Lawyers win big in $787.5 million Fox defamation case

By Andrew Goudsward

(Reuters) – The $787.5 million settlement that ended Dominion Voting Systems’ defamation lawsuit against Fox Corp also marks the end of a lucrative, two-year legal battle for the sprawling teams of highly-paid lawyers on both sides.

At least 31 lawyers from nine different law firms worked on the case, court filings show.

Dominion said Fox News broadcast false claims that the company’s voting machines were involved in a conspiracy to rig the 2020 U.S. presidential election, and won one of the biggest settlements paid in a defamation lawsuit.

Delaware Superior Court Judge Eric Davis complimented the legal teams in court after Tuesday’s settlement, saying he had not seen “as good of lawyering” in 13 years on the bench.

Law firm Susman Godfrey, one of two firms that represented Dominion in the case, was hired on a contingency, or success-fee, basis, according to a source familiar with the fee arrangement.

The firm gave Dominion a “substantial discount” because it viewed the case as pursuing accountability for election falsehoods, the source said.

It was not immediately clear how large a share of the settlement the firm would receive in legal fees. A spokesperson for Dominion declined to comment.

Dominion accumulated about $12.2 million in out-of-pocket legal costs just from November 2020 through October 2022, according to court filings, which listed law firms and legal consulting companies retained by Dominion. The filings do not include recent costs associated with preparing for trial or the success fees lawyers could earn from the settlement.

LUCRATIVE SUCCESS FEES

Susman Godfrey helped pioneer the use of contingency fees in business litigation, a model more common for plaintiffs in personal-injury lawsuits. Such arrangements, advertised on Susman’s website, have included fees as high as one-third of a settlement in prior cases.

Partners at large corporate law firms like those representing Fox, meanwhile, sometimes bill more than $2,000 per hour, filings in other cases have shown.

Winston & Strawn and DLA Piper, which represented Fox News and parent company Fox Corp, respectively, each fielded teams led by two partners and multiple associates, court filings show. The Winston & Strawn team was headed by Dan Webb, a top trial lawyer who represented Beef Products Inc in a closely watched defamation case against ABC News that settled in 2017 for at least $177 million.

Fox News also hired Paul Clement and Erin Murphy, top appeals court lawyers who have advocated for conservative causes at the U.S. Supreme Court.

The lawyers on the Fox team did not respond to requests for comment.

Dominion’s lead lawyers at Houston-founded Susman Godfrey included partners Justin Nelson, Stephen Shackelford and Davida Brook. The company also hired Clare Locke, a firm specializing in defamation cases that represented former Alaska Gov. Sarah Palin in a libel lawsuit against The New York Times.

“We recognized right away just how momentous an issue this was, not only for Dominion, but for the entire country and the integrity of elections,” Clare Locke partner Tom Clare told Reuters.

Clare would not discuss legal fees, but said his firm’s small size allows it to be “flexible” in structuring agreements with clients.

Past examples of contingency fee arrangements show how lucrative they can be if a case is successful.

Susman Godfrey and another plaintiffs’ firm earned about $106 million in 2018 under a contingency fee arrangement in a class action that secured $590 million in combined settlements with major banks accused of manipulating the Libor benchmark interest rate, according to court documents.

Last year, the firm took in one-third of the cash component of a $92.5 million class action settlement to resolve allegations that Voya Retirement Insurance and Annuity Company breached its contract with tens of thousands of life insurance policyholders, court records show.

Staple Street Capital Group LLC, the small buyout firm that owns Dominion is also set to receive a major windfall from the settlement.