Australian Judge Approves $26 Million Legal Bill in Price-Fixing Case

An Australian judge approved a A$25 million ($26 million) legal bill for the lawyers who won a record settlement in the country’s biggest price-fixing case, saying he did so with “some hesitation,” because the costs don’t comply with reforms to make litigation more efficient.

“This should not be regarded as the norm,” Federal Court Judge Peter Jacobson wrote in a ruling released yesterday. “Amounts such as these represent a barrier to the access to justice reforms which underlie the recommendations made by the Australian Law Reform Commission.”

Maurice Blackburn, a Melbourne-based class-action law firm, won a A$95 million cartel settlement in March for customers who sued Amcor Ltd., Australia’s biggest packaging company, and closely held packager Visy, for fixing prices on corrugated fiberboard packaging. The settlement was three times higher than the previous record set in Australia, said Bernard Murphy, chairman of Maurice Blackburn.

Closely held Jarra Creek Central Packing Shed Ltd. led a group of about 4,500 customers who sought to recoup overpayments for corrugated fiberboard packaging accrued from July 2000 to June 2009.

Amcor agreed to pay A$80 million and Visy A$40 million to settle the case just before a trial was scheduled to start. Jacobson approved the settlement.

The amount, including the legal fees, was almost four times higher that the A$30.5 million Roche Holding AG, BASF SE and Aventis SA agreed to pay in 2006 to settle allegations they fixed prices of animal vitamins.

Seven-Year Battle

Amcor and Visy battled the lawyers every step of the way during the seven years it took to prepare for trial, Ben Slade, a principal at Maurice Blackburn who took the case in 2004, said in a telephone interview today. The costs incurred are a deterrent to people seeking compensation and law firms, he said.

“I agree with the judge,” Slade said. “It’s not good for justice.”

Slade said he spent A$9 million getting the case ready for trial, including hiring expert economists and preparing 111 witnesses, 60 of whom he planned to call to testify.

“I stuck my neck out,” he said.

Jarra Creek hired Joseph Anthony Mazzeo, an independent cost consultant, to examine the legal bills in the case. He concluded Maurice Blackburn’s reasonable costs and disbursements were A$26.3 million, A$1.3 million more than the firm received under the settlement.

Contingency Basis

The judge noted there was no litigation funder in the case and Maurice Blackburn took a risk by accepting the case on a contingency basis, meaning the firm would be paid only if it won.

The enormity of the costs was also explained by the complexity of the case and “the hard fought nature,” which required numerous hearings to be conducted, the judge said.

Jacobson said a A$1.7 million fee paid by the lawyers to Daniel Rubinfeld, a professor of law and economics at the University of California, Berkley School of Law, to prepare a report was “staggering.”

“I therefore accepted the figure of A$25 million,” Jacobson wrote. “I did not do so without some hesitation.”

The case is: Jarra Creek Central Packing Shed Ltd. v. Amcor Ltd. NSD 702/2006. Federal Court of Australia (Sydney).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net

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