The plaintiffs’ firm Labaton Sucharow is experiencing the after-effects of a notorious investigation of its fees in the $300 million State Street class action, according to a report in Reuters.
In February 2020, U.S. District Judge Mark Wolf of Boston slashed the firm’s fee award by $10 million and concluded that Labaton improperly entered and failed to disclose an agreement to pay $4.1 million to a Texas lawyer, Damon Chargois, who had facilitated the firm’s introduction to the Arkansas pension fund that served as the lead plaintiff in the State Street case.
The deal between Chargois and Labaton came to light in 2018, after Wolf appointed retired federal judge Gerald Rosen to investigate the fees requested by plaintiffs lawyers from Labaton, the Thornton Law Firm and Lieff Cabraser Heimann & Bernstein and appointed. The underlying State Street class action involved allegations that the bank charged excessive fees for foreign exchange transactions.
Wolf had by then awarded the firm’s $75 million in fees but ordered the investigation after reports in the Boston Globe raised questions about allegedly inflated hourly bills from Labaton and Thornton, as well as alleged political contributions from lawyers at the two firms to state pension fund officials.
Chargois is now suing Labaton and two partners at the firm for allegedly refusing to pay him the fees he says he is owed under their longstanding fee-splitting deal.