Briefs: SEC files brief on attorneys' fees+.

• Date: 20 February 2002
• Author: Ziemer, David

Byline: David Ziemer

SEC weighs in on attorneys fees

The SEC earlier this month filed an amicus curiae brief in the 9th Circuit, arguing in a closely watched securities fraud case that too-high attorney fees could get law firms kicked off federal class actions. The brief represents a shift in gears for the SEC, which has previously argued that, by and large, courts should grant lead plaintiffs great deference in their choice of counsel and fee arrangement.

The [Private Securities Litigation Reform Act] is intended to provide courts with better and competing candidates from which to choose the lead plaintiff, SEC special counsel Luis de la Torre wrote.

The case, Cavanaugh v. U.S. District Court, 01-70772, challenges the discretion exercised by U.S. District Judge Vaughn Walker of the Northern District of California in rejecting New York-based Milberg Weiss Bershad Hynes & Lerachs bid to have a group of clients named as lead plaintiff in securities litigation filed against Palo Alto, Calif.-based broadband provider Copper Mountain Networks Inc.

In doing so, Walker ruled that the firms fee agreement with its clients was too high compared with that of a competing firm the six-lawyer New York outfit, Beatie & Osborn. Milberg Weiss appealed.

The district court held, correctly in our view, that an applicants conduct in dealing with counsel, including a failure to make a meaningful effort in negotiating the counsel fee, can be a basis for a finding of inadequacy, de la Torre wrote.

De la Torre said the SEC decided to weigh in because the Copper...