A little while ago, Anthony Rickey and I published an article looking at the settlement approval process in class actions with a particular focus on the State Street Case.  Our article noticed that Judge Wolf found that class counsel made deceptive, less than fully candid statements when it submitted hourly rates to a court which no client had ever actually paid:

In theory, a vigorous lead plaintiff actively supervises its lead counsel, examining fee requests to maximize the portion of the settlement retained by the class. The efforts that ATRS undertook to supervise its class counsel remain unclear, but they do not seem to have been effective. In the State Street litigation, Judge Wolf harshly criticized Thornton for declaring, under oath, that one attorney's regular rate was $500 per hour, when the firm could only identify one case in which that attorney had been charged at even $300 per hour. He similarly noted that Labaton submitted as “regular rates” for services hourly rates that had “never been charged to paying clients.” ATRS did not volunteer these facts. They were only discovered because the State Street court took the apparently unprecedented step of appointing a special master to investigate.(footnotes omitted) 

In the State Street litigation, Judge Wolf went on to find significant problems with class counsel representing to the court that their firms "regularly charged" certainly hourly rates when no paying client ever actually paid that rate.  Rather, all their work was on a contingency basis and they had simply convinced other courts to approve fee awards referencing those "hourly" rates.  Wolf sharply criticized both Thornton and Labaton for their statements about "hourly" rates.  This led Judge Wolf to cut the total fee award and the allocation to class counsel.  Arkansas Tchr. Ret. Sys. v. State St. Bank & Tr. Co., No. CV 11-10230-MLW, 2020 WL 949885 (D. Mass. Feb. 27, 2020), appeal dismissed sub nom. Arkansas Tchr. Ret. Sys. v. State St. Corp., No. 20-1365, 2020 WL 5793216 (1st Cir. Sept. 3, 2020).  

Ultimately, the issues caused Judge Wolf to cut the fee award from the $75 million he initially approved to $60 million.  Within the final fee allocation, he left the fees untouched for the firms which had not participated in any misconduct and taxed the investigation costs to the firms found to have been less than fully candid. 

Judge Wolf also made very specific findings about the need for class counsel to avoid stating that they "regularly charge" certain rates when they are pure contingency firms.  Consider the findings with respect to Thornton and Labaton. 

As to Thornton:

Garrett Bradley did not, as required by Federal Rule of Civil Procedure 11 and the Massachusetts Rules of Professional Conduct, read the fee declaration in support of the fee request that he signed under oath before it was submitted to the court on behalf of Thornton. It included many false statements. For example, Bradley represented that certain attorneys were employed by Thornton and that the hourly rates attributed to them for the purpose of calculating Thornton's lodestar were “the same as my firm's regular rates charged for their services, which have been accepted in other complex class actions.” G. Bradley Decl. ¶4 (Dkt. No. 104-16) (emphasis added). However, Thornton worked solely on a contingent-fee basis. It had no clients who paid the firm on an hourly basis and no “regular rates charged” for its attorneys. In addition, Michael Bradley was not, as represented, employed by Thornton. Nor had the firm, as Garrett Bradley claimed, ever charged $500 an hour for his services, which in this case were worth far less.

As to Labaton:

Sucharow also falsely claimed that the rates attributed to Labaton attorneys were “the same as my firm's regular rates charged for their services, which have been accepted in other complex class actions.” Dkt. No. 104-15, ¶7 (emphasis added). When Sucharow made this statement under oath he believed that Labaton did not have any clients who were charged or paid hourly rates.