Lawyers may get close to $180 million in Flint water crisis settlement

Lawyers who helped win a $626-million legal settlement tied to the Flint water crisis could receive close to $180 million for their work, according to terms set forth in a federal judge’s ruling Friday. It’s less than they requested, but considerably more than critics say should go to lawyers for such a large class-action award.

In her decision, U.S. District Court Judge Judith Levy adjusted some of the lawyers' requested fees downward, leaving them to collect expenses and fees coming to what she described as “less than 31.33 percent” of the total settlement amount of $626.25 million.

The exact dollar amount won’t be known until administrative fees and other details are worked out, but one lawyer who has closely followed the case said he expects lawyers to take about $180 million.

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The total cut for lawyers includes $7.1 million in reimbursements for out-of-pocket expenses, plus a pooled fund of $39.6 million to compensate lead attorneys. After those and other deductions, including $35 million for future claimants who were minors during the water crisis, lawyers will receive additional fees amounting to up to 25 percent of the remaining pot. Those fees will vary depending upon the amount of their clients’ claim, the lawyers involved, the type of clients they assisted, and when their clients retained a lawyer.

Levy called it “a reasonable and fair result” that slightly reduces lawyers’ cut while awarding fees that “reflect their hard and persistent work” over five years of litigation.

She stressed that the exact amount left for claimants won’t be known until a host of fees and costs are deducted.

In a statement, co-lead plaintiffs counsel Ted Leopold lauded the settlement as a step toward justice for Flint residents, and highlighted the work attorneys did to reach the legal agreement.

“As in every case, attorneys fees are calculated based on the length and intensity of the litigation,” Leopold said, “which in this instance spanned more than five years and included millions of pages of documents, roughly one hundred depositions, dozens of expert witnesses, 10 appeals and 18 months of court-supervised negotiations." 

It’s not unusual for lawyers to take up to a one-third cut of awards in contingency fee civil cases, in which lawyers pay the up-front expenses of litigation that they may or may not win. But litigation experts say courts often reduce lawyers’ cut in mega class-action settlements, such as the Flint case.  

The plaintiffs attorneys who took the state and other parties to court for their role in the Flint water crisis argued their requested fees were a reflection of more than 182,000 hours of work by dozens of law firms and hundreds of lawyers, with no guarantee of success, in hopes of securing a semblance of justice for people who drank the city’s lead-tainted water.

But some plaintiffs and outside groups had argued lawyers were asking too much, and thus leaving Flint’s struggling residents with too little.

Levy generally rejected those complaints, noting that deducting attorneys’ fees from the overall pot of money “is a common occurrence in every contingency fee case.”

“This is the way the litigation system operates and it is standard,” she wrote. “Plaintiffs’ Counsel have earned and are deserving of reasonable compensation for their work.”

But a lawyer for a D.C.-based nonprofit that fights for smaller fees in class action suits said he was disappointed in a ruling that he estimates will send about $180 million to lawyers. Noting that he was still reading through the ruling, Frank Bednarz, an attorney with the Center for Class Action Fairness at the Hamilton Lincoln Law Institute, said Friday the judge had granted lawyers compensation that is “not that much different than what they asked for.”

In hearings before Levy last year, Bednarz was among multiple lawyers and Flint residents who had pushed for a smaller fee structure. He accused some lawyers of overcharging for reimbursable expenses, and noted other class-action suits in which attorneys had received a far smaller cut of the total settlement.

But Michael Pitt, a co-lead counsel in the case from the Royal Oak-based firm Pitt McGehee Palmer Bonanni & Rivers, defended the fees as appropriate. He noted that some law firms refused to take the case because success was considered a longshot. 

“I would not agree with anyone who says the fees are excessive,” he said. “They are not excessive when you understand what went into doing this, and the amount of risk that we took.”

More than 50,000 people have registered to participate in the settlement, which settles a portion of claims tied to the water crisis that emerged after a state-appointed emergency manager approved the city’s 2014 switch from Detroit’s water supply to the Flint River, without requiring anti-corrosion chemicals to prevent lead from leaching out of aging pipes.

It’s still unclear how much any individual Flint resident will receive as part of the settlement — that depends on how many people successfully file claims in a process that began last month.

But Pitt said Friday’s decision ensures “life-altering” amounts of money — tens of thousands of dollars — for Flint residents who were young children during the water crisis and can demonstrate elevated lead levels or cognitive impairments.

So far, Pitt said, almost all of more than 350 children tested for cognitive function have shown some type of impairment.

“This is a real opportunity for people to get some real compensation for their kids,” Pitt said. “They should take advantage of it.”

Potential claimants can learn more about how to file a claim here. The claims period ends May 12.

After attorney fees, people who were children during the crisis will receive nearly 80 percent of the remaining settlement, while 18 percent will go to adults who can prove health impacts from the lead or a Legionnairre’s Disease outbreak that emerged after the water switch, or property damages. Smaller amounts will fund special education programs and compensate businesses.

Some residents have criticized that payment structure, arguing it shortchanges those who were adults during the crisis. Flint City Council President Eric Mays said he has no problem with lawyers taking their cut, but he wishes they would have held out for a bigger settlement, with better terms for adults.

“I really wish they would negotiate a settlement that's in the best interest of their clients, just as in the best interest of them getting attorney fees,” he said.

Mays said his lawyer “dropped me like a hot potato” when Mays objected to the settlement. He is considering options to appeal the settlement terms in court, he said.

The settlement includes commitments of $600 million from the state of Michigan, $20 million from the city of Flint, $5 million from McLaren Regional Medical Center and $1.25 million from Flint-based engineering firm Rowe Professional Services Co., for their respective roles in the failure to protect city residents.

It resolves only a portion of civil suits tied to the Flint water crisis. Lawyers are suing four other parties tied to the Flint water crisis, including the U.S. Environmental Protection Agency.  

In a statement Friday, Michigan Attorney General Dana Nessel noted that the settlement agreement bans her from voicing an opinion about attorneys’ fees. 

But Nessel described Levy’s order as a step toward monetary relief for afflicted Flint residents and vowed to “remain steadfast in my commitment to address the damage created by the Flint Water Crisis in court.”

Pitt said Flint residents should “stay tuned” for the outcome of other litigation, including a lawsuit against two engineering firms that declined to join the settlement. 

Editor’s note: Due to a calculation error, an earlier version of this article overstated the maximum amount plaintiffs lawyers stand to receive under the Friday ruling. It has since been corrected.