Two US Law Firms Stand to Earn Hundreds of Millions from $2.7 Billion NCAA Settlement

Two prominent US law firms stand to earn hundreds of millions of pounds after negotiating a $2.7 billion settlement with the National Collegiate Athletic Association (NCAA), which will allow student athletes to receive payments for the first time.

However, they must first convince a judge to approve the landmark deal and the unconventional, multi-faceted fee structure they have proposed.

The firms have until Friday to address objections from student groups regarding the July settlement, and further litigation is anticipated once they provide additional details about their fee request.

The settlement aims to resolve antitrust lawsuits concerning the NCAA's long-standing prohibitions on payments to athletes. This includes restrictions on compensation related to competing, the commercial use of players' names, images, and likenesses, and payments tied to athletes' academic achievements.

The firms leading the litigation, Hagens Berman Sobol Shapiro and Winston & Strawn, have informed US District Judge Claudia Wilken in Oakland, California, that the settlement's total value exceeds $20 billion, primarily based on the future earnings of student athletes.

The firms' share of these future payments could significantly impact their earnings, potentially adding $200 million or more to their fees.

The Fees

The plaintiffs' lawyers, led by Steve Berman of Hagens Berman and Winston's Jeffrey Kessler, have stated in court documents that they have invested over 72,000 hours into the cases since 2020.

Initially, they will request a $20 million upfront payment for their work, to be divided equally between the firms, according to Berman.

Additionally, they plan to seek up to $495.2 million, based on a percentage of the settlement funds the NCAA has agreed to pay over the next decade.

This includes 20 per cent of $1.976 billion allocated for college athletes who were previously denied compensation for the use of their names, images, and likenesses, as well as for their athletic service.

A unique aspect of their fee request is the potential for the lawyers to claim an annual percentage of the compensation that schools will now be permitted to pay student athletes, ranging from 0.75 per cent to 1.25 per cent of the NCAA schools' sporting revenues over ten years.

This pool is estimated to be worth around $20 billion over the decade, potentially leading to legal fees as high as $250 million.

Both Berman and Kessler have defended these ongoing fees as reasonable given the settlement's scale and historic significance.

"Frankly, I think it is an extremely modest request considering the case law and the value to the class," Kessler remarked. He noted that each annual fee would require court approval.

An NCAA spokesperson did not immediately respond to requests for comment on the fees. Last month, the organisation stated that the settlement offered a sustainable path to enhanced benefits for student athletes.

Regarding the fee provisions, Berman emphasised their focus on addressing the objections and securing the judge’s preliminary approval for the settlement. "My parents always taught me not to count your chickens before they hatch," Berman said in an email.

One group challenging the proposed NCAA settlement has argued that the deal favours male athletes. They also objected to the $20 million upfront fee request, describing it as a "classic 'clear sailing provision' that raises questions about what the class counsel might have conceded to secure it."

The MoloLamken attorneys who filed the objection did not immediately respond to requests for comment. Other objections claim the settlement would unfairly shield the NCAA from separate antitrust lawsuits.

Kessler dismissed the objection to the $20 million fee as "insulting," asserting it was only negotiated after all other settlement terms had been agreed upon. "We stand by our record for what we’ve done for athletes," he added.

Other Legal Fee News

The Delaware Supreme Court upheld a $267 million fee award for five law firms that secured a $1 billion settlement for Dell Technologies shareholders.

The court determined that this near-record award was not an improper windfall for the firms representing the plaintiffs: Labaton Sucharow; Quinn Emanuel Urquhart & Sullivan; Andrews & Springer; Robbins Geller Rudman & Dowd; and Friedman Oster & Tejtel.

Attorneys negotiating a proposed settlement with seafood giant StarKist, its parent Dongwon Industries and private equity firm Lion Capital have announced they will seek just over $50 million in legal fees.

This proposed fee award for the law firm Wolf Haldenstein Adler Freeman & Herz accounts for two class action settlements: Tuesday's proposed $136 million deal and a 2022 settlement with Chicken of the Sea and its parent Thai Union Group, worth $16 million.

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