Success in Swiss banks case overshadowed by lawyers fee

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new york | The success of a landmark $1.25 billion settlement for Holocaust victims risks devolving into a bitter public spat over the fee an attorney is charging on the case.

A ruling is expected any day on whether Burt Neuborne, the New York University law professor who served as lead settlement counsel for survivors in the Swiss bank case, should be paid $4.76 million for his efforts.

Neuborne worked pro bono in winning the original settlement, but he’s seeking payment for seven subsequent years of work representing hundreds of thousands of claimants during the complex process of disbursing the funds.

Holocaust survivors involved in the case say Neuborne never disclosed his intention to seek remuneration and were shocked to learn he was asking for a multimillion-dollar fee.

“It is, to me, an outrageous thing,” said Roman Kent, chairman of the American Gathering of Jewish Holocaust survivors and a member of the committee that negotiated a similar settlement with German corporations and government in the 1990s. “I can only tell you that as far as I’m concerned, he never told me that he’s going to get paid for the work. He told me on numerous occasions that he is working pro bono.” 

Survivors were further outraged last week when the Anti-Defamation League gave Neuborne its American Heritage Award in recognition of his work promoting human rights and democratic ideals. 

“There was a time when we all thought of the ADL as a paragon of justice and honor,” a group of survivors wrote to the ADL’s national director, Abraham Foxman. “Most of us and many other survivors have supported ADL financially and with our work in the community. Your disrespect for us and our martyred loved ones will tarnish this organization forever.”

Foxman responded by acknowledging the complaint “from the heart and as a Holocaust survivor” but stood his ground, saying the controversy “does not detract from our honoring Burt Neuborne.”

In a written statement provided to JTA, Neuborne says he always intended to seek compensation. “I disclosed my post-settlement fee arrangement to the German Holocaust Foundation, the U.S. Supreme Court and the parties in open court,” he wrote. 

Several lawyers who worked on the case support that position, saying it was well understood that Neuborne’s post-settlement work was not free. 

Michael Hausfeld, a lawyer who worked on behalf of survivors on the case, says there was no “technical disclosure” but that Neuborne’s intentions were well understood.

“Burt never said in any public filing, ‘From here on in, I’m going to be calculating a fee,'” Hausfeld said. “But everybody understood who remained involved in the case that Burt’s work would have to be compensated.” 

Apparently not. Several survivors, lawyers and community professionals connected to the case told JTA that Neuborne had every opportunity to inform them he was seeking payment for post-settlement work, but did not do so. 

In a number of court papers, Neuborne refers to the fact that he worked on the case without fees; Neuborne says those statements are being misconstrued. 

Thane Rosenbaum, a Fordham University law professor and author of a book on the moral basis of restitution claims, says such ambuguity is precisely the problem. 

“This isn’t some mom-and-pop local magistrate in upstate New York. This is federal court in Brooklyn,” Rosenbaum said. “This is a lawsuit with international implications, precedent-making. There’s going to be books and articles written about it. How can there not be technical disclosure?”

The question of attorney fees is not the first controversy to hit the case, in which Swiss banks were accused of hiding Holocaust-era bank accounts belonging to Jews. 

A group of American survivors filed an appeal to block a plan to send a large percentage of the settlement funds, earmarked for needy survivors, to survivors in Europe and the former Soviet Union. The presiding judge, Edward Korman, rejected that appeal, a decision Neuborne supported.  

“I feel he betrayed us,” said David Mermelstein, 77, a survivor from Miami who participated in the appeal. “He was supposed to have been our representative and it turned out he betrayed us.”

Neuborne calls that charge “so incredibly unfair,” arguing that survivors in the former Soviet Union had as much claim on his services as those in the United States. He says he turned his life “upside down” working on the case, even persuading Congress to make the settlement money tax-free, which saved more than enough to cover his fee. 

He notes that his fee, if spread across the several hundred thousand survivors who received compensation, amounts to only about $10 a head. And, he says, he successfully defended every legal challenge to the settlement. 

“Everybody forgets that for 10 years I worked unremittingly,” Neuborne said. “There wouldn’t be any money if it weren’t for me.”

Kent says that’s nonsense. 

“When the lawyers say, ‘We did everything,’ yes, they were helpful. But it was a moral and ethical issue that would have been settled with or without the lawyers,” he said.

For some, the disclosure issue only partly explains the reaction. The fact that Neuborne calculated his fee at $700 an hour — a rate that corporate attorneys might charge for work on behalf of major companies — after having already earned more than $4 million for work on the German claims case appeared to them to be the height of greed.

“Putting aside the legalities involved, Professor Neuborne wants to walk away from his involvement with Holocaust-related cases on behalf of survivors as a very rich man,” said Menachem Rosensaft, a lawyer and founding chairman of the International Network of Children of Jewish Holocaust Survivors. “He wants to have enriched himself to the tune of more than $9 million for his work. That, to me, is not just unseemly, it is obscene.”

The controversy over Neuborne’s compensation has built since he filed his fee application in U.S. District Court in Brooklyn last December. In June, the New York Times editorial board slammed Neuborne, calling his bill “troubling” and “unseemly.”

Neuborne says he has no quarrel with those who question the size of his fee, but is stung by accusations that he’s profiteering from the suffering of Holocaust survivors, tarnishing what he calls “the proudest achievement of my career.”

“It’s painful to think that Holocaust survivors who I wanted to help, at the end of this process, have a negative view of me. I just hate that idea.’

Ben Harris

Ben Harris is a JTA correspondent.