Levi & Korsinsky Sues Shuman, Glenn & Stecker for Settlement Fee

Levi & Korsinsky LLP sued Shuman, Glenn & Stecker on Friday, claiming it’s wrongly pocketing 75% of a $2.3 million haul the two law firms won representing Clovis Oncology Inc. investors, in breach of an agreement to split the legal fees down the middle.

The lawsuit in Delaware’s Chancery Court stems from a shareholder derivative case on behalf of Clovis investors that ended earlier this year with a noncash settlement calling for the biotech company to adopt a series of corporate governance reforms and oversight measures.

The investor suit, filed in 2017, accused Clovis senior leaders of hyping an experimental lung cancer drug while making insider trades at prices inflated by their scheme. The board deliberately ignored red flags indicating that trials of the drug candidate, Roci, weren’t following proper protocols, the suit said.

The settlement, first disclosed in March, gave the Clovis investors credit for pressuring the company into reforming its oversight practices. The agreement gave the two law firms, plus a local Delaware firm, a combined $2.3 million.

But rather than handing over half of the $2 million award—after taking certain expenses off the top, including a fee for Delaware counsel—leaders of the Shuman firm kept roughly $1.5 million, according to the complaint.

They allegedly claimed to have put more time into the case, making adjustments based on a “lodestar” multiplier. That’s a breach of the agreement specifying that the two firms would each get half of the settlement fees, not that their shares would be prorated, the suit says.

Representatives of the Shuman firm didn’t immediately respond to a request for comment Friday.

Cause of Action: Breach of contract.

Relief: Specific performance or more than $499,000 in damages; costs, fees, and interest.

Attorneys: Levi & Korsinsky is represented by Halloran Farkas & Kittila LLP.

The case is Levi & Kosinsky LLP v. Shuman Law Firm, Del. Ch., No. 2022-0928, complaint filed 10/14/22.