BIRMINGHAM, Ala. (CN) – Former co-counsel claims the Milberg law firm collected more than $27 million in fees – $7.8 more than it deserved – from health-care settlements, though Milberg “ceased working on any of the matters in the wake of its indictment in May of 2006.”
Whatley Drake & Kallas claims Milberg LLP breached its fee sharing agreement.
In its complaint in Jefferson County Court, Whatley Drake say Milberg represented plaintiffs in 41 lawsuits against managed care companies, in which doctors and medical associations claimed that insurers schemed to delay, reduce and deny payments to health care providers.
In October 2002, Milberg signed a fee-sharing agreement with Whatley Drake and other firms that joined forces in the multi-district litigation.
“Prior to the fee sharing agreement, the Lamb/Tropin Group, which included Whatley Drake, had been appointed by the court to serve as the lead attorneys for the provider track that included claims by physicians and medical associations,” the complaint states. “Milberg was not appointed in any leadership position. However, Milberg represented a number of medical associations and physicians. Because of Milberg’s clients and its willingness to commit to represent those clients and the physician class through the end of the litigation including but not limited to compliance with any settlements, the Lamb/Tropin Group entered into negotiations with Milberg to join the leadership in the provider track.”
According to the complaint, the agreement “provided in pertinent part that in return for 20 percent of any award of attorneys’ fees in the actions, ‘Milberg Weiss [would] play a substantial role in the litigation and settlement aspects of such actions, including significant participation on any team, working groups or other groups established for the purpose of litigating such actions, a lead participant in the evolution of settlement proposals and a direct participant in any settlement discussions.’ Milberg’s commitment to remain a significant player through to the conclusion of the actions was an essential part of the fee sharing agreement and a prerequisite to Milberg receiving a share of the fees under it.” (Brackets in complaint.)
But Whatley Drake says, “Milberg was discharged by its clients in the cases subject to the fee sharing agreement and ceased working on any of the matters in the wake of its indictment in May of 2006.” (Milberg Weiss was accused of paying people to act as plaintiffs in class action lawsuits.)
In June 2006, Whatley Drake assumed Milberg’s responsibilities in the health-care litigation.
The complaint states: “Consistent with the fee sharing agreement and Milberg’s commitment to remain in the cases to their conclusion, Milberg was allocated 20 percent of the fees awarded in connection with settlements with Aetna and Cigna, two of the defendants in [the] In re Managed Care [lawsuit]. Milberg’s 20 percent share of the fees awarded with respect to the settlements with these two defendants represented a significant 1.7 multiplier over its lodestar. In addition, Milberg claimed a 20 percent share of fees awarded in connection with four other settlements with In re Managed Care defendants – Health Net, Humana, Prudential and Wellpoint. In total, although it has breached its agreement to see the cases subject to the fee sharing agreement to their conclusion and is no longer taking the risk of the continuing litigation in the cases subject to the agreement, including In re Managed Care, Milberg has reaped a combined lodestar multiplier from these six settlements of 1.4 percent.”
Whatley Drake claims that Milberg has breached the fee sharing agreement by withdrawing from the litigation.
It claims: “the fee sharing agreement required Milberg to play a substantial role in all aspects of the forty-one cases subject to the agreement and to see those cases through to their conclusion. Milberg’s commitment was the consideration for the Lamb/Tropin Group’s agreement to allocate 20 percent of any fees awarded in any of the cases subject to the agreement to Milberg.”
While the managed care lawsuits continue 5 years after Milberg’s discharge, the risk of litigation has shifted entirely to Whatley Drake, which has incurred more than $4 million in unreimbursed expenses, the firm claims.
It says that “Milberg, which is not incurring any ongoing risk, has been paid a substantial multiplier over its lodestar from earlier settlements. In this regard, to date, Milberg has received more than $27 million in fees, $7.8 million more than its lodestar, while Whatley Drake has accumulated more than $4.2 million in unreimbursed fees and expenses.”
Whatley Drake seeks damages for breach of contract and unjust enrichment. It is represented by Joe Whatley Jr.