Gas case attorneys to split $125 million in legal fees

By Kelly Holleran | Dec 15, 2008

CHARLESTON -- Lawyers who represented about 10,400 leasers in a class action lawsuit against NiSource Inc. and Chesapeake Energy will receive about $125 million in legal fees.

The money is about 33 percent of a $380 million settlement reached between the natural gas companies and Roane County landowners.

Roane Circuit Judge Tom Evans awarded the fees Nov. 22 because of the six years of work the lawyers performed, said Marvin Masters, lead attorney for the plaintiffs.

"There were tremendous amounts of legal work that went into investigation and discovery," he said. "It was a very complicated case involving fraud allegations. There were millions of records. This case was tried and appealed and appealed."

Four law firms –- The Masters Law Firm, Bowles Rice McDavid Graff and Love, Carey Scott and Douglas and The Segal Law Firm -- will split the money, Masters said.

The money will be divided based on the amount of work each law firm performed, Masters said.

Another law firm in Washington, D.C., will receive $200,000 for work they performed in preparing to defend against Supreme Court appeals. That money is included in the legal fees, Masters said.

Lawyers took the case on a contingency basis, Masters said. If they had lost the case, they would not have received any compensation.

"Some cases make you very much, some cases make you very little and in some cases, you get nothing," he said. "It all balances out."

After paying court costs of $1.3 million, leasers will split the remaining $126 million.

Leasers known as one-eighth leasers will receive 2.5 times their actual damages, plus interest and flat-rate leasers will receive about two-thirds of their actual damages, plus interest, Masters said.

One-eighth leasers receive one-eighth of the price for which gas sells. Flat rate leasers receive a set amount of money, no matter the price of gas.

The case should have a significant impact on landholders in West Virginia, Masters said.

Flat rate leasers were treated unfairly, and because of the case, they will be switched to one-eighth leasers, he said.

Gas companies were taking deductions out of one-eighth leasers. The lawsuit prohibited that practice, so now landholders will receive the full one-eighth of their money, Masters said.

The case began after a retired school teacher and Roane County farmer named Garrison Tawney approached lawyers with questions about amounts he was receiving from a gas company, Masters said. Other landowners joined until the case became a class action lawsuit.

A verdict last year initially awarded $94 million of past royalty, $40 million in interest, $134 million in compensatory damages and $270 million in punitive damages to landholders, Masters said.

But the gas companies reached a settlement agreeing to pay $380 million. In exchange, they agreed to drop appeals pending before the U.S. Supreme Court.

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