Sheppard Mullin Partner Is Running Circles Around Quinn Emanuel

Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at Sheppard Mullin’s effort to be paid $1.6 million by Quinn Emanuel. Sign up for Business & Practice, a free morning newsletter from Bloomberg Law.

Sheppard Mullin partner Moe Keshavarzi has racked up a series of wins worth more than $100 million for health insurers challenging how much they should have to pay Quinn Emanuel. Now he wants the firm to pay him more than $1.6 million for all his work chopping its fees.

Keshavarzi, a healthcare litigator based in Southern California, represents a group of insurers in a yearslong battle to lower the $185 million fee Quinn Emanuel received from the insurers’ winnings in a class action against the federal government.

For his final act in the case, Keshavarzi wants Quinn Emanuel to pay his fees for time he has spent fighting the firm. A court ruling in his favor this week brought him one step away from a complete sweep against one of the country’s top litigation firms.

The dispute highlights a tension that always exists in class actions, where judges decide legal fees. The class members pay lawyers out of the awards they win. But what happens when the clients are unhappy about how much of their award goes to their lawyers?

In this case, the answer is a drawn-out dispute that has grown bitter, and dulled the shine of a $12 billion win for insurers who argued the federal government owed them Obamacare payments. Some of the clients Quinn Emanuel represented hired Sheppard Mullin, which is now rebuking the firm for what it characterizes as an unnecessarily aggressive approach to getting paid.

The episode also highlights the litigation chops at Sheppard Mullin, a firm that has heavily invested in trial lawyers in recent years with a particular focus on the healthcare industry. Keshavarzi has taken on Quinn Emanuel, which is representing itself, and largely won so far.

The underlying case, which we’ve covered many times, has been going on since 2016. The Supreme Court in 2020 ruled the US must repay the insurers roughly $12 billion in “risk corridor” fees under the Affordable Care Act.

Quinn Emanuel’s clients earned nearly $4 billion in repayments. A judge awarded the firm a 5% cut in 2021, amounting to nearly $185 million.

That’s where Keshavarzi stepped in. He represents a group of Quinn clients, primarily health insurance plans offered by Kaiser Permanente and UnitedHealth. They say the firm asked a judge to pay it more than it initially sought when signing up clients for the case.

An appeals court sided with the companies, sending the case back to the district court, which in 2024 slashed the fee in half. The vast majority of the money Quinn had to return came from its own insurers: the firm purchased a judgment preservation policy protecting its fee.

Keshavarzi wasn’t finished.

He then argued that Quinn Emanuel owed interest on the portion of the fee it couldn’t keep. The firm was ultimately forced to pay $10 million in interest in June last year.

Now, Keshavarzi wants a judge to force Quinn Emanuel to pay his firm’s fees for its work clawing back the cash. His request represents about 1.6% of the more than $100 million he’s won for the insurers.

Keshavarzi declined to comment. A Quinn Emanuel lawyer said the firm would respond to Keshavarzi’s fee motion in court.

It’s rare for lawyers in Keshavarzi’s position, known as objector’s counsel, to seek fees from the class’ lawyers, said John O’Connor, a San Francisco-based lawyer who handles attorney fee disputes.

But it’s also rare that a group of objectors represent such a large portion of the class, he said. The insurers who objected to Quinn’s fees represent 43% of the class, according to court filings. That gives them more incentive to seek payment for their lawyers’ fees from their class counsel, O’Connor said.

“Bully for Sheppard Mullin if they can do this,” he said. “This is normally something you get out of the class fund, but they have shown some exceptions to the rule. So it is within the sound discretion of the court.”

The request seems to be borne, at least in part, out of Sheppard Mullin’s frustration with Quinn Emanuel’s actions throughout the fee fight. “None of [the] expense would have been incurred” if Quinn Emanuel had stuck to its original promises, Keshavarzi wrote in his latest motion.

“At this juncture it would be more surprising if Class Counsel (Quinn Emanuel) didn’t force Objectors to incur additional unnecessary fees to seek leave to file a motion Class Counsel knows Objectors can file,” Keshavarzi wrote in September. It’s the very first sentence in a motion asking the court to allow him to file a fee request.

Quinn Emanuel lawyers earlier told the judge they were “shocked” at Keshavarzi’s “threat” to be paid by the firm, calling it “extortionate.” The lawyers said Keshavarzi had offered not to challenge a different fee request by the firm in exchange for the firm paying his fee. In their responsive legal filings, they unsuccessfully argued Sheppard Mullin’s request for fees was made too late.

Quinn Emanuel did secure one victory this week.

US Court of Federal Claims Judge Kathryn Davis ruled Keshavarzi’s fee request is limited to Quinn Emanuel, not the award received by the class members. That opens the door for Quinn to argue that the request be denied because any fee Keshavarzi is awarded should be paid by the class members.

“We appreciate Judge Davis’s thoughtful decision and plan to address Objectors’ fee motion on the merits,” Quinn Emanuel partner Adam Wolfson said in a statement to Bloomberg Law. “There is a notable irony to the Objectors’ allegations about us, which we will address in our papers.”

Worth Your Time

On Law Firm-Trump Deals: The Trump administration made an abrupt about-face this week after initially saying it would drop its appeals of rulings finding executive orders targeting law firms illegal. The administration now wants to pursue those appeals, Meghan Tribe reports.

On Government Lawyers: The federal government is launching a recruiting program for lawyers after losing a net of more than 7,000 lawyers last year, Chris Marr reports.

On Bar Complaints: Attorney General Pam Bondi wants the Justice Department to have the power to suspend state bar ethics investigations into current and former DOJ lawyers, Ben Penn reports.

That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.