A 3rd District judge Monday awarded $5.8 million to a team of four lawyers who represented thousands of thrift depositors in settling a landmark class-action suit against the state.
The attorneys had requested a $7.25 million contingency fee."We think it's a fair decision and we are thrilled that this is done and behind us," said depositors co-counsel George Haley. The other attorneys sharing in the fee are Haley's partner Robert Stolebarger and California attorneys Malcolm Misuraca and Douglas Provencher.
Others weren't quite as pleased, particularly legislators who fought against the state's cash settlement, partially financed by taxpayer revenues, enriching depositors' legal counsel.
"I think $5.8 million is clearly excessive. I feel bad for the depositors who clearly paid for more than what they got," said Sen. Kay Cornaby, R-Salt Lake.
Although several depositors mailed letters to the court protesting the $7 million request, a committee speaking for depositors recommended the court uphold their contract with their attorneys. The contract called for 20-40 percent of a judgment or settlement.
Under state and federal rules, a judge has final say on legal fees in cases taken on a contingency basis.
Judge David S. Young's approved fee is 20 percent of the $29 million up-front cash the state has agreed to pay depositors, while the attorneys' request was for 25 percent of the cash settlement. The judge, however, is withholding 10 percent of the approved fee until "legal counsel completes all matters in the case."
The attorneys represent some 15,000 depositors who faced losing more than half of their savings after five thrift and loans failed in 1986 and were placed under liquidation. To recover their anticipated losses, estimated at more than $60 million, the depositors filed a class-action suit against the state and thrift officials alleging fraud and negligence.
Lawyers negotiated a settlement with Gov. Norm Bangerter, later modified by the Legislature, that will enable depositors to recover 98 percent of their savings through a cash payment and ongoing liquidation proceeds. Depositors and the court have approved the settlement and a distribution of money is scheduled before Christmas.
The potential of millions of dollars in fees going to attorneys proved to be a sticky issue between the lawyers, depositors and the Legislature, which drafted the bill providing money for the settlement.
Legislative action on the settlement was delayed until lawmakers agreed to recommend the court cap legal fees at $1.5 million. The Legislature also sent their legal counsel to oppose the $7.25 million fee at a court hearing last week.
But those efforts were apparently undermined by the bill's sponsor, Sen. Fred Finlinson, R-Murray, who filed an affidavit saying the $1.5 million recommendation was a political ploy during an election year and was not based on any facts.
Cornaby disagrees, saying lawmakers came to their decision based on interviews with local attorneys who felt the work wasn't worth more than $2 million.
In his memorandum decision, Young noted he wouldn't satisfy everyone, possibly disappointing the lawyers, depositors and legislators. But, "recognizing that judges must make unpopular decisions, nevertheless the court feels that the decision herein is appropriate."
Young said he considered, among other things, the contract between depositors and their attorneys; the time and labor involved; risk to the attorneys' business by taking on the case; fees customarily charged; and reputation of the lawyers.
According to court documents, if the fee was based solely on hourly rates of all four lawyers the bill would have come to $1.8 million.