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NYLJ “Unusual Settlement Structure Leads to Approval of Fee Award Nearly Double the Payout

By Thomas E.L. Dewey

Public policy generally prohibits class action settlements in which the attorney fee awards dwarf the amount awarded to the class. But as a recent case in the U.S. District Court for the Southern District of New York illustrates, such a settlement may be approved if it is structured so that class counsel’s award does not come at the class’s expense.

In Hart v. BHH, No. 15-cv-4804, 2020 WL 5645984, at *2 (S.D.N.Y. Sept. 22, 2020), Judge Pauley approved over $4.6 million in fees and expenses for class counsel, even though the total payments to class members were expected to top out at less than $2.5 million. However, the court balked at the inclusion of a “quick-pay” provision in an earlier draft of the settlement, which would have allowed class counsel to collect its fees before the class members were paid, and did not allow the parties to submit attorney fees to a separate arbitration.

This article first appeared in the New York Law Journal on October 28, 2020. L. Lars Hulsebus, an associate of the firm, assisted in the preparation of the article.

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