Wilmington, DE – The Delaware Court of Chancery has approved a $7.5 million attorney fee for class counsel in connection with a $50 million Lutnick bonus dispute involving former Newmark Group Inc. controller and current Commerce Secretary Howard Lutnick. The award, granted by Vice Chancellor Bonnie W. David, reduces the attorneys’ originally requested 25% fee to 15%.
The settlement fully offsets a disputed bonus paid in 2021 and marks a notable resolution in one of Delaware’s high-profile derivative cases. The court also approved a $15,000 incentive award for lead plaintiff Cardinal Capital Management LLC.
“The settlement delivers a 100% recovery of the plaintiff’s best claim, though not all damages initially pled,” Vice Chancellor David stated. The case also involved claims for recovery of $146 million from an accelerated exchange of partnership units held by Newmark management.
Counsel for the plaintiffs, Randall J. Baron of Robbins Geller Rudman & Dowd and colleagues at Cooch and Taylor PA, emphasized that the $50 million cash settlement represents a complete recovery of the core wrongdoing. “As far as we understand, it’s the only 100% recovery in Delaware history,” Baron said.
Kevin R. Shannon of Potter Anderson & Corroon LLP, representing Newmark, noted that while the $50 million benefit was secured, the central issue remained determining the appropriate portion of the benefit allocated to plaintiff’s counsel. The Chancery Court’s decision reflects established Delaware precedents, which tie attorney fee percentages to the stage of litigation.
The case, filed in 2022, saw limited discovery, including a single deposition before expert analysis. The court acknowledged that while more extensive discovery might produce larger settlements, pursuing depositions solely to inflate fee percentages is inefficient litigation.
The lawsuit alleged that Lutnick, Newmark’s controlling shareholder and principal executive, influenced board members to approve the bonus despite dedicating only 33% of his professional time to the company.
The case, In re: Newmark Group Inc. Derivative Litigation, Case No. 2022-0687, continues to underscore the Chancery Court’s role in balancing shareholder recovery with reasonable attorney compensation in derivative actions.
