NY Firm Gets $56 Million Fee, Firm’s Largest Ever, in Backdating Suit

New York Lawyer | June 25, 2010; By Nate Raymond ; A federal judge in Brooklyn has approved a $56 million fee for Pomerantz Haudek Grossman & Gross for its work as lead counsel in a class action over alleged backdating against Comverse Technology, Inc. Eastern District Court Judge Nicholas Garaufis yesterday approved a fee of 25 percent of a $225 million settlement, which the judge also signed off on in In re Comverse Technology Inc. Securities Litigation, 06-CV-1825.

A state retirement fund in Pennsylvania had objected to the fees as too large, but the judge said he was unwilling to interfere with an award negotiated openly between the law firm and its client, lead plaintiff Menora Group.

Marc Gross, a name partner at Pomerantz Haudek, based in New York, said the fee award “is the largest in our 75-year history.” The firm stood at one time to earn up to 30 percent, but ultimately cut its fee after Menora Group “pressed us to take some reduction,” he said.

“Ultimately the 25 percent that was agreed upon was well within the normative range of these types of lawsuits,” Mr. Gross said.

Comverse in December agreed to the $225 million settlement, the second largest in a case involving backdating. A number of companies including Comverse came under scrutiny for allegedly issuing options with dates earlier than when they were actually granted.

Comverse’s former CEO, Jacob “Kobi” Alexander, fled to Namibia after the federal government charged him and the company’s chief financial officer and general counsel in 2006 with criminal fraud.

Comverse will pay $165 million of the settlement. Mr. Alexander, still abroad, agreed to pay $60 million.

Joseph S. Allerhand, a lawyer for Comverse at Weil, Gotshal & Manges, declined to comment. Edward M. Spiro, a lawyer for Mr. Alexander at Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer, had no comment.

Pomerantz was originally slated to receive 30 percent of any recovery, but after the settlement was reached, Menora Group and the firm engaged in “vigorous negotiations” over the fee award, according to an affidavit by Assaf David-Margalit, an in-house attorney in the investment division of Menora Mivtachim Pensions, Ltd. Menora Group also consulted with independent counsel about Pomerantz Haudek’s fee award.

The Pomerantz firm has 25 lawyers, 13 of whom are partners.

Three objections to the $56.25 million fee award were presented to Judge Garaufis, though one was later withdrawn and the other the judge deemed frivolous. The third, by the Pennsylvania State Employees’ Retirement System, objected to the fees as “unreasonable.” In a letter to the judge, Brian McDonough, deputy chief counsel at the retirement system, argued that a 25 percent fee award was not necessary “to provide reasonable compensation to class counsel for their efforts.”

But Ju…