Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at a ruling slapping down plaintiffs’ lawyers who requested six figures in fees after their clients won $249. Sign up to receive this column in your Inbox on Thursday mornings.
Programming Note: Big Law Business will be off until October while I take paternity leave. Send your tips to my editor.
Plaintiffs’ lawyers make decisions all the time about when to pass up a settlement offer and take a case to trial. It’s not very often the decision goes more poorly than it did for a group of plaintiffs who chose to try their cases against Volkswagen AG over the company’s “dirty diesel” scandal.
The plaintiffs who opted out of the nearly $15 billion settlement mostly lost their cases. Now, they also have to pay VW’s costs for the trial.
US District Judge Charles Breyer last week slammed the plaintiffs’ lawyers for requesting nearly $625,000 in fees despite what he called “abysmal” results.
“The average person would say the trial was not an unalloyed success,” Breyer wrote, calling the plaintiffs’ lawyers’ attempts to “sugarcoat” their results “disingenuous.”
Here’s the anatomy of the failed strategy: The seven sets of plaintiffs turned down settlements worth about $155,000. They swung and missed at a trial in March 2020 when they sought $582 million in punitive damages. After appeals, only one of the seven cases resulted in an award greater than the settlement they declined—and that was only by $249.
After more than three years of litigating, the group also was ordered to pay VW $110,000 in costs.
Curious strategy, sure. But the story got more interesting when the lawyers asked to have VW cover their fees.
Breyer called the fee request, seeking 20 times more than the damages awarded, “grossly inflated” and “unreasonable.”
The lawyers’ strategy for a “huge payday” was “hoping to hit the jackpot with punitive damages,” he wrote. But that was always unlikely considering the lawyers “essentially ignored what the cases were truly worth” and would have had an outsize award struck down on appeal, the judge wrote.
“After over a thousand hours later, all [one plaintiff] got was $249 more than what they could have received almost four years ago,” Breyer wrote. “That the plaintiffs’ attorneys racked up over $620,000 in fees and expenses and prolonged litigation to achieve the same (and arguably, worse) result is breathtaking.”
The lawyers ultimately secured a trial award that was $4,500 less than the settlement offered to their clients, Breyer concluded, after considering inflation over the four years.
The plaintiffs’ lawyers at California law firm Knight Law saw it differently. They spun their work as a victory.
“Plaintiffs’ attorneys righteously prosecuted their clients’ claims and achieved superlative results,” Knight Law attorneys wrote in a court filing. “Knight Law and its associated counsel did not take the easy route; they investigated VW’s scheme and took this litigation to its end with an impressive finish.”
VW’s lawyers at Sullivan & Cromwell, which handled the trial, challenged the fee request.
The team, led by firm co-chair Robert Giuffra, argued the lawyers should be paid less than 1% of their request: about $5,700 in fees and costs, all racked up before VW offered its settlement.
“The plaintiffs’ lawyers here thought that their clients could hit the jackpot with a San Francisco jury by opting out of Volkswagen’s generous settlement,” Giuffra said in an email. “Their strategy backfired when the jury refused to award unjustified windfall damages.”
Breyer’s ruling didn’t spell out exactly what the lawyers will be paid, but he instructed them to slash the bulk of their request—time spent on the case after VW made a settlement offer—by between 75% and 85%. The two sides were instructed to submit a joint order proposing new fees by July 7.
Knight Law was not the only firm that represented the plaintiffs, but Breyer’s ruling singled out the firms’ lawyers for “boasting” about their results. He also cited multiple fee requests from Knight Law that had been slashed in previous cases.
In one of those cases, Knight Law asked for $45,000 in lawyers’ fees and was granted just under $11,000 after a judge lowered the lawyers’ hourly rates and criticized their approach to the case. The judge in that case noted the bulk of the firm’s fees were spent after rejecting a settlement offer that was only $9,000 lower than the eventual award.
Roger Kirnos, managing partner at Knight Law, did not respond to a message seeking comment.
“To give the Plaintiffs’ attorneys what they’ve asked for,” Breyer wrote, “would reward their gamesmanship in racking up unnecessary work and hours.”
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That’s it for the next few months! Thanks for reading and please send me your thoughts, critiques, and tips.
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