Attorneys in $1B Surfside settlement vowed to work at a discount. Will they get $100M? [Miami Herald]

In a packed courtroom last summer, as rescue teams were still digging up human remains after the collapse of a Surfside condo tower, a Miami-Dade judge declared the tragedy was “not going to be treated as business as usual” and gave an ultimatum to a throng of seasoned lawyers representing the grieving families.

Circuit Judge Michael Hanzman laid down his demands for the attorneys, who might normally collect a third of the damages as a fee in such a massive catastrophic case: He would cover their expenses, but they must agree to work for free at their own risk with “absolutely no assurance of payment whatsoever and no legal right to payment.” Depending on the outcome of their class-action case down the road, the judge suggested he might approve some legal fees based on their hourly work.

After agreeing to the judge’s terms, the legal teams eventually delivered two separate settlements in the complex and emotionally difficult Champlain Towers South class-action case — one to condo owners for $96 million in property losses and a surprisingly large second one to victims’ families for $1 billion in wrongful-death and injury claims. Now, the legal bill is due to be filed by Sunday — and it’s expected to be up to $100 million, sources tell the Miami Herald.

One law professor with expertise in class actions said the attorneys’ potential cut of the Champlain South wrongful-death settlement — 10% — would seem “ordinary” in a case of this magnitude. But their possible share doesn’t sit well with some survivors, who are not getting a dime out of the $1 billion settlement because they only lost their condos and personal belongings, not loved ones.

In the end, dozens of attorneys could wind up with a larger share of the overall payout than the 136 condo owners would receive, Alberto Manrara, who owned unit 1201, told the judge during a May hearing.

“Your honor, fairness here requires that the property owners do not get less of the compensation than what you might award the attorneys, as hard as they worked and as much as they may be entitled to it,” said Manrara, who called the class action the “legacy” case of Hanzman’s career. “The word on the street is that the award is probably going to be $100 million — $100 million to the attorneys and $96 million to the property owners. It just doesn’t look right, and it just doesn’t seem fair.”

A lawyer designated to speak for the team of attorneys who brought the class-action negligence case declined to comment about their fees for this story. Hanzman, a former class-action lawyer himself, could rule on their request later this summer. But he pushed back against Manrara’s comments in that May 24 hearing.

As he has done repeatedly in the past, the judge defended the plaintiffs’ lawyers, saying they “were the best and the brightest in this community” who “stepped up to be public servants” at “financial sacrifice,” adding that “they risked their time” and “did a remarkable job” within one year of the Surfside building’s collapse.

Hanzman said such a complex class-action case with so many victims, defendants and insurance companies would normally drag on for a decade and that one-third of the total settlement would customarily be set aside for the plaintiffs’ attorneys. “So, whatever the lawyers are awarded in this case,” the judge said, “at the end of the day it will be far less than what they would have achieved in a private marketplace.”

But Hanzman saved his harshest words for Manrara’s analysis of the potential legal fees in the second-largest class-action settlement in Florida’s history.

‘Word on the street’

“First of all, I don’t base my decisions on any type of word on the street,” the judge said. ”These lawyers stood up at my request and agreed to take on this case on an entirely unusual fee agreement. ... I don’t know what the lawyers will ask for. ... [But] all the victims will have a right to be heard and I will make a decision, not based upon word on the street, not based upon my perception of my legacy, not based upon anything except what they did in this one case. OK?”

Manrara, apparently shaken by the judge’s biting remarks, apologized.

Since the beginning of the class-action case, Hanzman’s goal has been like a mantra: To ensure that the families of the 98 people who died in the collapse of Champlain South and the 136 owners who lost their condos would recover as much money as possible as quickly as possible. The judge had put the sensitive issue of potential legal compensation on the back burner because of the gravity of the Surfside tragedy.

But what has heightened tensions over the last few weeks is the unexpected $1 billion settlement with the array of defendants and their insurers in the wrongful-death class action. No one was optimistic about reaching that astronomic figure. In fact, when it was announced in mid-May, about half the Champlain South condo owners demanded that their original settlement of $83 million for their unit losses be increased substantially. They prevailed to an extent, gaining an additional $13 million from the judge.

All of the legal fees in the wrongful-death settlement, which was given preliminary approval in late May by Hanzman, would come out of the $1 billion in damages to be paid by various developers, contractors, engineers, a security firm and insurance companies. The judge’s final approval of the settlement is expected on June 23, one day before the tragedy’s anniversary, but his decision on legal fees will come later in the summer.

The judge has already approved a much smaller cut in the initial $96 million settlement for property losses — $750,000 in attorneys’ fees, which represents less than 1 percent of the total payout. That money, to be distributed to the Champlain condo owners on the basis of each unit’s value, will come from insurance coverage and partly from the sale of the nearly two-acre oceanfront site for $120 million to a Middle Eastern developer.

While some Champlain unit owners have been critical of the lawyers collecting substantial fees, families who lost both condos and relatives in the building’s collapse seem more receptive to the idea. However, some are guarded in their commentary because the judge must still decide how much each victim is going to receive in compensation.

“That is a tough decision given all that has been stated from the beginning of the case, but the judge will decide what the lawyers should be paid,” said Pablo Langesfeld, father of Nicole, 26, a promising young lawyer who died in the collapse along with her husband, Luis Sadovnic, 28.

“They worked nonstop, and they did an excellent job,“ Langesfeld told the Herald. “Because of them, the victims got a $1 billion settlement. At the end of the day, everybody from the victims to the lawyers should get compensated. And, of course, we also believe justice should be served.”

The task of dividing up the $96 million property loss settlement — which matches the independent appraiser’s value for all 136 Champlain South units — will be straightforward. It’s based on the value of each unit, including factors such as size, floor and views. Simple division would yield an average payout of about $705,000 per unit.

The task of dividing up the $1 billion wrongful-death settlement for Champlain Towers South victims — less potentially $100 million in plaintiffs’ legal fees — will be far more daunting. If it were done strictly on the basis of dividing that figure by the 98 residents who died in the tragedy, the average individual payout would be about $9.2 million. But it won’t be done that way.

The calculation of the value of each victim’s life, including factors such as age, occupation, income and life expectancy, will be decided by the judge this summer as he reviews each compensation claim. The Champlain South victims ranged in age from a 1-year-old girl, Aishani Patel, who perished along with her parents, Vishal and Bhavna Patel, to 92-year-old retiree Hilda Noriega. The victims worked in medicine, real estate, banking, fashion and many other businesses and industries. Some were students, some newlyweds, many were retirees.

Plaintiffs’ leadership team

Early on in the Champlain South class action, 32 plaintiffs’ attorneys at 17 law firms representing the victims formed leadership groups to manage the negligence case against more than 25 defendants, ranging from the Champlain South condo association to developers, contractors and other parties, including Champlain South’s security provider. The plaintiffs’ team handled court pleadings, depositions and negotiations with the defendants’ insurance companies and attorneys.

The co-chairs of the plaintiffs’ team, attorneys Rachel Furst and Harley Tropin, who worked full time on the class-action case, said they plan to file claims for legal fees by Sunday, a deadline set by Hanzman. But Furst said she could not disclose any details.

“We can’t comment,” Furst told the Miami Herald last week.

Another dozen or more lawyers who are not part of any plaintiffs’ leadership groups might also file individual claims for fees if they did some actual work for their clients in the class action, which is the consolidation of dozens of lawsuits filed after the June 24, 2021, collapse of the 12-story Surfside condo building.

But for all the work that some of the plaintiffs’ attorneys did on the class action, the two principal lawyers credited with toiling the hardest and moving the case forward are the Champlain South condo association’s receiver, Michael Goldberg, and the mediator, Bruce Greer. Both were appointed by Hanzman, the judge, who was also seen as a driving force in the class settlements.

Goldberg, a partner with the Akerman law firm who has worked as a receiver in South Florida for three decades, is billing his work at $475 an hour, or half his regular rate, according to his statements in court. So far, he has put in about 1,200 hours on the Champlain South class action since his appointment as receiver last July. That would roughly work out to $570,000.

Greer, a respected mediator, agreed to volunteer his time and work for free. He tallied about 1,600 hours of work in his mediation role to resolve the Champlain South condo and wrongful-death disputes involving defendants, lawyers, insurance companies, owners and witnesses. By guiding the parties to settlements, Greer prevented protracted legal fights and possibly a trial.

‘Appalled’ Champlain neighbors

While Manrara stood out among the property owners when he challenged Hanzman in court about potential legal fees, he has company among his former neighbors at Champlain South. They say they were under the impression that the judge’s initial ultimatum about “pro bono” legal work literally meant no charge.

Susie Rodriguez, who owned unit 607 for 22 years, said she was “appalled” to learn that the lawyers on the case could receive more than the $96 million the owners will receive in a settlement that divides the money in proportion to unit size. Rodriguez and many other surviving owners reluctantly agreed to that settlement under the threat of being sued if they didn’t accept it. They believe they are not being fairly compensated for the value of their condos and will not be able to afford anything comparable to the homes they lost.

“Making lawyers rich and leaving the survivors out there struggling to resume and rebuild their lives — it’s wrong, it’s inappropriate and it’s disgusting,” Rodriguez told the Herald. “They have worked hard but if you agree to work pro bono as a service to the community, you should be a person of your word. For months, the judge has praised them as a ‘dream team.’ For us, it’s been a nightmare.”

Mayra Cruz, owner of unit 1205 for 20 years, shared her sentiments.

“I think it’s excessive if the lawyers are paid more than the Champlain owners who are not even getting reasonable value for their homes. We’re losing money and they’re making money?” Cruz said.

Cruz said the condo owners were pushed “into taking the low-ball [property] settlement” because they were told by the judge and attorneys that it was unlikely the wrongful death settlement would reach $1 billion.

“I think if the judge awards the lawyers $100 million [in fees], it looks improper,” Cruz said. “They deserve to get paid something for their work, yes, but at the outset the judge said he would only reimburse them for expenses because they were volunteering to help the community at a time of tragedy.”

Another Champlain South condo owner, who did not want to be identified, shared the same view.

“I think it is seriously messed up if the lawyers end up with $100 million or more when the owners are only being paid $96 million,” the person said. “And a lot of owners are deceased so you’re picking out of their pockets, too. We’re not denying they worked long and hard but this was not a 10-year case. Those numbers are screwed up. It would look very bad.”

Controversial legal fees

Legal experts said it was inevitable that lawyers’ fees would eventually become a hot-button issue in the Champlain South class action, especially after the $1 billion settlement was announced in May.

Brian T. Fitzpatrick, professor of law at Vanderbilt University and author of “The Conservative Case for Class Actions,” said attorneys’ fees “are often thorny and controversial, and it sounds like they might be even more so here in light of the judge’s pro bono comments” at the outset.

“I don’t know why the judge said what he did about working pro bono, but it’s very unusual and I can see how that comment might make even an ordinary [attorneys’] fee request controversial because people’s fee expectations may have been lowered,” Fitzpatrick told the Herald.

“Everyone wants the lawyers to work really hard when success is uncertain, but once success has been achieved, everyone tends to forget that the success was uncertain and contingent upon all the hard work the lawyers had to do,” Fitzpatrick added. “We call this amnesia ‘hindsight bias.’ ”

But, he said, “right or wrong, in light of this bias, setting attorneys’ fees is often the least popular part of a judge’s job.”

Fitzpatrick said in his research on class actions, the average attorneys’ fee is 13.7% in a settlement above $1 billion, such as the Champlain South case. The median fee is 9.5% of the total.

“It sounds like the lawyers are going to ask for a percentage that would seem ordinary by the standard of other cases,” he said.