Citibank recently settled a PSLRA case alleging $6.3 billion in damages for $590 million, nine cents on the dollar. The opt-out deadline was December 5; the objection deadline December 21; the settlement administrator got around to mailing out the notice to class members like me December 6; I received the mailing December 12, and confirmed my class membership December 14. I've filed an objection to the late notice, but of larger concern to the class is the fact that the attorneys are asking for over $100 million, some $30 to $75 million more than what they're legally entitled to. The fairness hearing is January 15, but I have an argument in Houston January 16. With the compressed schedule, I could use some help.
- The easy thing I'm looking for is a declaration. The law of lodestar is that attorneys are entitled to request market rates for attorney work. But in this case, the class counsel is asserting that the market rate for the temporary attorneys they paid $30 to $45/hour for is between $350 to $550/hour—subject to a 1.8 multiplier on top of the gigantic markup for "overhead." Of course, I know darn well from experience and conversations with defense and in-house counsel that no paying client agrees to pay more than $50/hour (give or take) in gigantic litigation for first-pass document review of 40 million documents; and I submitted a declaration to that effect. But if you're a defense or in-house counsel with experience with billing willing to submit a declaration about the going rate for large-scale document review, the additional evidence can't hurt. Because my objection is only to the fee request, and not to the fairness of the settlement, this wouldn't present the normal conflict issues my other objections would.
- Similarly, I could really use some pro bono or contingent help from skilled experienced counsel located in the Southern District of New York and able to devote some real resources to this case in January. The court received my request for ECF access on December 21; as of the morning of January 2, there has been no action on it. I am concerned that I am not being taken seriously as a pro se. Again, because my objection is only to the fee request, and not to the fairness of the settlement, this wouldn't present the normal conflict issues my other objections would; and with tens of millions at stake, this is plausible for contingency-fee work.
If you might be willing to help, please contact me at the email address on the brief. The case is In re Citigroup Securities Lit., No. 07-cv-9901-SHS (S.D.N.Y.); list of parties and attorneys; settlement website.
There are a lot of important issues in this case that the Center for Class Action Fairness hasn't previously addressed.
- The question of compensation for first-tier document review has been poorly handled by the courts, in part because no one has ever submitted the right evidence to challenge it. No paying client would agree to $550/hour attorneys doing first-pass document review; the law firm here claimed that the style consultants moonlighting as temp attorneys working for a third party and getting paid less than a tenth of that were firm attorneys. (That's before the question of whether the document review is intentionally conducted in an inefficient manner to inflate the hours, which won't be challenged since the scanty billing records are going to be inscrutable in the week that class members have to look at the Rule 23(h) fee petition.) This issue has been covered by Lester Brickman and, sadly, no one else.
- The PSLRA freezes discovery until the motion to dismiss is resolved; if the plaintiffs survive the motion to dismiss, 82% of securities cases settle. Given that nearly all the investment is after it becomes very likely that the attorney is going to be paid, why is a 1.8 multiplier necessary to attract competent legal counsel?
- Lester Brickman has also written about the "bless these fees" experts who rubber-stamp every fee request. The experts here were no different: they cherry-picked empirical evidence; one used boilerplate to assert that the "risk" meriting a multiplier and accounting for the small size of the settlement included the threat that Citigroup would go bankrupt because of the litigation; they bald-facedly called a $0.09/dollar nuisance settlement a "success." A really shameful performance. I hope to be able to depose them.
- The PSLRA requires the fees and expenses to be a reasonable percentage of the amount the class actually receives. Few fee petitions follow the law; neither this one, nor either of the expert reports even mentioned it. Of course, the amount the class will actually receive is not disclosed in the notice or in any of the papers.
- Brokers regularly take two months to provide lists of names to settlement administrators. It's happened in every securities case I've been involved in. Settlement administrators know this, dawdle in requesting the names, and then point fingers when the notice is late. How is it possibly acceptable to send reasonably foreseeable late notice instead of establishing a schedule that accounts for the inevitable two-month delays? Again, no one has ever made the right argument challenging this problem.
(As always, my class-action objecting is not on behalf of the Manhattan Institute.)