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VW Settlement Means Big Payday for Plaintiffs' Lawyers

In September, 2015, news broke that Volkswagen had been using illegal 'defeat devices' on its diesel cars in order to evade emissions tests. In a matter of days, the German car company was swamped by lawsuits. While the government's VW investigation continues to play out, the consumer class action was settled last October, when U.S. District Judge Charles Breyer approved a $10 billion package as part of a total $15 billion deal settling civil claims.

It was the largest class action settlement in history and the attorneys involved have walked away with a pretty penny themselves. Last Friday, Judge Breyer awarded $175 million in attorney's fees and costs to the plaintiffs' lawyers, Courthouse News Service reports.

VW's $10 Billion Settlement

As part of the settlement, Volkswagen agreed to spend up to $10 billion buying back or fixing the cars with its illegal defeat devices. VW will also pay $2.7 billion into an environmental trust meant to offset some of the ecological damage caused by its defeat devices. Those devices allowed VW cars to spew out more than 40x the legally allowed pollutants, activating pollution controls only when the device thought the cars were undergoing emissions tests.

Overall, approximately 475,000 polluting vehicles are expected to fall under the settlement deal, according to Reuters.

$529 an Hour for 119,000 Hours, Times 2.63

The $175 million awarded to attorneys covers $167 million in fees and $8 million in costs, according to CNS. That money will be split between 21 law firms involved in the case, which was headed by lead counsel Elizabeth Cabraser of Lief Cabraser Heimann & Bernstein. In total, attorneys worked 98,000 hours on the case so far. They expect to dedicate another 21,000 hours processing claims in the future.

The attorneys average hourly rate was $529, for a lodestar of $63.5 million. That was in turn multiplied by 2.63, given "the complexities of this case and the extraordinary result achieved for the class".

The $175 million award is only 1.7 percent of the overall settlement package. That may seem small, given that, in a typical class action, plaintiffs' attorneys usually take home 15 percent of the total settlement. But, under the terms of the VW deal, none of the attorney's fees will come from the $10 billion pot. As part of the settlement, VW agreed to pay costs and fees for plaintiffs' attorneys directly, so that class members would not see any reduction in compensation. Those attorneys had originally sought as much as $332.5 million in compensation.

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