AUSWR
The Association of U S West Retirees
 

 

 

Qwest retirees file complaint over fees
At issue is law firm's $98 million slice out of $400 million pie
By Jeff Smith
Rocky Mountain News
Tuesday, March 7, 2006

Qwest Communications retirees on Monday bashed as "extremely outrageous" attempts by attorneys to collect $98 million in fees from a $400 million shareholder class-action settlement.  The Association of U S West Retirees complained in a filing in U.S. District Court in Denver that the shareholders' lead law firm - Lerach Coughlin Stoia Geller Rudman & Robbins LLP of San Diego - is requesting fees equivalent to $1,750 an hour.

Lerach Coughlin also is "trying to pull a fast one" by asking for $10 million to cover work done by in-house accountants paid by the law firm, according to the filing by the retirees group's attorney, Curtis Kennedy.

"It is all too obvious that lead counsel are the mere jackals to the government's lions, feasting after both the United States Securities Exchange Commission and the United States Justice Department made the kill," Kennedy wrote.  But "unlike the jackal, they seek the lion's share" of the settlement.

The proposed $400 million settlement would resolve the major consolidated shareholder lawsuit against Qwest regarding alleged securities fraud between 1999-2002.  Qwest previously settled alleged misdeeds with the SEC for $250 million, money that also will be distributed to eligible shareholders.

Lerach Coughlin spokeswoman Kathleen Walsh said in a statement Monday that the law firm will wait for the decision from the court on its request for 24 percent of the $400 million settlement, plus $2.2 million for out-of-pocket expenses.

But Walsh added: "Lerach Coughlin has vigorously litigated this case for a period of over four years.  Lerach Coughlin took on a substantial risk in this case with no assurance of success.  However, the result is an excellent settlement in an extremely complex and difficult case.  And the lead plaintiffs and class representatives support the fee requested."

A hearing to determine the fairness of the proposed settlement and attorney fees is scheduled for May 19.  But the retirees group is asking for a delay and more court scrutiny, contending it's premature to hold a final hearing because of insufficient documentation.

"While the reward for success should justifiably be substantial, that does not necessarily equate to rates that are forty or fifty times higher than the average wage earner," Kennedy, the retirees attorney, said in the filing.

For example, the retirees said, Lerach Coughlin is asking for $394,891 to cover "meals, hotels and transportation," without giving any receipts.

Kennedy also claimed the law firm is asking for $6.9 million of fees for work performed by an unidentified "document clerk," who is shown as getting hourly rates of $135 to $200.

He also said Lerach Coughlin had failed to provide a phone number or e-mail address on its notice to class-action members, hampering their efforts to clarify how the settlement would be distributed.

Since Lerach Coughlin didn't disclose details about its fee until more than six weeks after the class notice was mailed, a stockholder now would have to download the documents electronically at a cost of up to $66.72, according to the filing.

"Lead counsel's dearth of disclosures in the class notice reflects a very cavalier approach to seeking an exorbitant amount of attorneys' fees and expenses in shareholder lawsuits settled well before trial on the merits," Kennedy wrote.

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_4520036,00.html