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Mark your calendars: On November 26, a federal court will decide not only whether to give final approval to the National Association of Realtors’ and HomeServices’ antitrust settlements, but also whether the attorneys that won those deals are entitled to more than $226 million for their trouble.
On Friday, attorneys for homeseller plaintiffs in major commission-related lawsuits known as Moehrl, Sitzer | Burnett, Umpa and Gibson submitted a motion for attorneys’ fees, costs and expenses related to the NAR and HomeServices deals to the U.S. District Court for the Western District of Missouri. On Monday, the court set Nov. 26 as the motion’s hearing date.
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In their filing, the plaintiffs’ attorneys ask for attorneys’ fees equal to one-third of the $679.275 million obtained for homesellers in the deals, or $226.425 million, plus the reimbursement of $16.528 million in expenses. The law firms who submitted the filing are Cohen Milstein Sellers & Toll, Hagens Berman Sobol Shapiro, Williams Dirks Dameron, Boulware Law, Ketchmark and McCreight, and Susman Godfrey.
“Class Counsel faced substantial risk representing the Settlement Classes,” the motion reads.
“They worked on a fully contingent basis, investing over 107,500 hours of labor through August 31, 2024, and advancing over $16 million in out-of-pocket costs and expenses without any guarantee of success. They did so despite this litigation having no pre-ordained path to a recovery.
“Indeed, Class Counsel faced well-funded and entrenched opponents represented by at least thirty of the most prominent defense firms in the country.”
In contrast to the plaintiffs’ counsel, law firms for NAR and HomeServices have not worked on a contingent basis and the court’s docket contains no information on how much they have been paid in the last five and half years, though NAR has previously said its related legal costs have been in the millions.
NAR reached a proposed settlement in the cases in March for $418 million while HomeServices came to its own deal in April for $250 million. In addition, several multiple listing services and brokerages chose to opt-in to NAR’s settlement and have agreed to pay $11.275 million. According to the filing, the law firms expect that figure to grow “modestly” because they’ve reached deals with MLSs and brokerages that are awaiting signatures.
The firms noted that they had “achieved proposed nationwide settlements now totaling at least $998.375 million in monetary relief” in the cases, including settlements with other major real estate franchisor defendants Keller Williams, RE/MAX and Anywhere (formerly, Realogy).
Bough awarded the firms the $82 million in attorneys fees they asked for in regards to settlements with those three franchisors, but several homesellers have appealed the final approval of those deals, as well as the attorney fee decision, so whether the firms get those funds will be up to the 8th U.S. Circuit Court of Appeals.
Because the named plaintiffs in the cases had previously said they agreed to a contingency fee of one-third of the settlement payout, if the courts ultimately decide in favor of the law firms, the firms will get $332.8 million in fees for more than five years of work. According to the filing, the firms’ “lodestar” — the number of hours worked multiplied by the attorneys’ hourly rates — was $92.34 million through August 31.
“Here, a multiplier of 3.62 for class counsel for all of the approved and pending settlements is well justified,” an expert hired by the firms, Robert H. Klonoff, a law professor at Lewis & Clark Law School, wrote in an exhibit attached to the filing.
“Class counsel took on a challenging and risky case with extremely complex legal and factual issues; prosecuted it skillfully over the course of several years in multiple jurisdictions without assistance from any government litigation; obtained class certification despite defendants’ vigorous opposition; successfully conducted a classwide trial; and obtained historic monetary and injunctive settlements for the class.”
In addition, the amount the firms are asking for is actually far less than one third of the value of the “historic injunctive relief that will result in a sea change in the real estate industry” the firms got for the plaintiffs: business practice changes required under the settlements, according to Klonoff.
The changes include a requirement that buyer agents obtain a signed contract before touring homes with clients which spells out the compensation the buyer broker intends to charge for their services. Offers of compensation to buyer brokers have also been removed from multiple listing services, though sellers can still choose to pay buyer broker fees.
“Press coverage reveals that the value of the injunctive relief here is billions of dollars per year going forward,” Klonoff wrote. “In addition, plaintiffs’ expert, Dr. Nicholas Economides, has submitted a declaration in connection with the instant motion for attorneys’ fees. Consistent with the press accounts, he opines in his declaration that the value of the injunctive relief is many billions of dollars.
“Adding to the monetary total fund an exceedingly conservative value of the injunctive relief as $10 billion yields a fee percentage of only 3.03 percent.”
Read the filing: