Remember Judge Moreno's reaction to the requested $11 million MBC fee enhancement request?

It almost caused a judicial heart attack:

“I needed a defibrillator,” he joked. “We’re talking about a lot of money.”

Well the judge must have had a nice herbal tea which settled his nerves, because on Friday he granted most of the request:

In this case, the uniqueness and complexity of the issues required lawyers with substantial skill, expertise, and tenacity, and it is undisputed that the lawyers' excellent representation enhanced the asset pool of funds to be distributed. Under these facts, these great lawyers did make a difference, and they should be compensated at a rate higher than $2 18 or even $264 per hour.

On the other hand, as the Receiver concedes, the Court wrote in WaIco Investments, Inc. v. Thenen, 975 F. Supp. 1468,1472 (S.D. Fla. 1997), that "the presence of a consistently paying client for four years, even at a reduced hourly rate, would warm the heart, let alone the pocketbook, of even the most successful securities litigator." Therefore, the Court must consider the good results obtained as a result of the attorneys' great work, but at a rate less than the $550 to $765 being paid by clients in the free market in South Florida.

Balancing these factors, the Court believes that $450 per hour is a reasonable rate in this case in the Southern District of Florida. At $450 per hour, the total compensation for 18,740 hours should be $8,433,000. The Receiver's motion states that the Receiver's lawyers have already been paid $3,876,081. Thus, the Receiver's lawyers shall be entitled to an additional award of $4,556,919 for its work through April 2009. Moreover, because the 18,740 hours worked by the law firms do not include work past April 2009, the Court will grant attorneys' fees for the work done after April 2009.

Seems like the right call to me.

There's been a lot of discussion lately about the bills submitted by receivers and trustees in bankruptcy to compensate lawyers for marshaling up assets.

David notes Vanessa Blum's excellent coverage of the recent hearing before Judge Moreno, where Roberto Martinez argued for an $11 million "enhancement" for his and KTT's work on the MBC receivership.

As reported by Vanessa, the Judge in his usual manner had something funny and charming yet witty to say:

“I needed a defibrillator,” he joked. “We’re talking about a lot of money.”

He's right, but to be fair I pulled the final fee app, which you can review here.

Roberto basically argues that his firm and KTT agreed to discount their rates back in 2004, have not sought any increases during the five years of the receivership, and did incredible work very efficiently which resulted in a big distribution to investors. Accordingly, they ask for 10 percent of what they collected as a bonus, which apparently was an option contemplated in the original fee agreements.

Michael Hanzman, who served as counsel in a related class-action case involving MBC, approves:

“If you want to attract the best and the brightest people to take these cases, you have to pay a reasonable fee,” Hanzman said. “This is not a pro bono case.”

I think the Judge's comments highlight where he is going with this.

However, I wonder whether these firms could have billed at incrementally higher rates over the last five years and possibly recouped a chunk of this bonus back through regular applications to the Court without ever garnering this kind of headline?

Indeed, consider what's going on with our friend Allen Stanford and his receivership, which is just off the ground and has accrued over $36 million in fees -- or $100,000 a day. Not good.

The Judge also referenced the Supreme Court's recent dismay over how much it costs to litigate cases nowadays, though that involved a fee-shifting statutory question not at issue here.

My own take is this is probably not the best case or the best time to make a request like this, and you definitely do not ever want to make Judge Moreno's eyes boggle if you can avoid it.

Let's see what he does with it.