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Wednesday, January 07, 2004 - Page updated at 12:00 A.M.

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Legal-fee fight erupts over Microsoft case

By James Rowley
Bloomberg News

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Microsoft's $441 million settlement of lawsuits in nine states alleging it overcharged purchasers of Windows has touched off a rare public fight over legal fees among plaintiffs' lawyers.

Big plaintiffs' firms that settled the class-action cases, including Milberg Weiss Bershad Hynes & Lerach and Lieff, Cabraser, Heimann & Bernstein, are resisting an attempt by fellow trial lawyers Michael Hausfeld and Stanley Chesley to share the legal fees.

Hausfeld and Chesley, due to collect $10.5 million in fees under a separate settlement with Microsoft of a nationwide federal-court case, say they are entitled to share in $50 million for helping lay the groundwork for the state claims.

More than 100 consumer lawsuits were filed after a U.S. appeals court in 2001 ruled that Microsoft, the world's biggest software maker, illegally protected its Windows operating-system monopoly for personal computers.

"It is not unusual that there is a lot of fighting among plaintiffs' lawyers over fees in class actions," said Charles Wolfram, a retired Cornell University law professor. "But it hardly ever breaks out in the open. It usually settles in the back alleys and hallways."

Hausfeld and Chesley have asked U.S. District Judge Frederick Motz in Baltimore, the judge overseeing the nationwide case, to "fairly compensate" them for their work on a lawyers' steering committee in the federal case that helped the state claims.

In 2000, Motz appointed Hausfeld and Chesley as leaders of a nine-member committee to coordinate collection of 3.4 million pages of documents and questioning of 100 , including Microsoft Chairman Bill Gates. Motz ordered the steering committee to coordinate case preparation to avoid duplication of efforts.

Hausfeld and Chesley argue in court papers that many lawyers in the state cases relied upon the steering committee to prepare their cases and "never attended a deposition" or provided any assistance in preparing the cases.

"Now, hoping to enrich themselves based on the fruits of others' efforts, these same counsel vigorously oppose any coordination of fee proceedings," the lawyers argued. "Memories are short and gratitude fleeting when attorneys' fees are at issue."

The steering-committee lawyers spent $10 million assembling a computerized database of the documents produced by Microsoft, and its 28 members invested $40 million of their time preparing witnesses, Chesley and Hausfeld argued.

In a reply brief, the law firms of Milberg, Weiss and Lieff, Cabraser, and Kirby, McInerney & Squire argue that assistance provided by Hausfeld and Chesley "was spotty and sometimes non-existent."

"To put it most charitably, rather than being a resource to various state court counsel throughout these proceedings, Hausfeld-Chesley looked out for their own clients (and fees) in their own cases, which of course is completely proper," the lawyers in the state cases replied. "Such behavior, however, does not give rise to an entitlement for fees for other plaintiffs in other cases."


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