"It took tremendous skill and perseverance to achieve a settlement at this level in these coordinated actions," the attorneys said. With few exceptions, they added, they have not been compensated for any time or expenses since the suits began.
Objectors
But Schneiderman's office said that before the mediation that resulted in the $219 settlement, Ivy Asset offered the office $140 million to settle substantially identical claims. Accordingly, the efforts of private counsel provided a benefit to clients of no more than $79 million, the state said in a brief signed by Roger Waldman, senior counsel in the investor protection bureau.
The fee request would consume 53 percent of the additional $79 million benefit they achieved, Waldman wrote. "A fee of this magnitude would be wildly excessive," he said.
Waldman also claimed that after the attorney general's office filed its suit, class counsel filed an amended complaint that "wholly adopted the facts and theory" of the government's complaint.
"It did not even bother to paraphrase the paragraph in the NYAG's complaint that summarized the material facts known by Ivy but not disclosed, instead copying the paragraph in haec verba," Waldman said. "The facts upon which Ivy has settled the Class Action are facts that were uncovered by the NYAG, not Class Counsel: Class Counsels' own discovery efforts did not yield a single significant fact or piece of evidence not mentioned in the NYAG's complaint."
Waldman said any fee award to private counsel must be based on a contribution of securing $79 million, not $219 million. At 20 percent, that would calculate to less than $16 million, he wrote.
He also said certain facts were "disquieting," including that counsel identified "a staggering 110 lawyers and over 67 staff and paralegals" in the litigation, compared to the three lawyers and support staff that handled the attorney general's investigation and lawsuit.
Herrick Feinstein, which represented Madoff feeder hedge funds and took part in the settlement, also vigorously opposed class counsel fees.
"In this case, Class Counsel rode the coat-tails of the NYAG to overcome motions to dismiss, and they have only conferred a benefit of less than $79.8 million on the class," said Arthur Jakoby, a Herrick partner who represents the hedge funds.
Jakoby said the issues that plaintiffs counsel presented as difficult and complex were "nothing but ordinary in securities litigations."
But in their reply, plaintiffs attorneys argued that over the last year, the attorney general "came to rely heavily on private counsel" and noted that in an email Waldman wrote to Lowey partner Thomas Skelton, he said: "Congratulations Tom. It could not have happened without your legal skill, extraordinary patience and iron endurance. You are a hulluva Lawyer."
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