Lawmaker says attorney fees in Ike settlements excessive

Marilyn Tennissen Feb. 24, 2011, 3:17am


The fees paid to lawyers for Hurricane Ike litigation were excessive, said a Texas lawmaker at a meeting of the Texas House Insurance Committee on Tuesday.

State Rep. Larry Taylor (R-Friendswood), co-chairman of the Joint Windstorm Insurance Legislative Oversight Board, faced off with Jim Oliver, general manager of the Texas Windstorm Association, over the more than $95,000 paid to plaintiff and defense attorneys in Hurricane Ike settlements.

Taylor filed an open records request in September 2010 to find out the details of the settlement between TWIA and a group of homeowners over slab claims — cases in which the only thing left of the houses following Hurricane Ike were the slabs they were built on.

The Southeast Texas Record, Texans for Lawsuit Reform and others also pursued open records requests from TWIA.

TWIA, the state-backed insurer of last resort for wind and hail along the Texas coast, has paid insured losses of $1.85 billion from Ike claims. The number of TWIA claims from Ike had risen to 92,800 and 4,800 lawsuits had been filed. More than half of those lawsuits have been settled, according to an article in Insurance Journal.

Steven Mostyn, the lead attorney for plaintiffs in the class action, fought the request, asserting the settlement information was confidential and suggesting that Taylor was over-stepping his authority as a state representative in requesting information about a confidential settlement.

TWIA released the information at the end of 2010, but Taylor said through months of court proceedings he was "personally and professionally and legislatively" harassed.

According to the Lone Star Report, on Tuesday Oliver openly criticized Taylor for sending his letter requesting the records to others before sending it to him. He said if Taylor had called him first he would have gotten the records to him immediately before any trial lawyers or anyone else could have objected. He said he never had any intention of hiding the slab settlement information from Taylor.

Taylor said he was "appalled" by the amounts paid to attorneys in the class action.
"For 1,300 claims, the attorneys received 67 percent over and above what claimants got," he said. "In other words if there was a $100,000 claim, they would inflate the claim to $167,000." The claimant would get the $100,000 but the lead attorneys would walk away with $67,000. 

Another "1,250 claimants that didn't have attorneys were brought into the class," he said. "They had seven law firms represent that group. In that part of the settlement [the attorneys] received a legal fee of 20 percent, which is more in line with the norm in class actions."

Although they had some differences on how to calculate what percentage of the total claims the attorneys made in fees, Taylor and Oliver agreed that the fees were excessive.

Taylor said claims are still being filed with TWIA from Hurricane Ike. Not only are new claims still coming in, Taylor said, but old claims are being resurrected by creative plaintiff attorneys who are opening them up and filing new lawsuits.

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