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Wednesday, June 25, 2008

Figuring Faegre's fee

It's difficult to ascertain what the per-partner take will be for Faegre and Benson lawyers on the drastically reduced punitive damage award in the Exxon Valdez case. The verdict dropped from $2,5 billion to about $500 million (or by about 80 percent) with one swipe of the high court's pen. (Interest makes the verdict about $1 billion.)

It would not be too out of line to say that partners will likely get somewhere around 20 percent of what many of them thought they would get yesterday. The following is what MinnPost had to say about the fee topic, which is the most reporting I have seen done on it so far:

Brian O'Neill, Faegre partner who spearheaded the litigation, said a formula was devised years ago to figure out fees to the lawyers, based on their involvement in the case and years with the firm, and the amounts of money that go to the thousands of fishermen, based on the size of their businesses before the spill.

With this decision, they all know that the X in the formula now equals $1 billion. Mechanisms are in place to cut checks within 60 days, O'Neill said.

"At the time of the first decision, Faegre & Benson went out of its way to tell partners not to count on this money and to live their lives as though it never happened," said David Lebedoff, author of "Cleaning up — The story behind the biggest legal bonanza of our time," published in 1997. "That was very wise advice." (Click here for more)

Ouch. I suspect some plans for an early retirement went up in smoke with the decision. On the other hand, I'm sure there are a lot of lawyers in town who wouldn't mind getting even one of those reduced checks ...

My question is this: Since Exxon just saved itself several billion dollars today, can we expect to see that savings reflected in the prices we pay at the pump? I think we all know the answer to this query. It's not just the rocks around Prince William Sound getting hosed by Exxon ...

UPDATE 6/25: 11:57 p.m.:

The following comes from a Strib story on the fee award:

Faegre represented 2,600 people, the most of any of the law firms involved. The firm now stands to receive roughly $20 million to $25 million in fees out of total attorney's fees of approximately $200 million, according to early calculations. That's a fraction of what it stood to earn after the initial 1994 jury award of $5 billion in punitive damages, which an Appeals Court reduced in 2006 to $2.5 billion. The firm also will get about $4 million in out-of-pocket expenses.

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