A class action law firm is claiming almost $700 million in legal fees for its work helping investors to recoup losses from the collapse of Enron. If approved, it would be the largest legal pay day in history.
Coughlin Stoia Geller Rudman & Robbins said that it had helped claimants to recover almost $7.3 billion, mostly from financial institutions that investors say played roles in the accounting fraud that led to Enron’s collapse in 2001. In court papers filed this week, the firm asked a federal judge in Houston to award fees equal to 9.5 per cent of the money recovered so far, or about $687 million. The payout must be approved by the court, which can force the lawyers to take a lower fee.
A spokesman for the San Diego-based firm, which is pursuing separate cases against GlaxoSmithKline and BAE Systems, said that the fees were fair. “Millions of defrauded Enron victims will receive billions of dollars. It is the largest recovery in history and the most complex and successful securities case in history,” he said.
As lawyers to the Regents of the University of California investment fund, the lead claimants in the litigation against Enron’s banks, Coughlin Stoia has done the bulk of the legal work. Since it offers its clients no-win, no-fee terms and litigation is often unsuccessful or dismissed, the firm has also put a substantial amount of its own capital at risk.
Rod Jordan, a former Enron project manager who stands to benefit from the firm’s work, said the fees were acceptable.
“When you look at the lawyers on their team and the number of years they’ve spent, my opinion is they probably earned it,” said Mr Jordan, chairman of the Severed Enron Employees Coalition.
Although the overall fee request dwarfs previous payouts, at 9.5 per cent of the total amount recovered it is modest by US standards. Class action law firms, including Coughlin Stoia, routinely take 20 per cent or more of the money they recover in fees.
Coughlin Stoia was previously called Lerach Coughlin Stoia Geller Rudman & Robbins. It changed its name earlier this year after its co-founder, Bill Lerach, pleaded guilty to conspiracy over his role in a scheme that bribed claimants to sign up to class action lawsuits at his former firm.
Coughlin Stoia has helped to recover almost $7.3 billion from financial institutions, including Bank of America, JPMorgan Chase and Citigroup.