Relying on his 20 years on the bench and 24 years in private practice, U.S. Southern District Judge Lewis A. Kaplan issued two decisions this year commenting on the lack of effective adversarial testing of proposed fee applications following securities class action settlements, and stressing the fiduciary obligation of the court to exercise stewardship over settlement funds in that circumstance. In that context, without questioning the good faith of the particular firms involved, he reduced the proposed fee awards and expressed concern about systemic inefficiencies in the handling of class actions. Kaplan’s thoughtful approach to the fee awards in these two decisions is likely to influence other judges in the Southern District of New York, and beyond, and may well reinforce the trend of shrinking fee awards of which Judge Kaplan himself makes note.

‘In re Weatherford International Securities Litigation.’ Judge Kaplan’s first decision, issued in January in In re Weatherford International Securities Litigation,1 is a brief, two-page decision considering a fee application in connection with a $52.5 million settlement of that securities class action. Kaplan expressed dissatisfaction with both the percent-of-recovery model, which he noted “many plaintiffs’ counsel relentlessly urge upon this and other courts,” and the lodestar approach (often used as a check on the percentage of the fund method) in which the number of hours reasonably expended times an hourly rate, is multiplied by a factor reflecting the complexity and risk associated with the case and the performance of the attorneys.2

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]