With under a week left before trial, the case with his live-in companion has become settled. In the end, Manuela Herzer will pay back $3.25 million of the reportedly $75 million he bestowed on her. Sydney Holland, another female companion who reportedly received $75 million, had her own lawsuit and that case settled last year.
This has gone on since 2015. Ms. Herzer’s case alleged federal Rico claims against Redstone’s daughter where she argued that there was a conspiracy between daughter and father to remove her from the mansion and cut her out of his will. Most of that case was dismissed last year.
This is a big settlement, with big numbers and significant potential future ramifications. Control of a media empire is at issue. Ms. Herzer will no longer remain in his will. All the appeals will be discontinued. Which leads to a few questions.
How much does a matter like this cost?
Her haul is reported to be a lot of gifts, including $45 million in stock options, a home worth about a cool $2 million, almost $10 million in home repairs, and items purchased while shopping. She was in for about $70 million or so after 3 1/2 years of litigation. If her lawyers took the case on a contingency, she may have netted 2/3rds, after expenses. That would be about $47 million to her, and $23 million to her counsel.
That seems like a high fee for three and a half years of work. If a lawyer worked full time on the case for a year at $800 per hour, the annual billing before paying overhead could be $1.6 million. For 3 1/2 years that would be $5.6 million in gross fees, assuming full time work on the case all day, every day. The contingency arrangement looks pretty good for the lawyer here. Clearly there was risk in the case and the certainty of a stiff fight among a lot of family members and others.
The reported terms of the settlement are that each side pays their own respective legal fees. A source for the media (unnamed but reportedly close to the case) has stated that the legal fees are ten to twelve million dollars – for each side in the case. Is that reasonable?
In New York that is the standard – is the fee reasonable? In much estate and trust litigation in New York, the fees are subject to the review of the court if they are paid from the estate or trust. The court’s authority is ordinarily modernly derived from Matter of Stortecky v. Mazzone, 85 NY2d 518 (1995). That case stands for the proposition that the judge most always has the power and authority to review the fees.
Another leading case in New York is Matter of Potts, 213 AD 59 (4th Dept. 1925). These two long standing and often cited cases essentially distill down to several factors: the time spent, the difficulties involved in the matters in which the services were rendered, the nature of the services, the amount involved, the professional standing of the counsel, and the results obtained.
In this case, the factors could probably be satisfied.
These types of cases are often costly based on the factual detail and nuances involved in the proof of the transactions that are the subject of the case. The cases are also often costly because they require the testimony of expert witnesses. For example, doctors charge by the hour to review the medical records, offer opinions, provide their time consulting on the case and ultimately, giving up a day practicing medicine to testify in a court room. They charge for the lost opportunity. A day in court with a credible doctor in New York can cost $10,000, for the day. Most require payment of all expenses and the payments are often required to be made up front with a non-refundable policy.
Economists, and accountants are often called as witnesses as well.
