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Plaintiff side contingency work isn’t for every firm. There’s a huge risk/reward gamble and fortune (read: contingency fees) favor the bold. Even though that’s an accepted maxim of the legal industry, some fee requests are large enough to turn the heads of even seasoned legal watchers. Such is the case of the latest fee request of Quinn Emanuel.
As, well, a bunch of outlets have reported, the firm is seeking $185 million in fees for their representation of insurers suing the federal government under the Affordable Care Act. As the firm has noted in its court filings, that is only 5 percent of $3.7 billion settlement: “If approved, a 5% fee would represent one of the lowest percentage rates ever awarded to class counsel, even in cases with multibillion-dollar recoveries, such as this.”
But as the ABA Journal notes, translating that to an hourly rate is $18,500 an hour, which is quite the bonus:
Translated into an hourly fee, $185 million represents a bonus of 18 to 19 times the law firm’s normal billable hourly rate. The firm said the amount is reasonable under a “lodestar cross-check” that involves calculating the product of lawyers’ hourly rate with the number of hours worked, then applying a risk multiplier to compensate for the risk of no or reduced recovery.
As Geoffrey Miller, professor at New York University School of Law, told Bloomberg Law, while the 5 percent seems reasonable, that multiplier number will still be taken into account:
Miller said Quinn Emanuel’s 5% request was “reasonable,” but noted that a multiplier of 18 was “extraordinarily large.”
That dynamic is somewhat common in cases with huge awards, Miller said, and makes it hard to handicap how a judge will view Quinn Emanuel’s fee request. One factor working in Quinn Emanuel’s favor is that the insurers chose to be part of the class and knew the fee could be as high as 5%, Miller said.
But in the end, as Miller notes, there isn’t a precise formula that will carry the day, but instinct, “Ultimately, the judge will decide based on his or her instinct.”
Kathryn Rubino is a Senior Editor at Above the Law, and host of The Jabot podcast. AtL tipsters are the best, so please connect with her. Feel free to email her with any tips, questions, or comments and follow her on Twitter (@Kathryn1).