Microsoft disputes largest legal fee

Reed Stevenson

SEATTLE: Lawyers seeking $258 million in legal fees from Microsoft Corp.'s $1.1 billion class action settlement in California are asking for too much, the world's largest software maker said.

The fees, the largest ever in an antitrust settlement, work out to $3,019 per hour for Eugene Crew, the class actions lead attorney and more than $2,000 per hour for other attorneys as well as hourly fees of $1,000 for administrative work.

Microsoft, which will have to pay the fees on top of the settlement, told San Francisco County Superior Court Judge Paul Alvarado that the fees did not justify the work involved in the case.

"Somebody ends up paying for this," said Microsoft lawyer Robert Rosenfeld, "these large fee awards get passed on to consumers."

The class action suit accused Microsoft of abusing its dominant market position to overcharge California consumers for software. Under the settlement struck last year, Redmond, Washington-based Microsoft agreed to pay vouchers to 13 million California businesses and consumers, with any unclaimed amount going to the state's school system.

Crews said the fees, outlined in a petition to the judge, were justified.

"I wouldn't have put it in if I didn't think we earned it," Crew said.

Microsoft attorney Rosenfeld said less than 5 percent of eligible consumers have filed claims, which could potentially result in the plaintiff's attorney's fees being higher than the actual money that Microsoft pays out to consumers.

"It generates a fair measure of cynicism about the whole process on whose behalf are these action being brought," Rosenfeld said, "I think it does make you wonder about who is being benefitted."

Crew said that negotiating the settlement with Microsoft took an inordinate amount of resources on his firm and that his take of the fees, which would amount at about $100 million, was fair compensation for the risk of taking on Microsoft.

"They are a 'take no prisoners company' whether it’s in the markettplace or in court," Crew said.

In court decision, the fees is expected after several more months of discussion, Rosenfeld said, although Crew said he expected a decision in weeks.

© Reuters