2nd Circuit sends dispute over Lockerbie fees back to lower court

A dispute over the allocation of attorney fees in the settlement of claims against Libya for the bombing of Pan Am Flight 103 over Lockerbie, Scotland, is headed back to the district court.

The 2nd US Circuit Court of Appeals found three "significant" errors plagued a judge's decision ordering Emery Celli Brinckerhoff & Abady to pay from its contingency fees $1.44 million, 21.3 percent of what it had then earned from the case, to a plaintiffs' committee, whose lead counsel until his death in 2003 was Lee S. Kreindler of Kreindler & Kreindler. (...)

Libya eventually agreed to pay $10 million to each plaintiff, although it withheld $2 million of this amount until May 2006, when the U.S. State Department removed the country from its State Sponsors of Terrorism list.

All but one of the 270 decedents accepted the settlement. Of those 269 parties, 240 were represented by members of the plaintiffs' committee. The remaining 29 parties were advised by 14 other counsel -- six by Emery Celli Brinckerhoff & Abady.

Eventually, all of the non-committee counsel except Emery Celli agreed to pay the plaintiffs' committee a portion of their fees equal to 3 percent of their clients' recoveries. The plaintiffs' committee used part of those payments for expenses it said it had incurred on behalf of all plaintiffs. It donated the remainder to a nonprofit foundation established in the name of Kreindler that has endowed a chair at Harvard Law School and a conference center at Dartmouth College, both in his name.

As justification for refusing to pay the fee, Emery Celli argued that it had performed a key role in lobbying Congress to change the law to permit suits against Libya to go forward. According to the circuit decision, the firm also objected to the use of the fees for "nonprofit causes unrelated to victims' rights or anti-terrorism, serving instead to glorify Lee S. Kreindler's legacy." (...)

Richard D. Emery said Friday that the plaintiffs' committee had done excellent work but had ridden "our coattails" when it came to the crucial change in the law that held Libya accountable.

"This was a huge effort on our part on behalf of Paul Hudson in what was Paul's heroic fight to hold Libya accountable before the Foreign Sovereign Immunities Act allowed any redress."

Emery noted that it was the initial dismissal of the case, and an affirmation of that dismissal by the 2nd Circuit, that triggered a "political outcry" and action by Congress, which "was the only reason that Kreindler and the other families ultimately won."

[From the Law.com website. The full text of the article can be read here.]