Monday, September 17, 2012

I'm in the Wrong Business Part 914: $35,000 per Hour Attorneys

A reader had sent us the Delaware Supreme Court decision, partly for consultant Goldman Sachs' inner thoughts on copper, link below.
From Deal Journal:

Dealpolitik: Delaware Supreme Court Should Revisit $304 Mln Legal Fee
You thought your lawyer was expensive? After the Delaware courts socked Grupo Mexico, the controlling stockholder of Southern Copper, with a $2 billion judgment, they awarded an additional $304 million in legal fees against it for the plaintiffs’ legal fees. That came to about $35,000 per hour worked.
Nice work if you can get it.

The Delaware Supreme Court last month upheld the award when it affirmed the $2 billion judgment. But Grupo Mexico went back to the Delaware Supreme Court last week with an unusual motion for reconsideration, asking the Supreme Court to take one last look at that fee. The Supreme Court should listen to Grupo Mexico.

In these kinds of cases, when plaintiffs win, they get a contingency fee based on a percentage of the amount involved. And in this case, the fee, as the trial court said, is “only” about 15% of the judgment. The Supreme Court said in its decision last month that as much as 33% can be permitted—though that would be “the very top of the range of percentages” permitted.

Fifteen percent isn’t an outrageous fee in a normal contingency case. What Grupo is arguing though, and what the Supreme Court did not address in last month’s decision, is that the award here is really much more than 15% of the benefit the lawyers obtained for the public shareholders—it’s almost 80% of that benefit. Why?...MORE
Link (111 page PDF):