In Re AH Robins Co., Inc.

211 B.R. 536, 1997 WL 464733
District Court, E.D. Virginia·Decided July 8, 1997·No. Employer's Tax Identification No. 54-0486348, No. 85-01307-R·Published·Cited by 1 cases

Opinion

MEMORANDUM

MERHIGE, District Judge.

The Court is in receipt of the Affidavit of Dr. Peter Cashman (“Cashman”) of the law firm of Cashman & Partners. Cashman has submitted his Affidavit as directed by this Court’s Order dated February 24, 1997 (the “February 24 Order”) (Docket No. 29876). In his Affidavit, Cashman explains the circumstances surrounding his decision to withhold sums in excess of 10% of the pro rata distributions made by the Daikon Shield Claimants Trust (the “Trust”) in violation of this Court’s March 1, 1995 Order. Cashman also requests that, in light of his explanation, the Court reconsider the February 24 Order, including the Court’s denial of his Motion For (Partial) Reinstatement of Attorneys’ Fees. Accordingly, the Court will construe Cashman’s Affidavit as a Motion For Reconsideration. For the reasons which follow, the Court will deny the Motion For Reconsideration.

I. Background

On March 1, 1995, this Court entered an Order Disallowing Unreasonable Attorneys Fees on Pro Rata Distribution (the “March 1 Order”) (Docket No. 21865). Paragraph 2 of that Order prohibits counsel for Daikon Shield personal injury claimants from “charging or receiving, directly or indirectly, any compensation or fees, based upon or out of any pro rata distribution received by a Daikon Shield personal injury claimant from the Trust ... in excess of ten percent of such pro rata distribution.” This Court rejected all challenges to its jurisdiction to enter the March 1 Order. That ruling was unanimously affirmed by the Court of Appeals for the Fourth Circuit. In re Robins Co. (Order Limiting Attorneys Fees), 182 B.R. 128 (E.D.Va.1995), aff'd, 86 F.3d 364 (4th Cir.1996). 1

*538 The March 1 Order prescribed a procedure to be followed by any attorneys or firms who objected to the disallowance and wished the Court to consider reinstating fees above the ten percent limit. The procedure included the requirement that such motions to reinstate fees be filed with this Court no later than April 17, 1995. The Order gave notice of the opportunity for argument and an evidentiary hearing before the Court beginning on April 27, 1996.

On April 17, 1995, Cashman filed his Motion For Reinstatement Of Disallowed Attorneys Fees (“Motion For Reinstatement”) (Docket No. 23050), and on April 28, 1995, he appeared before the Court and presented evidence in support of his motion. Having stayed entirely the proceedings on all of the individual motions to reinstate fees during the pendency of the appeal, this Court never addressed the merits of Cashman’s motion.

Following the unsuccessful appeal to the Fourth Circuit, this Court entered an Order dated September 17, 1996, which addressed the sixty-two motions to reinstate fees still pending before the Court. That Order directed Cashman to file by November 1, 1996 his proposed findings of fact and conclusions of law with respect to his motion. Cashman timely filed his proposed findings and conclusions as well as a supplemental memorandum in support of his motion. On February 24, 1997, the Court denied Cashman’s Motion For Reinstatement. Cashman now asks that the Court reconsider that determination, as well as the other elements of the February 24 Order. 2

II. Cashman’s Motion For Reinstatement

Cashman is a lawyer from Sydney, Australia who has represented over 3,000 Australian Daikon Shield claimants, charging a maximum contingency fee of 25%. (Tr. at 393, 400). 3 Cashman testified that this fee was taken from a claimant’s total recovery, before costs were deducted. (Tr. 413, 417). The record reflects that as of the date of the April 1995 hearing, Cashman had represented approximately 2,500 Daikon Shield claimants who had received payments from the Trust totaling approximately $34 million. (Tr. at 418-19). Finally, Cashman stated that he has received approximately $7.5 million in fees and expenses as a result of his Daikon Shield work. (Tr. at 434-36). 4

In his Motion For Reinstatement, Cash-man asks that the Court permit him to retain more than 10% from the pro rata payment so that his “overall fee” — that is, his average fee after all of the pro rata distributions are made — will equal that of most American firms which charged a one-third contingency fee. Cashman argues that because his firm limited its fee to 25% of a claimant’s settlement, its overall fee after the pro rata payment, in light of the 10% cap, will be 17.5% of the total amount paid a claimant. In contrast, a firm that charged a one-third fee and retained 10% of the pro-rate payment, would receive an overall fee of 21.66%. In light of this disparity, Cashman asks that he be allowed to withhold more than 10% of the pro rata payment so that his overall fee will equal 21.66%, and place him in the same position as other firms.

*539 The Court finds that Cashman’s decision to limit his fee to 25% does not constitute the type of “extenuating circumstances” that this Court has held to be required in order for an attorney or firm to be entitled to a fee of more than ten percent. (Order Limiting Attorneys Fees), 182 B.R. at 138. Indeed, this Court has rejected similar arguments made by other firms seeking to retain more than 10% of the pro rata payment. Recently, in In re A.H. Robins (Medical Claims Consultants), 205 B.R. 767 (E.D.Va.1997), the Court considered a motion of a firm that sought to retain more than 10% of the pro rata on the basis that the firm had only charged a 16% fee. The firm also argued that the 10% limit jeopardized its financial viability. This Court declined to permit a higher fee, noting that the firm set its contingency fee well before it knew, or ever expected, that most claimants would be, in effect, paid twice by virtue of the pro rata distribution. Id. at 770. Likewise, in the instant case, the Court finds that the mere fact that Cashman will be paid a lower overall rate than some of his American colleagues does not constitute grounds for relief from the 10% limit.

It must also be remembered that the pro rata payment is not an entitlement, but rather a “bonus” that is paid over and above the amount of an individual’s full settlement of a claim. Robins, 86 F.3d at 369-70, 375; see also In re A.H. Robins (Weisfuse v. Wagner), 206 B.R. 810 (E.D.Va.1997) (counsel not necessarily entitled to a 10% fee). This is because the availability of the pro rata payment did not result from the legal efforts of counsel, but from the effective management of the Trust. (Order Limiting Attorneys Fees), 182 B.R. at 136. Accordingly, when considering pro rata fees, the Court’s focus is not on an attorney’s efforts on the underlying claim, but on the efforts required for the client to receive the pro rata payment. Id. at 135; In re A.H. Robins (Henri E. Norris, Esq.), 205 B.R. 771, 773 (E.D.Va.1997); In re A.H. Robins (Stan L. Linker, Esq.), 211 B.R. 533 (E.D.Va.1997).

Free access — add to your briefcase to read the full text and ask questions with AI

In Re AH Robins Co., Inc., 211 B.R. 536, 1997 WL 464733 (E.D. Va. 1997).

211 B.R. 536 (In Re AH Robins Co., Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

In re A.H. Robins Co.
220 B.R. 271 (E.D. Virginia, 1997)