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Glaxo Plaintiff Lawyers Settle Dispute Over $143 Million

Lawyers who won what may be a $2.3 billion settlement with GlaxoSmithKline Plc (GSK) over its Avandia diabetes drug resolved their own fight over the allocation of more than $143 million in legal fees.

Eight lawyers on a court-appointed fee committee agreed to take a smaller portion of the fee fund after nine objectors challenged their payouts, a special master assigned to review the recommendations said in court papers made public Jan. 18 in federal court in Philadelphia. The fee committee had asked for 71 percent of the fund set aside by U.S. District Judge Cynthia Rufe for the Avandia cases before her.

“Allocating a limited pot of common benefit fees among numerous counsel, all of whom are talented and capable attorneys and many of whom have made a significant contribution to the ultimate success of (a) case, is an unenviable task that is sure to lead to hurt feelings and bruised egos,” Bruce Merenstein, the special master, wrote in the filing. “Yet, all of the parties involved handled this difficult task with care and equanimity.”

The fee fund is 6.25 percent of the total settlement, according to court records. That means the total accord may be worth $2.3 billion and the average payout for the 40,000 users of Avandia involved in the litigation would be about $57,500 -- before legal fees. People familiar with the settlement who didn’t want to be named because the terms weren’t public have said the fee fund was 7 percent of the total.

Glaxo Payments

Glaxo, the U.K.’s biggest drugmaker, has said it paid more than $3 billion to settle federal and state government claims that it illegally marketed Avandia, once the world’s best- selling diabetes pill, and other medications. Company officials haven’t said what the drugmaker spent to settle the Avandia lawsuits before Rufe, and in state courts, alleging executives failed to properly warn consumers about the drug’s risks.

Glaxo said in 2010 it would stop promoting Avandia worldwide after regulators said marketing for the drug would be halted in Europe and sales would be limited in the U.S. because of studies linking the drug to increased risks of heart attacks. Sales fell 43 percent after those restrictions were imposed, Glaxo said.

The fee-advisory group, led by Philadelphia attorney Dianne Nast, agreed to a lower payout as part of the accord. Nast agreed to take $6.3 million, down from $6.7 million, according to court papers. Joseph Zonies, a Denver-based attorney who was slated to get the highest recommended fee, will see his firm’s payout reduced to $22.5 million from $24.4 million for 18,232 hours of work. Vance Andrus, another Denver-based lawyer, saw the biggest reduction, a cut of about $3 million that left him with a payout of $14.6 million, according to the filing.

Fee Reductions

Other lawyers in the group, including Thomas Cartmell, Bryan Aylstock, Stephen Corr, Paul Kiesel and Bill Robins III all agreed to reductions from about $700,000 to $1.3 million each, according to court papers.

Fifty-eight law firms are seeking payment from the fund for common benefit work. The proposed payout for 41 firms that did not object will remain unchanged, Merenstein said in the filing. The allocation is subject to final approval from Rufe.

The consolidated case is In re Avandia Marketing, Sales Practices and Products Liability Litigation, 07-01871, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).

To contact the reporters on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net; Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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