Judge slashes fees, slams counsel in State Street Bank case.

Byline: Pat Murphy

A U.S. District Court judge has reduced by $15 million an award of counsel fees in a $300 million class action against State Street Bank, finding that Boston-based Thornton Law Firm and other plaintiff firms made misrepresentations that warrant review by the Board of Bar Overseers.

In 2016, Judge Mark L. Wolf awarded $75 million in fees to Thornton, New York firm Labaton Sucharow and San Francisco firm Lieff Cabraser for representing the plaintiffs inArkansas Teachers Retirement System v. State Street Bank & Trust Co.

But in a 159-page decision issued on Feb. 27 Wolf found that, in reaching the conclusion that the $75 million fee request was reasonable, the court had been misled by the plaintiffs' firms.

"The evolution of events since has demonstrated that the court's assumptions in awarding fees were incorrect in material respects," Wolf wrote. "Many of the representations made to the court in support of the request for attorneys' fees by Labaton and Thornton, and to a lesser extent by Lieff, were untrue."

In addition to slashing the original fee award, Wolf referred the matter to the BBO for "whatever action, if any, it deems appropriate."

"[T]his case has demonstrated that judges should recognize that in class actions not all lawyers are trustworthy," the judge wrote. "Some may engage in unethical conduct to obtain clients who will allow them to instigate and control class actions, and to be richly rewarded. When such class actions settle and the adversary process is not operating, some attorneys may engage in misconduct to maximize their income at the expense of their clients and co-counsel."

In 2015, the three firms reached a $300 million settlement on behalf of a class of plaintiffs that alleged State Street Bank overcharged customers in foreign exchange transactions. In moving for approval of the settlement, the parties requested a fee award to plaintiffs' counsel of about 25 percent of the common fund approximately $75 million.

Wolf noted that, during the course of the hearing on the fee request, the court repeatedly reminded the parties that "because the adversary system was not then operating, it was relying heavily on the representations of plaintiffs' counsel."

However, after the judge's decision to grant the award in November 2016, the fees came into question almost immediately when a Boston Globe investigation revealed evidence of double billing. In particular, The Globe found that the work of certain staff...

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