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Law firm demands $185m contingency fee

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US Supreme Court: Claim succeeded

A leading US law firm has demanded a contingency fee of almost $185m (£143m) for its work in obtaining $3.7bn in compensation for insurers in a dispute that reached the US Supreme Court.

The clients are arguing that it should receive just $9m

Quinn Emanuel Urquhart & Sullivan said, in a motion for approval of their fee request, with was at a “blended hourly rate” of approximately $1,033.

The dispute concerned the failure of the US Department of Health and Human Services to make ‘risk corridor’ payments under the Affordable Care Act (also known as Obamacare) between 2014 and 2016.

Quinn Emanuel was the first firm to file a proposed class action against the government on behalf of insurers in 2016, but its claim was not among those heard by the US Supreme Court, which ruled earlier this year that the department must pay the full $12bn it owed under the programme.

This enabled Quinn Emanuel’s Health Republic Insurance Company class to recover around $3.7bn. It sought a contingency fee of 5%.

The law firm argued in the motion that it was “the first firm in the nation to file a lawsuit on behalf of a qualified health plan issuer” against the federal government in 2016.

Four years later, the firm said, “following round after round of fierce litigation and a loss at the Federal Circuit”, the Supreme Court adopted “the exact legal theory Quinn Emanuel set forth”.

The firm went on: “An entire industry was able to collect three years’ worth of unpaid risk corridors amounts they had previously been forced to write off as a total loss—approximately $12 billion…

“If approved, a 5% fee would represent one of the lowest percentage rates ever awarded to class counsel, even in cases with multi-billion-dollar recoveries, such as this.”

The law firm went on: “Rare is the case where class counsel’s skilful strategy and execution produces such far-reaching benefits. Quinn Emanuel’s performance as class counsel more than justifies its requested fee award.”

The firm said its 5% fee would be significantly lower than contingency fees “routinely found in both risk corridors litigation and commercial litigation more generally”, with attorneys regularly charging 30-40%.

“The class members here are not unsophisticated consumers or workers; they are large, sophisticated entities, most of whom have their own in-house counsel or have separate outside counsel through whom they communicated with class counsel.”

Reports in the US say the insurers have objected, calling the amount “grossly excessive.” They argue that Quinn Emanuel has overstated its role in the class action, and that $8.8m would be a fair award.

Quinn Emanuel said that its attorneys had put almost 10,000 hours on the class action, at a “blended hourly rate” of approximately $1033.

In addition, its support staff and paralegals had spent over 400 hours at an average rate of approximately $325 per hour.

“Here, Quinn Emanuel achieved a class recovery that is not merely enormous in absolute terms, but also constitutes a complete recovery of claimed damages in the face of extraordinarily complex issues and a vigorous, determined adversary.”