Hawaii high court lets lawyers keep $222M from Maui fire settlement

An attorney fee carveout capped what lawyers could charge in the $4 billion settlement awarded to victims of one of Hawaii's deadliest natural disasters.HONOLULU (CN) — A $222 million pot set aside to pay the lawyers behind Hawaii’s record wildfire settlement will stay intact, the state Supreme Court ruled three years after fire swept through Lahaina and killed 102 people.The justices upheld most of a state judge’s plan for dividing attorney fees out of the $4.037 billion settlement for Maui wildfire victims. But they struck down three provisions that blocked attorneys from appealing their fee awards.Second Circuit Judge Peter Cahill set up a tiered fee schedule which capped what attorneys can charge, and carved out the $222 million Common Benefit Fund for lawyers whose work helped the whole settlement come together. A review board was created to divide that money.Claimant Michael Bates and attorneys Anthony Ranken, Alex Edrenkin and John Thickstun challenged the order. They argued it was void from the start, because the special proceeding overseeing the Maui fire cases had ended once the individual lawsuits were dismissed.“We are not here to seek a higher fee,” their attorney, Samuel Shnider, told the justices at a September hearing. “The purpose of this appeal is, again, to address the issues of due process, of equal protection, to protect the integrity of settlements and access to justice in the next disaster.”Justice Todd Eddins wrote the court’s Wednesday opinion rejecting that argument.“The fires also brought the largest settlement in state history,” Eddins wrote. “And with it a predictable question. Who pays the lawyers, and how much?”The special proceeding never formally closed, the court found, so Cahill kept authority over the settlement. Separately, a long-standing rule called the common-fund doctrine lets a court pay legal fees out of a shared pool of money when that work benefited everyone sharing in it.The justices also rejected the claim that the fund takes money from clients to pay lawyers they never hired.“They misread the common work,” Eddins wrote, later adding: “There’s no eleventh slice. There’s a cost to baking the pie. Spread among those who eat it.”But three provisions in Cahill’s order went too far, the justices found, by penalizing attorneys for appealing their fee awards.The order had declared fund awards final and unappealable, said any appeal would cancel the award entirely and froze an appealing attorney’s future payments until the appeal was over.“Government may not condition a benefit on the surrender of a protected right,” Eddins wrote.The high court struck all three provisions, left the rest of the order intact and ordered any withheld payments released.“Striking the anti-appeal conditions does not unravel the fee order,” Eddins wrote. “It opens the rulings to review. The fund still exists, the fee schedule still stands and the board still does its job.”The justices also turned down broader constitutional claims that the fund was an illegal taking, violated due process, discriminated against out-of-state attorneys and crossed separation-of-powers lines.At the September hearing, Shnider had warned the stakes reached beyond Hawaii, pointing to a pending California case over the Eaton Fire that destroyed Altadena.“This fee order is a wolf in sheep’s clothing,” he said. Michael Lam, representing Hawaii, countered that without a coordinated process, the result “would have created chaos.”The case now returns to Cahill’s court. Attorneys challenging the review board’s awards can seek review there; attorneys seeking fees above the standard cap can pursue an ordinary appeal, in both cases without having their payments frozen.The board, chaired by retired Associate Justice James Duffy, continues reviewing applications for a share of the fund.Shnider and attorneys for the state didn’t immediately respond to a request for comment.The Aug. 8, 2023, Maui fire destroyed more than 2,000 structures in and around Lahaina. It was the deadliest U.S. wildfire in more than a century and the worst natural disaster in Hawaii’s history.Lawsuits followed against local utility Hawaiian Electric, the state, Maui County and others, leading to the largest settlement in Hawaii history, though it covered only a fraction of the $12 billion to $15 billion in damages sought by roughly 21,750 claimants.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads