Although the legal battle over commissions and anti-trust in real estate is far from over, lawyers representing plaintiffs in the two oldest commission suits are hoping their payday comes sooner rather than later, as last week they filed their official request for “reasonable attorney fees” to be drawn from settlements.
Just under $70 million of the $82 million requested—which must be approved by a federal judge—comes as payment for what the lawyers say was over 96,000 hours of work on the two cases (known as Moehrl and Burnett) spanning almost five years. A little under $13 million would reimburse firms for expenses incurred before, during and after the trial.
Back in October in the Burnett case, a jury awarded damages of $1.8 billion to around 250,000 recent homesellers in Missouri, though that verdict is being appealed. The Moehrl case, which has damages estimated at over $13 billion, is scheduled to go to trial by the end of 2024.
Plaintiffs’ attorneys would be paid from a total of $208 million forfeited by three companies who chose to settle these lawsuits—RE/MAX, Keller Williams and Anywhere.
The two other defendants in Moehrl and Burnett—HomeServices of America and the National Association of REALTORS® (NAR)—have continued to fight on in court, and nearly every other large real estate brokerage is named in at least one of the many copycat cases that were filed in the wake of the Burnett verdict.
Federal law requires that a judge approve the final amount of attorneys fees, with significant discretion in altering the amount of a class-action settlement that ends up in the pockets of lawyers, and can also hold a hearing to discuss various elements of the case that should modify the fees.
But after plaintiffs in the Burnett trial focused intensely on the burden inflated real estate commissions placed on average Americans, and with attorneys basing the $70 million fee on “well-established precedent,” those in the real estate industry are certain to scrutinize what at least superficially appears to be a “standard” fee charged by lawyers.
“(Plaintiffs’ lawyers) pitch a false narrative that we have set fees or have standard fees in our business which is a lie,” says broker Anthony Lamacchia via email.
In their filing urging the judge to approve the fees, attorneys pointed out they shouldered a significant risk in taking on the lawsuit, and also claimed they were not asking for additional compensation based on the “valuable relief” provided to homebuyers and sellers by the settlements and jury verdict.
“There was no roadmap of previous cases or settlements, and no assistance from governmental entities or regulators through parallel litigation,” they wrote. “Despite the odds, Class Counsel was successful in their efforts on behalf of the Settlement Class in the Litigation.”
In arguing for the $70 million in fees, plaintiffs’ attorneys cited numerous other court rulings that affirmed that a one-third portion of a settlement was “customary” to pay to counsel, and noting that between 25% and 36% is what district courts usually award.
The plaintiffs’ lawyers also point out that defendants were represented by some of the “most highly-regarded defense firms in the world.” They also claim to have participated in “at least” three unsuccessful attempts to settle the lawsuits.
RISMedia reached out to all 11 law firms who are requesting fees in this case, but did not immediately receive a response.
Lawyers and numbers
A group that will be most immediately affected by the judge’s decision on attorneys fees are the homesellers who allegedly overpaid due to NAR rules that plaintiffs successfully convinced a jury are illegally constraining real estate markets.
If the $82 million is approved, there would be $126 million remaining in the settlement fund. Assuming that number stays the same, class members—who number in the millions—would likely receive very little compensation for their injury.
In Burnett, the class size was estimated to be around 250,000 people, with Moehrl orders of magnitudes larger. While the two cases use very different calculations to determine damages, the $1.8 billion in Burnett was based on approximately $7,000 overpaid by every homeseller across five MLSs and a four-year time period.
Moehrl’s class spans 20 MLSs across a similar time period, including some of the largest in the country. Based on the current settlement funds, it seems unlikely that the average class member would receive more than a few dollars—though again, HomeServices and NAR are still litigating, and it is possible (though implausible) they could end up paying the full $15.5 billion from both cases.
Class representatives in the case should receive $15,000 for their participation, or $25,000 if they testified at trial, according to the plaintiffs’ attorneys.
Though the $70 million fee seems like a lot for the law firms to take for themselves, it comes down to about $800 per hour, or—if split evenly between every person who worked on the case—about $525,000 each.
Attorneys also claimed that if they had all billed their usual hourly rates for the hours worked, the fees would come to over $80 million.
Brandon Boulware, who initially filed the Burnett suit back in 2019, said his firm would normally bill just under $13 million for hours worked on the case. Working on Burnett for almost five years, he personally would have been paid $6.6 million, he claimed.
“Boulware Law is a small firm—three attorneys and one paralegal. That means this case was an ‘all-in’ lawsuit for the firm. Each of us at Boulware Law worked tirelessly—late nights and weekends included—for five years for our clients,” he said.
Mike Ketchmark, who has remained the most visible representative of the plaintiffs’ claims in the media, said he would have billed $9 million for the work he did, and $22 million for all the work done by his six-person firm.
He also noted that he was named “Missouri Lawyer of the Year” in the wake of the Burnett victory, and cited his firm’s “extensive” experience in the kind of complex litigation that characterized Burnett.
“I have personally declined to work on numerous promising cases due to my commitments in prosecuting this case,” Ketchmark wrote.
