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Lawyers seek record pay in Microsoft case

By David Kravets
The Associated Press

AP Attorney Richard Grossman, standing, and co-counsels Daniel Furniss, middle, and Eugene Crew, left, seek $258 million in fees yesterday.

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The bill comes as attorney fees are being examined critically by the American Bar Association and lawmakers across the country. It amounts to about $3,000 per hour for one lawyer, more than $2,000 an hour each for 34 other attorneys and $1,000 an hour for administrative work.

At a scheduled hearing yesterday to determine the legal fees, San Francisco County Superior Court Judge Paul Alvarado said he would rule as soon as possible. The judge, without hearing arguments, said he was not prepared to say "what I'm going to do."

Microsoft agreed to allocate $1.1 billion for California consumers after a San Francisco law firm sued in state court alleging the company inflated prices by monopolizing the preinstalled software market from 1995 to 2001.

But Microsoft could end up spending much less. The deal enables anyone who bought a computer in California to get vouchers of $5 to $29 per Microsoft product, but only a small fraction of the millions eligible have asked for them.

The lead attorney in the case, Eugene Crew, told the judge in legal briefs that he deserves about $3,000 for each of his 6,189.6 billable hours, "considering the enormity of this undertaking against the most powerful corporation in America."

Lawyers from 35 firms joined the suit, which was filed in 1999 under California's unfair-competition law and settled four years later. The requested fees represent about 25 percent of the settlement.

Normally, attorneys charge clients about a third of what's recovered, but in class actions they negotiate fees with the losing party and the judge.

Crew told Judge Alvarado in briefs that they deserve about five times their normal rate because of the difficulty of the legal maneuvers to recover money for consumers. "Extraordinary deeds warrant appropriate recompense," Crew wrote.

The lawyers spent $11.4 million while reviewing millions of pages of legal documents and taking dozens of depositions, and devoted "marathon days, all-nighters and the entire Thanksgiving holiday weekend" to the case in 2001, he added.

Microsoft opposes the fees, and said the lawyers deserved no more than about $75 million combined. "No client would pay any lawyer or paralegal at those rates, and this court should not order Microsoft to do so," Microsoft attorney Robert Rosenfeld said.
 
Rosenfeld said the case was simple because of the federal antitrust case against the software maker. "Although class counsel would have had difficulty proving that plaintiffs were overcharged, their ability to piggyback on prior proceedings significantly increased the likelihood of a settlement," Rosenfeld said.

A proposal from Common Good, a group committed to "reforming America's lawsuit culture," and the conservative Hudson Institute would cap fees at 10 percent of a $100,000 settlement and 5 percent of anything more, said Brent Tantillo, a deputy director at the institute.

The American Bar Association says lawyers can ethically charge whatever is "reasonable."

"That's a big question, what is reasonable," said Steven Lesser, head of an ABA task force investigating attorneys fees.

The California Supreme Court two years ago upheld a lower court decision reducing fees from $88.5 million to $18.2 million for lawyers who won a class action over auto-registration fees.

At the same time, a three-member Tobacco Fee Arbitration Panel awarded $1.25 billion in fees to 60 law firms that helped California get $25.4 billion as part of a nationwide tobacco-industry settlement. Panelists John Calhoun Wells and Harry Huge said the lawyers' efforts were "an important contributor to a resolution of the tobacco war" in California.

Arbitrator Charles Renfrew dissented, saying the fee "truly shocks the conscience."