ParfumGigi@aol.com

Mark Hamblett

New York Law Journal

12-07-2007

Attorney Burt Neuborne will receive $3.1 million in fees for representing Holocaust victims in litigation that resulted in a $1.25 billion settlement with Swiss banks.

Eastern District of New York Judge Frederic Block said Thursday that Neuborne deserved the payout for work he did as lead settlement counsel in rendering post-settlement services beginning in January 1999. His previous work on behalf of those who claimed that the Swiss banks collaborated with the Nazis had been pro bono.

The decision was the latest in a series of Neuborne's application for fees, which had been vehemently opposed by attorney Robert A. Swift of Swift Kohn & Graf and others who claimed Neuborne had volunteered to perform post-settlement work for free.

Swift, who represented the class, and Samuel J. Dubbin, a Florida lawyer who filed objections to the award on behalf of 17 individual class members and the Holocaust Survivors Foundation USA, later withdrew those objections after Magistrate Judge James Orenstein issued the report and recommendation ultimately endorsed Thursday by Block.

"I'm relieved," Neuborne said Thursday. "It was an unpleasant process and I'm glad it's over."

Neuborne had set the lodestar fee $5.7 million, an amount he said represented 8,178.5 hours at a rate of $700 per hour. He then said he deemed it appropriate, in keeping with the practices of special master and the "unique nature of the litigation," to discount that fee by about 25 percent to $4.1 million.

Orenstein issued his report in March. He found that Neuborne was not precluded from receiving any compensation by the doctrine of judicial estoppel and he agreed that the number of hours billed was appropriate.

But Orenstein questioned Neuborne's proposed hourly rate of $700 per hour and found that he was not entitled to a multiplier. He found that $450 per hour was reasonable.

Part of his justification for lowering the rate was based on market analysis. Under that analysis, had Neuborne engaged in arms length fee negotiation with a person with a fiduciary duty to the class, that fiduciary would have been able to persuade him to accept a significant discount.

In adopting Orenstein's recommendation in In re Holocaust Victim Assets Litigation -- Fee Application of Burt Neuborne, lead case number 06-CV-0983, Block cited the comments of his colleague in the Eastern District, Edward Korman, who handled the Swiss bank litigation. Judge Korman said that Neuborne had been retained for post-settlement work and was "entitled to counsel fees."

Swift said Thursday, "As reduced by Judge Orenstein, I believe the fee award was in the upper range of what was acceptable for the services performed. I hope going forward that a more reasonable approach is taken by class counsel to ensure that any fees incurred will be reasonable."

Block also quoted Korman as saying that Neuborne was an enormous help during the entire process and said he "rendered extraordinary service."

He credited Neuborne with securing legislation in Congress to make the settlement fund tax exempt, and defending Korman's decision to afford a preference to claimants who were not in the United States.

Korman, unable to resolve the fee dispute between Neuborne, Swift and Dubbin, recused himself from the matter and referred it to Orenstein.

Orenstein also noted that the "participants in this fee dispute, on both sides, seem to have lost sight of the admirable example they helped set seven years ago" in reaching the settlement agreement, and he urged both sides to "put aside their differences and their emotions," by dropping their objections.

Both Neuborne and Dubbin dropped their objections prior to an oral argument scheduled for May 21.

Thursday, Block said there was "no plain error" in the report and recommendation, and agreed with the magistrate judge's determinations.

He said he believed that Neuborne understood he was performing services for Korman that "should not be measured by the hourly rate he could have commanded in the commercial market, and that his $700/hour proposals were simply ill-advised reactions to Swift and Dubbin's challenges."

He said that Swift and Dubbin had "produced a positive result that should not be overlooked" -- the savings of nearly a million dollars from Neuborne's initial request.

"Finally, with Swift not filing objections to the R&R, and with Dubbin and Neuborne withdrawing theirs, the parties have recognized that the time has come for there to be peace, or in the language more befitting for the victims of the Holocaust, shalom b'byat," the judge said.