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Friday, July 19, 2024 | Back issues
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Lawyers in Shareholder Case Were Paid Enough

WASHINGTON (CN) - An attorney who wanted $778,535 in fees for reducing a billion-dollar tax burden to just $50 million for shareholders must settle for roughly $89,000, a federal judge ruled.

Ernest Fleischer, a St. Louis attorney of counsel at Husch Blackwell, was hired as a consultant for litigation surrounding the tax claim against a defunct bank, Benj. Franklin Federal Savings and Loan Association. The bank's assets in receivership exceeded $90 million, but the Internal Revenue Service wanted $1.2 billion in back taxes and interest.

Fleischer and attorneys with Winston Strawn were just some of the players who helped lower the tax obligation down to $50 million. Benj. Franklin investors ultimately left with $43.4 million in surplus.

The attorneys demanded 2 percent of that surplus, or a success fee of twice the hourly rate plus "fees on fees," but the the Federal Deposit Insurance Corp., as the bank's receiver, refused. Fleisher was the only remaining plaintiff, but the court dismissed his claim Tuesday.

"Mr. Fleischer has already been reasonably compensated by the FDIC for his work on the tax settlement," Chief U.S. District Judge Royce Lamberth wrote. "Of the approximately 250 hours he reported working, he was compensated at his hourly rates for all but 4.5 hours."

Lamberth ruled that the $89,465.34 was enough, and that Fleischer is not entitled to a percentage of the surplus, a success fee or fees on fees.

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