoia Geller Rudman & Robbins -- once the firm of former name partner and disgraced class action king William Lerach --] attorneys seek high comfort on their journey but neither should the class finance such a lifestyle. This Court finds that a client could reasonably expect to pay $300 per night for his attorney's food and lodging on domestic trips, and that is the level at which this Court will reimburse Coughlin for its travel." Another expense disallowed was $93,960.67 for LexisNexis, Westlaw and Online Library Research. Judge Hunt correctly observed that, "charging separately for use of a research sevice is akin to charging for the use of a case law reporter. That is, the research service is a tool, much like a computer or a pen, and this Court considers the use of such a service part of a firm's overhead. ... Moreover, this Court is aware that many firms pay a flat rate to Lexis and Westlaw regardless of their usage, and class counsel cannot claim such flat rate payments as an out-of-pocket expense."

About fees, the court found it curious that of 24,914.15 hours billed by Coughlin, only 1,411.74 were billed by the 11 associates assigned to the case whose hourly rates were $350 or less. "This Court would find it surprising if only six percent of the work performed in this matter was of the type that could be performed by lower-level associates...."

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.