November 19, 2006
Attorney's Fees and the Swiss Bank Holocaust Litigation
The Los Angeles Times today ran two opinion pieces regarding the attorney fee petition in the Swiss Bank Holocaust litigation of Professor Bert Neuborne of New York University School of Law. Here is an excerpt from Profiting from the Holocaust, by Menachem Z. Rosensaft, a lawyer in New York who is the founding chairman of the International Network of Children of Jewish Holocaust Survivors:
IF LAWYERS EVER WONDER, in a rare moment of introspection, why they are generally held in low esteem, they need look no further than the obscene fee application pending before a federal magistrate judge in Brooklyn, N.Y.
Burt Neuborne, the court-appointed lead settlement counsel in a class action brought on behalf of Holocaust survivors against Swiss banks, has turned himself into the poster boy for avaricious attorneys. He demands $4.75 million for his role in administering the $1.25-billion settlement and determining distribution of the money. . . .
Neuborne wants to be paid $700 an hour for the roughly 6,800 hours he claims to have spent on the Swiss banks case between Feb. 1, 1999, and Oct. 1, 2005. (Earlier this year, he agreed to remove 1,500 hours from his fee application after some of his billing practices were challenged.) That averages out to about 20 hours a week, for which he wants to be paid, again on average, $675,000 a year. This would be on top of $4.4 million he received in 2001 from another Holocaust-era settlement with German corporations that had exploited Jews and Roma/Sinti as slave laborers during World War II.
Responding to such criticism, Professor Neuborne wrote What profit? I gave up $10 million. Here's an excerpt:
ATTACKS ON ME for seeking a court-awarded fee for seven years of labor as the lead lawyer in the $1.25-billion Swiss banks Holocaust settlement give new meaning to the phrase "no good deed goes unpunished."
I began my work on behalf of Holocaust survivors in December 1996, when U.S. District Judge Edward R. Korman asked me to serve as counsel in the Swiss banks litigation. I redrafted the complaints, wrote the principal legal brief, argued the case and spearheaded the negotiations that succeeded on Aug. 12, 1998, in obtaining the historic settlement. I then told Korman that although I was entitled to as much as $10 million, I would not seek a fee for those services. At that point, no one expected me to do more work on the Swiss banks case. Instead, beginning in September 1998, I devoted myself to the German slave labor cases that led to the creation of the $5.2-billion German Holocaust Foundation.
In April 1999, Korman asked me to return to the Swiss banks case to carry out the complex settlement. Given the grueling, time-consuming nature of the work, he agreed that I would be entitled to reasonable hourly fees. Korman has publicly acknowledged that he "retained me" and that I am entitled to a fee. My detractors say Korman should have given formal notice that I was no longer working for free. But notice to a class of 1 million people would have cost a fortune (it cost $40 million to give notice of the terms of the settlement) while accomplishing nothing because the class was not entitled to insist that I return to work for them for free.
My work as lead settlement counsel over the last seven years has been massive and unrelenting, requiring me to spend, to date, more than 7,000 hours providing complex legal services to the settlement fund. I appeared in 30 contested legal proceedings, including multiple federal appeals, two Supreme Court proceedings and three trial-type hearings in the district courts.
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In criticizing Neuborne's fee application, Rosensaft notes that "[i]n sharp contrast, Kenneth R. Feinberg, who served as the special master of the September 11th Victim Compensation Fund, worked entirely pro bono." Although Rosensaft does not go so far as to insist that all social policy mass tort work be done pro bono, he does contend that "[l]awyers who take on matters in this context have moral and ethical obligations that transcend their narrow self-interest. They should view their representation of Holocaust survivors as an opportunity to bring about a long-delayed measure of justice rather than a means of enriching themselves."
I'm troubled by Rosensaft's suggestion that lawyers doing morally compelling work must do so at a reduced fee. In the long run, the interests of most victims are not served by marginalizing work on their behalf as charity cases, but rather by making such work economically viable. Pro bono legal work does the most good when applied to market-undervalued representation, not representation with the potential for significant recoveries. I've explored these concerns, and the relationship between mass torts and public-interest motives, in Doing Good, Doing Well, 57 Vand. L. Rev. 2087 (2004), http://ssrn.com/abstract=590883.
Posted by: Howard Erichson | Nov 21, 2006 10:51:25 AM