Opinion ID: 6342044
Heading Depth: 3
Heading Rank: 2

Heading: Other Risk Factors

Text: Several other risk factors also weigh in favor of reconsidering the award. For one, class counsel points to the fact that no other ﬁrm ﬁled a securities fraud case against Stericycle as evidence of the litigation’s high risk. It is true that a lack of interest from other ﬁrms “suggests that most members of the securities bar saw [the] litigation as too risky for their practices.” Silverman, 739 F.3d at 958. In this case, however, a Minnesota pension fund initially moved for appointment as lead plaintiﬀ. The fund asked the court to designate another experienced securities ﬁrm, Berman DeValerio, as lead counsel. So this was not a case where “no other law ﬁrm was willing to serve as lead counsel.” Id. In addition, class counsel rely on Stericycle’s reporting only $52 million in available cash at the time of the settlement as further evidence that there was a signiﬁcant risk of nonpayment. But the analysis should be based on the risk that existed when the litigation began—not at the time of settlement. See Birchmeier, 896 F.3d at 796–97 (“When awarding fees to class counsel, district courts must approximate the fees that the lawyers and their clients would have agreed to at the outset of the litigation given the suit’s risks….”). 18 No. 20-2055 Finally, class counsel did not present any expert testimony to the district court about the magnitude of the risk they faced. While such evidence is not required, it can be useful to a district court that is attempting to estimate the ex ante risk of the litigation. See, e.g., Silverman, 739 F.3d at 958 (observing that expert report characterized case as “unusually risky” and that defendant “might well have prevailed on summary judgment but for some unanticipated facts plaintiﬀs’ lawyers turned up in discovery”); Hale v. State Farm Mutual Automobile Insurance Co., No. 12-0660, 2018 WL 6606079, at  (S.D. Ill. Dec. 16, 2018) (noting that class counsel “were not assisted by any governmental investigations or prosecution” and that three class action fee experts “all opined that this case was as risky as they come”); Aranda, 2017 WL 1369741, at –4 (relying in part on plaintiﬀs’ expert testimony about value generated by counsel in concluding that unique circumstances of case merited higher-than-average fee award).