Attorneys Drop Fees in Shareholder Case Alleging Backdating

04/03/2009

Attorneys Drop Fees in Shareholder Case Alleging Backdating
The National Law Journal

The plaintiffs’ lawyers in a shareholder derivative suit involving allegations of stock options backdating against Cirrus Logic Inc. have agreed, in a revised deal filed this month, to drop all attorneys’ fees, which the judge in the case had described as "almost entirely unmerited."

The revised deal, approved on March 25, comes as judges in derivative actions involving the backdating of stock options have questioned the amount of attorneys’ fees in cases involving noncash settlements. Last year, a federal judge in California initially rejected a settlement for similar reasons in a backdating case involving Zoran Corp.

"Judges are understandably concerned in these types of cases when the suit is brought on behalf of the company but, at the end of the day, there doesn't seem to be any tangible benefits flowing to the company, who is the client of the plaintiff's attorneys, and all the money seems to be flowing to the attorneys themselves," says Lawrence Gaydos, a partner in Haynes and Boone in Dallas who represents one of the individual defendants in In Re: Cirrus Logic Inc.

Article excerpted from National Law Journal.

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