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Quinn Emanuel disclosure order highlights relatively new product: judgment preservation insurance

By Debra Cassens Weiss

January 31, 2024, 3:39 pm CST

Quinn Emanuel Urquhart & Sullivan must disclose terms of judgment preservation insurance that it allegedly bought before distributing a $185 million fee award to partners, according to a U.S. Court of Federal Claims judge.

In a Jan. 30 opinion, U.S. Federal Claims Judge Kathryn C. Davis ordered Quinn Emanuel to disclose the policy document but denied a request for an accounting and safekeeping of the funds, report Reuters and Bloomberg Law.

A group of health insurers that objected to the legal fee had sought the information.

Davis ruled after the U.S. Court of Appeals for the Federal Circuit vacated the $185 million award because she failed to properly conduct a “lodestar cross-check” that considers hours worked, billing rates and a risk multiplier to compensate for the risk of no or reduced recovery. The appeals court said the fee award had an implicit multiplier that was “outside the mainstream” and ordered Davis to reassess the amount.

The award translated to an hourly fee of about $18,500, according to previous coverage of the case.

Bloomberg Law called judgment preservation insurance “a relatively new area of litigation finance” that is becoming more popular. Typically, it is used to preserve some portion of large awards from being overturned on appeal, but details of such polices are mostly under wraps.

A Bloomberg Law article written by an outside contributor described judgment preservation insurance, known as JPL, as “appellate risk insurance.” The insurance can be obtained by a party or a litigation funder, and it kicks in after a judgment is final with no further possibility for appeal.

“It may insure all of the judgment, or it may be targeted at a specific legal issue that is challenged on appeal, such as attorneys’ fees or statutory damages,” the contributed article reports.

Davis said she was ordering the policy disclosure in the interest of transparency. She also said the policy terms would be relevant on remand “if the policy provisions are inconsistent with the court’s objective ‘to ensure an overall fee that is fair for counsel and equitable within the class.’”

Quinn Emanuel received the $185 million fee award in its representation of two classes of health plan insurers in litigation under the Affordable Care Act. The insurers said the federal government did not abide by its promise to pay them for losses incurred for the first three years of participation in the law’s insurance marketplace. The litigation settled for $3.7 billion, and the $185 million represented 5% of the award.

The case is Health Republic Insurance Co. v. United States.