The special master appointed to investigate claims of double billing by Labaton Sucharow in the scandal-plagued $300 million State Street Corporation securities lawsuit has reached a tentative settlement with the firm, Law360 reports.
Former federal Judge Gerald Rosen said Labaton and two other firms involved in the case should disgorge up to $10.6 million of their $75 million in fees. Included would be a $3.4 million disgorgement to Employee Retirement Income Security Act lawyers since Labaton paid $4.1 million to a Texas attorney who introduced Labaton to the lead plaintiff, the Arkansas Teacher Retirement System, but did not work on the case. The two other firms have not reached an agreement with Judge Rosen.
That $4.1 million payment to the Texas attorney spurred investigations from the Arkansas Legislature over potential public corruption between the pension fund and Labaton. A professor at Columbia University Law School said in an op-ed that the case may represent a market “in which politically connected attorneys charge extraordinary contingent fees, requiring payments in the millions of dollars, for introducing and connecting prominent plaintiff law firms with public pension funds and other institutions capable of serving as lead plaintiffs’ in major class actions.”