NY Laywer Famed for Holocaust Suits
Disbarred for Not Paying Sanctions, Fees

By Noeleen G. Walder
New York Law Journal
New York Lawyer
December 12, 2008

An attorney well known for representing Holocaust survivors has been disbarred after he neglected to pay sanctions imposed by a federal judge in a multi-billion-dollar lawsuit against Bank Austria Creditanstalt AG and other entities.

In an August 2005 decision excoriating Edward Davis Fagan, Southern District Judge Shirley Wohl Kram fined the lawyer for having a financial interest in the outcome of the $6.8 billion action and trying to circumvent a $40 million payment made by Bank Austria to Holocaust survivors and their heirs. Several months later, the judge denied Mr. Fagan's bid to reargue Association of Holocaust Victims for Restitution of Artwork & Masterpieces, a/k/a "AHVRAM" v. Bank Austria Creditanstalt, No. 04 Civ. 3600, and ordered the attorney to pay Bank Austria nearly $350,000 in attorney's fees.

Yesterday, in Matter of Edward D. Fagan, M-2732, M-3148, M-3193, a unanimous panel of the Appellate Division, First Department, held that Mr. Fagan's failure to pay the bulk of the $5,000 sanction and all of the money owed to Bank Austria, his "pattern of prior sanctions for unprofessional conduct" and his "lack of contrition" made him unfit to practice law.

In addition to the money Mr. Fagan owes as a result of the case before Judge Kram, he has failed to pay more than $20,000 in sanctions and fees imposed by three other federal judges, the panel said.

Mr. Fagan said in an interview yesterday that he plans to immediately move for a rehearing and reargument and will take the case to the Court of Appeals, if necessary.

Mr. Fagan claimed that he had new evidence that Bank Austria and its counsel, Charles G. Moerdler of Stroock & Stroock & Lavan, had lied to Judge Kram. Among other things, he said, they "failed to fully disclose" that two stipulations made subsequent to the settlement with Bank Austria permitted him to go forward with his suit.

Mr. Moerdler vehemently denied making any misrepresentations to the court.

"Mr. Fagan simply has no grasp of the truth," Mr. Moerdler said yesterday.

In an Oct. 8 order, Judge Kram permitted Mr. Fagan to file a motion for reconsideration of her prior rulings.

Mr. Fagan, who began his career as a personal injury attorney, gained fame in the mid-1990s as the first attorney to sue the German, Swiss, and Austrian banks for allegedly stealing money from Holocaust victims.

According to Mr. Moerdler, Mr. Fagan obtained several million dollars in attorney's fees from the suits.

In 2004, Mr. Fagan filed a $6.8 billion suit accusing a number of corporations, governmental entities and financial institutions, including Bank Austria, of stealing and selling artwork looted during the Holocaust.

In August 2005, Judge Kram dismissed the action, which she said was "little more than an end run around" an earlier class action settlement agreement reached in In Re Austrian and German Bank Litig., 80 F. Supp. 2d 164.

In addition to filing "glaringly inadequate pleadings," misleading the court about the scope of the prior settlement, and falsely claiming that he was a member of a plaintiff organization that did not exist, Judge Kram held that Mr. Fagan had committed champerty by having a financial stake in the artwork of which he accused Bank Austria of stealing.

The judge fined Mr. Fagan $5,000 and ordered him to pay all of Bank Austria's litigation fees in connection with the suit.

On Nov. 17, 2005, Judge Kram refused to stay the judgment or reconsider her August decision, and directed Mr. Fagan to pay his fine "without delay" or post bond. Citing his "careless abdication of his duties as a lawyer," she also concluded that Mr. Fagan owed $345,520 in attorney's fees to Bank Austria.

On April 2, 2007, after granting the disciplinary committee's unchallenged petition giving collateral estoppel effect to Judge Kram's findings, the First Department held that Mr. Fagan had violated a number of disciplinary rules prohibiting an attorney from disregarding a court's rulings, engaging in conduct involving dishonesty, fraud, misrepresentation or deceit, and acquiring a proprietary interest in the subject of the litigation.

In hearings before the disciplinary committee, the committee contended that Mr. Fagan had never paid the $5,000 sanction or attorney's fees to Bank Austria. The committee also cited four prior instances since 1994 in which Mr. Fagan had been either reprimanded or sanctioned for misconduct.

Most recently, in August 2007, Southern District Judge Shira Scheindlin disqualified Mr. Fagan from representing plaintiffs in a suit brought by relatives of six Americans who died in a ski train fire in Kaprun, Austria. After noting that Mr. Fagan, who had filed for personal bankruptcy, had a personal interest in the litigation's outcome and made false representations to the court, Judge Sheindlin slapped the attorney with a $5,000 fine.

Mr. Fagan argued that two of the sanction rulings cited by the disciplinary committee were being appealed.
While he admitted to the hearing panel that he had only paid $250 of the $5,000 fine and none of Bank Austria's fees, he characterized his failure to comply with the judge's orders as "procedural violations."

According to the decision, Mr. Fagan said he could not afford to pay the sanction and blamed his conduct before Judge Kram on a difficult divorce. He said he should not have taken on the $6.8 billion action because he already was saddled with a heavy case load, but feared that the litigation would be compromised if he relinquished control of the matter, the panel noted.

Despite asking for and receiving more than one extension from the disciplinary committee to bolster his case, Mr. Fagan failed to submit a brief on mitigation or new evidentiary materials.

On May 14, the hearing panel found Mr. Fagan's "sparse" mitigation evidence "insufficient to overcome the seriousness of his violations and the overwhelming aggravating evidence" and recommended that Mr. Fagan be disbarred.

The First Department agreed.

Mr. Fagan "knew that the plaintiff AHVRAM did not exist and that the relief he sought had already been obtained by settlement in another action," the panel held.

"In light of the significant aggravating factors, including respondent's pattern of prior sanctions for unprofessional conduct . . . his failure to pay sanctions and fees imposed, and lack of contrition or acknowledgment of wrongdoing . . . and the absence of little if any mitigation, respondent is unfit to practice law," the panel concluded.

Mr. Moerdler said yesterday, "It is always sad and tragic when a lawyer is disbarred." In Mr. Fagan's case, "it is even more so because there was a time when he was a serious champion of Holocaust victims and he was a person who helped start the proceeding to try and recover the . . . property that Holocaust victims lost. Thereafter, he seems to have gone off the rails and that's really too bad."

In response to Mr. Fagan's recent motion for reconsideration, Bank Austria has requested that further sanctions be imposed against him, and asked the court to enjoin him from filing any more claims that are precluded by the Bank Austria settlement.

Justices Angela M. Mazzarelli, Richard T. Andrias, John W. Sweeny Jr., James M. McGuire, and Dianne T. Renwick sat on the panel.

Dispute Over NY Professor's
 $3 Million Holocaust Fee Continue

By Tom Perrotta
New York Law Journal
New York Lawyer
April 6, 2007

The fee dispute between Burt Neuborne and the Holocaust survivors he has represented for more than a decade continues, despite the urging of a federal magistrate judge for a truce.

In papers filed in the Eastern District last week, Mr. Neuborne said he would accept Magistrate Judge James Orenstein's recommendation that he receive $3 million, provided the U.S. Holocaust survivors who oppose his fee request also agree to the magistrate judge's terms.

The objecting survivors, in a separate filing, disagreed with the magistrate judge's findings and reiterated their position that Mr. Neuborne - a professor at New York University School of Law and legal director of the Brennan Center for Justice - was working pro bono and should not be paid.

Eastern District Judge Frederic R. Block must now review Magistrate Judge Orenstein's ruling and the objections.

Mr. Neuborne has been lead settlement counsel for Holocaust survivors throughout the world for the last eight years. In the 1990s, he was lead counsel in a suit against Swiss banks that assisted the Nazis in looting the assets of Jews. The case was settled for $1.25 billion; Mr. Neuborne litigated it pro bono.

But in December 2005, he requested a fee for his subsequent work in distributing the settlement funds, a task to which he was appointed by Judge Edward R. Korman. Survivors in the United States, who felt not enough of the funds were given to U.S. survivors, objected. They argued that Mr. Neuborne was still working pro bono and should not receive a fee.

Mr. Neuborne responded by increasing his fee request to what he deemed was fair value for his services: $4.8 million plus the possibility of an excellence multiplier that would bring the total to $6.3 million.

Magistrate Judge Orenstein tried to broker a compromise between the parties last month, recommending that Mr. Neuborne receive $3 million in fees. While the judge called Mr. Neuborne's second fee request "troubling" and said he could have been more clear from the outset about his intention to request a fee, he said it was unlikely the objectors could have reasonably concluded from Mr. Neuborne's past statements that he intended to work pro bono forever.

In a filing last week, Mr. Neuborne's attorney, Samuel Issacharoff, also an NYU law professor, raised "conditional" objections to the magistrate judge's findings, calling them "legally flawed."

Magistrate Judge Orenstein essentially awarded Mr. Neuborne $450 an hour, rather than the $700 fair-market-value figure proposed by Mr. Neuborne. The magistrate judge reached this figure by supposing a hypothetical negotiation, at the inception of Mr. Neuborne's service as lead settlement counsel, between Mr. Neuborne and the court.

Under the magistrate judge's hypothetical, Mr. Neuborne would have reduced his fee because of lower overhead costs and the number of hours he expected to spend on the case, and to reach a "just result," among other factors.

Mr. Issacharoff's letter says this approach by the magistrate judge "departed from the mimic-the-market rationale that is supposed to underlie fee awards and substituted a chancellor's-foot award that is both unpredictable and impressionistic."

He argued that a search for a "reasonable" rate is nothing more than a search for fair market rates. Yet, the magistrate judge set the final rate at $450 an hour, despite acknowledging that Mr. Neuborne had increased the settlement fund by $20 million and had done work of "extremely high quality."

However, the letter added that Mr. Neuborne "acknowledges the thoughtfulness and wisdom" of the report, and that he would abide by it if the objectors also agreed.

In subsequent papers, the objectors, represented by Florida attorney Samuel J. Dubbin, said Magistrate Judge Orenstein had incorrectly ruled against the objector's judicial estoppel argument.

"The magistrate completely fails to address the U.S. Survivors' central point - that Mr. Neuborne argued in his court filings that his pro bono status as Lead Settlement Counsel was integral to the allocations process as well as the settlement itself, and would ensure the fairness of the allocations themselves."

Mr. Dubbin asked Judge Block to review the estoppel issue de novo. He added that the magistrate judge erred in holding that no hearing was required on the fee request under Local Rule 23.1, and that the magistrate judge should have reduced Mr. Neuborne's hours by 800 and applied a rate, if one was applicable, of as low as $200 an hour.

In an interview, Mr. Issacharoff reiterated that Mr. Neuborne was willing to settle for the fee recommended by the magistrate judge.

"We said from the beginning that we would be perfectly willing to leave this in the magistrate's hands," he said. "We are still willing to live by that even though we didn't get everything we wanted."

Mr. Dubbin declined to comment.

                                          A Disputed Fee

Editorial
New York Times
March 26, 2007

A dispute has been raging between elderly Holocaust victims and Burt Neuborne, a lawyer who helped win a $1.25 billion settlement from Swiss banks, over the size of the fees Mr. Neuborne has requested. A federal magistrate judge has wisely recommended significantly reducing the fees. If the Federal District Court accepts the recommendation, it will put an end to an unfortunate aspect of an important lawsuit.

Mr. Neuborne, a New York University law professor, played a key role in helping Holocaust victims win compensation from Swiss banks, which they accused of looting the deposits of Jewish customers and of laundering Nazi money. He did that legal work without a fee, but submitted a bill for more than $4 million for helping to allocate the settlement money.

There were several problems with Mr. Neuborne’s request. He originally submitted a larger bill, backed up by slipshod hourly records, which included billing for 30.5 hours of work in a single day. It was not the kind of care a lawyer should use in billing for any case, much less one in which Holocaust victims are paying the bill.

Holocaust victims objected to the hourly rate Mr. Neuborne put in for, $700. United States Magistrate Judge James Orenstein recommended that the hourly rate be reduced to $450. The market for a lawyer to take a case for elderly Holocaust victims is different, Judge Orenstein noted, than for lawyers in the sort of ordinary commercial litigation that might produce $700-an-hour fees. A $450 hourly fee is certainly more reasonable.

The Holocaust victims also say that Mr. Neuborne indicated that he was doing the whole case without charge and so had no right to bill for any of it. Judge Orenstein rightly criticized Mr. Neuborne for the “murkiness” of his statements about whether he expected to be paid for his settlement work. Nevertheless, Judge Orenstein was right to conclude that Mr. Neuborne was entitled to be paid for his work.

The Swiss banks case did tremendous good, and Mr. Neuborne did an able job of pursuing it. He failed, however, to approach the issue of fees with the care and good judgment that were required. Judge Orenstein’s resolution, if it is accepted, will bring this regrettable episode to a close.

NYU Law Professor Burt Neuborne Gets His Due

For Forcing Swiss Banks to Repay Their Debts to Holocaust Survivors, Nyu Law Professor Burt Neuborne Was Hailed as a Hero. Then He Submitted His Bill: $4,760,000.

By Joel Siegel
New York Magazine
October 9, 2006

At the end of my career, to have to listen to people say, 'You lied to us, you cheated, you did this to us!'"—Burt Neuborne is practically pounding his right hand on the table now, momentarily channeling the anger of his accusers—"it hurts," he tells me, "especially since they are survivors."

In the dark art of lawyering, Neuborne has always been considered a white knight. He is one of the nation's leading public-interest lawyers, a defender of lost causes: Air Force pilots who refused to bomb Cambodia in the Vietnam War, the Socialist Labor Party when it wanted to get on the ballot, legal-aid lawyers suing the government. Yet when Neuborne takes up the cause of the little guy, the little guy often wins. Of the twelve cases he's argued before the Supreme Court, he's won eight. Now he is sitting in his office at the NYU School of Law, where he teaches, second-guessing his decision to represent the Jewish victims of the Holocaust. The crusading attorney helped to win $1.25 billion for his clients, but some of them now regard him as just another big shot looking out for himself.

The battle is over legal fees. Neuborne is seeking $4.76 million for almost eight years of work representing Holocaust survivors in the distribution of the Swiss-bank settlement for plundering Jewish assets in World War II. Some of the survivors are furious. They thought he had been working for free. They had heard him say so several times, or so it seemed. They were already angry at Neuborne for backing the judge and opposing them—"betraying" them, in their view—in a crucial decision that diverted more than $100 million of that payout to needy survivors in Russia. Now here he is, staking a claim to settlement funds they regard as "holy."

Elan Steinberg, former executive director of the World Jewish Congress, calls Neuborne's $4.76 million bill a "moral disgrace," pointing out that in a similar class-action suit against German industry, Neuborne already made $4.4 million. Menachem Rosensaft, a lawyer and the founding chairman of the International Network of Children of Jewish Holocaust Survivors, says, "There is a point at which even greed becomes unseemly." Robert Swift, a Philadelphia human-rights lawyer who also worked on the case—and clashed with Neuborne—says flatly, "Burt did a lot of things here that we would not want to teach our kids in law school." Others disagree: "In my opinion, he has done a superb job, in the finest tradition of what lawyers should do," says Michael Bazyler, a Whittier Law School professor who has written about the case. And the dispute has split the Jewish community. Next week, the Anti-Defamation League will give Neuborne its annual American Heritage Award, recognizing his work on behalf of the survivors and others. Gary Rosenblatt, the editor and publisher of The Jewish Week, wrote in a column, "Whatever number ultimately is determined to be fair pay for Neuborne, he should be compensated with a sense of gratitude, not bitterness, and the focus should return to pressuring those governments and banks and other institutions to pay what they have long owed."

For Neuborne, it is all a giant misunderstanding: "To the extent that the survivors are confused and misunderstood that I would be seeking fees," he says, "I feel terrible." The outcome of the Swiss case could not have been more successful, he believes. He spent years as the lead settlement counsel, and the pace was relentless. After collapsing with chest pains in 2002, he worked on his laptop as he was being prepped for open-heart surgery. "After all these years, the last thing I want is for survivors to think that I was not straight with them," he says. Yet how could anyone think he was donating all that time, he wonders; he certainly wasn't doing it for his health. "My doctors were so pissed at me for continuing this stuff," he says. Neuborne sits in his NYU office, arms folded across his chest, as if trying to restrain himself, fulminating. He's leaning forward now, almost on the edge of his chair, and his voice begins to rise. "Sometimes I think, would I have been better off just staying in my own world ... and not having to deal with people who, at the end of my career, call my integrity into question on something that I literally"—he pauses—"almost killed myself working on?"

It has been ten years now since Burt Neuborne suffered what he calls "the worst thing that could ever happen to anybody." In 1996, his youngest daughter, Lauren, died of a heart attack. She was 27, and Neuborne, then 55, was devastated. His passion and sense of purpose evaporated. "He was beyond a state of sadness," says his friend, the lawyer Richard Emery. "I was very concerned about Burt's future." So Emery staged an intervention. He asked Neuborne to join a long-shot legal assault against a smug and impenetrable target.

The case was about billions deposited by European Jews in Swiss banks for safekeeping on the eve of World War II and never returned. Previous efforts to get the money back failed. But with the remaining Holocaust survivors reaching their final years, momentum was building for one more try. "It was an opportunity to finally get closure for a lot of people who lived through a horrible part of history," says the class-action attorney Melvyn Weiss, who also worked on the case.

Neuborne attended Harvard Law and worked as a tax attorney on Wall Street before finding his calling in civil-rights and public-interest law. For all his experience arguing before the Supreme Court, he had relatively little in international law and no real involvement with the Jewish community. Still, the more he considered it, the more attracted he was. When she died, Lauren was studying to become a rabbi, a big departure for his family. "She apologized to us for going into rabbinical school," he says. "We were intensely secular. [My wife] was the director of the now Legal Defense and Education Fund. I headed the ACLU legal program. To the extent that we had a religion, it was the Bill of Rights, and we worshipped it." Neuborne came to believe that seeking justice for Holocaust survivors would be "extending the arc of Lauren's life in some way." And so he entered the case, working for free.

The work was a salvation, at least at first. "A life preserver," is how Neuborne puts it. He played a starring role during eight hours of oral arguments in federal court—talking so long, he says, "my face hurt." The Swiss banks waved the white flag. In August 1998, after twelve consecutive days of negotiations, they agreed to the $1.25 billion payout. Neuborne's work, however, was only beginning.

The settlement was silent on how the money should be divided. This was deliberate. "Everybody punted," Neuborne says. "Everybody was so pleased to get $1.25 billion that nobody wanted to even think at that point how it was going to be allocated." And so, in January 1999, five months after the banks capitulated, the judge—Edward Korman of Brooklyn federal court—urged Neuborne to return in the role of lead settlement counsel. It became Neuborne's responsibility to represent hundreds of thousands of Holocaust survivors covered by the settlement in the crucial decisions about who would get what. The job proved far more complex and controversial than anybody imagined.

Although the settlement compensated Swiss-bank-account holders, there were other groups of survivors who were eligible, including a "looted assets" class—for example, survivors whose gold and jewelry had been seized by the Nazis and fenced by Swiss banks. In a typical class-action case, each class of plaintiffs has a lawyer representing its interests in dividing the settlement. But Neuborne and the judge thought such an adversarial scramble of elderly survivors would be tragic. They developed an alternative: Survivors were asked to accept the settlement—giving up their legal claims to the banks—before they knew what they would get. Neuborne would represent not any one class of survivors but everyone. Of the hundreds of thousands covered by the class action, no more than a few hundred opted out of this arrangement.

Then Judge Korman (largely following the proposal of a special master tasked with devising a plan) decided that the looted-assets survivors would get nothing at all. There were just too many of them, he reasoned, and how could anyone prove which looted assets ended up in Switzerland? Korman ruled that using their $100 million share of the settlement to help destitute survivors would be the "next best thing." He ordered that 75 percent of the aid for Jewish survivors be spent in the former Soviet Union, where he considered the needs overwhelming; 21 percent would go to other foreign nations. Only 4 percent would be used to help survivors in the U.S. And that's the root of the trouble.

Leo Rechter, the 79-year-old leader of the 1,100-member National Association of Jewish Child Holocaust Survivors, avoided the Nazis by hiding in plain sight. Born in Vienna, he spent much of World War II in Brussels, and because he was blond-haired and blue-eyed, no one suspected he was a Jew. Rechter did everything a young teenager could to provide for his mother and two sisters. He sold bread and old clothing and peddled cigarettes made from discarded butts. Tenacity saved his life, and when he ushers me into his rowhouse in Jamaica, Queens, one night, it becomes clear that that tenacity continues to define it.

After retiring from his position as a bank president at 65, Rechter explains, he volunteered for Steven Spielberg's Shoah Foundation, traveling around the city to videotape scores of survivors' remembrances. He was struck by how many survivors were in need. "I was appalled that in the richest country on earth, there are survivors who cannot afford their dentures, their medications, their dialysis," he says. The experience propelled him into his current activist phase. In his dining room are two large bureaus filled with files of the organization's work. Rechter reaches into one, grabs a folder, and hands it to me. It contains several neatly labeled files: SWISS BANKS CASE, NEUBORNE'S PROMISE, NEUBORNE'S STATEMENTS, AND DISTORTIONS. "In my opinion, what Mr. Neuborne has done is immoral," Rechter says.

The division of the looted-assets money upset Rechter and the leaders of other grassroots American survivor groups. They saw it as an injustice that so much aid would go to the former Soviet Union, at the expense of poor survivors in the U.S. The case was supposed to be about restitution, compensating victims, but this outcome seemed more like charity. And so they broke from Neuborne, and their lawyer, Samuel J. Dubbin, filed an appeal on behalf of American Holocaust survivors, holding up the $100 million in aid. Months passed without a resolution, frustrating Neuborne and the judge. Korman called for a meeting in his chambers in Brooklyn. Dubbin flew in from Florida; Neuborne trekked in from Manhattan. "The judge took out a yellowed copy of the Times and showed me a story about how hard life is in Russia," Dubbin says. "I told Korman about the needs in Miami."

What happened next is bitterly disputed. Dubbin says that the judge admitted he did not realize that the needs of some survivors in America were so great and that Neuborne offered a quid pro quo: He'd help them if Dubbin would just drop the appeal. Neuborne recalls the meeting differently: "The judge told Dubbin, 'Why are you doing this? Your appeal is worthless' … I said to Dubbin, 'I don't want to embarrass you. Isn't there some way you can save face?' "

Indeed there was: "I have a great deal of sympathy with the argument that the needs of poor survivors in the United States should be carefully considered," Neuborne wrote in an open letter to Dubbin's clients. The first $100 million would be disbursed under the 75-21-4 formula, but he held out the possibility that future looted-assets money from the main $1.25 billion pile would be diverted to impoverished Holocaust victims in Miami and elsewhere in the States. "I will support thoughtful plans designed to assure that the needs of the American survivor community are addressed … with due regard for the fact that they have not received significant distributions up to this point." Satisfied, the American survivors abandoned their appeal. Later Korman thanked them in a conference call. "You are performing a mitzvah, and I will not forget it."

Yet subsequent distributions of $60 million and $45 million to the looted-assets class proceeded under the same formula: 75 percent to the former Soviet Union, 4 percent to the U.S. Feeling double-crossed, the American survivors filed a new appeal. And Neuborne, to their astonishment, opposed them. "It was a betrayal," says Dubbin. "Instead of backing us, backing the plaintiffs, he backs the judge."

Neuborne says Dubbin is trying to turn a face-saving gesture—the letter—into a promise. "We sat in that room, the judge and I, and we told Dubbin, 'This is not binding … You understand that, don't you?' " he says. Neuborne says the survivors misunderstand his role and that Dubbin misrepresents it. "I have tried to explain to them: 'Look, of course I am going to represent you. But my representation is to make sure your views are heard by the special master and the judge. Once that happens, they will make a decision. And my job is to enforce that.' "

Neuborne, in his role as lead settlement attorney, inevitably became more CEO than crusader. The job had him develop a mechanism to file claims and explain it at survivor gatherings from Italy to California. There were negotiations in Switzerland for bank records and decisions on how to invest the money. Neuborne lobbied Congress, winning a tax exemption that saved tens of millions of dollars. Korman even asked Neuborne to review the bills of other lawyers seeking fees. "It was his work on every vacation, every trip. We go to Europe and he is faxing papers from the hotel in Paris," his wife, Helen, says. "Nobody expected it to happen this way. It just happened."

Last December, a week before Christmas, Neuborne sent Korman a letter. Nearly seven years had passed since he'd become lead settlement counsel. Neuborne had successfully defended every legal challenge to the settlement, including those filed by Dubbin on behalf of the American survivors. Hundreds of millions of dollars still had not been distributed, but systems to file, review, and pay claims for plundered bank deposits were in place. Neuborne thought it was time to get paid. In his letter, Neuborne reminded the judge that he had waived fees in the first phase of the case. He added, "Once it became clear that service as Lead Settlement Counsel would entail an enormous commitment of time and intellectual energy, you suggested, and I agreed, that hourly … compensation should be paid." Neuborne declared that he had worked 8,178 hours since 1999, at $700 an hour. After applying a 25 percent discount, he staked out his bottom line: $4,088,500.

Neuborne's fee petition surprised almost everyone. Wasn't he working for free? they asked. For the American survivors, the $4 million fee was the final outrage. "In a class-action case, nobody is really thrilled that lawyers walk away with millions. But at least you know who your lawyer is; it's clear that he's working on your behalf," says Thane Rosenbaum, a son of Holocaust survivors and a Fordham law professor who opposed the 75-21-4 formula. "This is twisted. The lawyer who fought you is sticking you with his bill."

Even one of the dozen attorneys who worked on the case, Robert Swift, was "surprised, to put it mildly," when Neuborne petitioned for payment. "I think it is unethical," Swift told me. "When there is a fee arrangement, it must be disclosed to the client—in this case, the survivors. After the fact, we learned of an agreement between Burt Neuborne and the judge. What are the details? Why wasn't it discussed?" Dubbin argues that it's a conflict of interest: "Neuborne supported the judge in his rulings, then … asks the judge to approve his fees."

Dubbin and Swift have gone to court to block payment. Neuborne responded with a gambit: He removed 1,600 disputed hours from his bill, but he also removed his discount, raising his fee by $671,500 in the process. The bill now comes to $4.76 million. Korman—who declined to speak with me because of the legal challenge—has recused himself. A federal magistrate, Justice James Orenstein, accepted written arguments from both sides over the summer and is expected to rule on the fee issue any day now.

In court papers, Neuborne argues that even though Korman never entered an order declaring that Neuborne's pro bono status changed when he became lead settlement counsel, his bill should not have been a surprise. The issue of fees came up in a January 2001 court hearing and in a 2002 law-journal article Neuborne wrote, he says. A transcript of the hearing shows only that Korman was willing to award Neuborne fees for settlement work, not that Neuborne definitely was going to seek them. In his article, for the Washington University Law Quarterly, Neuborne addressed the issue in a one-sentence footnote: "Hourly payments for post-settlement work needed to administer the fund will be sought," he wrote. Six lawyers who worked with Neuborne have submitted sworn statements saying they assumed that he would be seeking fees for his work on the settlement. Yet as recently as September 26, 2005, Neuborne made no distinction between the first, pro bono phase of the case, and this second, fee-for-service settlement phase, telling a federal judge in Miami, "I am the lead settlement lawyer in the Swiss case in which I served without fee now for almost seven years." In person, Neuborne argues that the September 26 statement was just good lawyering, an attempt to short-circuit an avenue of appeal by making clear he had no financial stake in the settlement's approval.

This summer, as the magistrate entertained arguments in the case, the Times weighed in with an editorial. It praised Neuborne's role and said, "No one should be expected to do arduous, complicated legal work without pay." But the editorial jumped on Neuborne's request for $700 an hour. "The dollar amounts are troubling … Top corporate lawyers charge that much, or more. But Holocaust victims are not Exxon Mobil. It is an unseemly rate to be asking." The Wall Street Journal published Neuborne's rebuttal online: "During the Middle Ages the Catholic Church insisted that Jewish merchants charge a 'just price' instead of market value," Neuborne wrote. "The Times has gone into the same business."

The exchange encapsulates the eternal philosophical divide between idealists, who believe the Holocaust is not something anyone should be profiting from, and the market-based realists, who argue that justice has a price and it ought to be paid. Yet the extraordinary rhetoric and bitterness comes from someplace else: What seems like just a fight over the bill is, at a deeper level, a rift between the rank and file and the leaders representing them.

Rechter and other grassroots survivor leaders have long believed that the Jewish Establishment spends too much on Holocaust commemoration and too little on the needs of those who actually survived Hitler. They see Korman's rulings—backed by Neuborne—as an expression of the organized community's will over theirs and the ADL's decision to give Neuborne its American Heritage Award, which is designed to recognize a fighter for American values, as a rebuke. "Institutions tend to have a very different pulse and mind-set than the rank and file. They are led by professionals … with law degrees and M.B.A.'s … who have a sense of administrative purpose and a feeling of 'we know what's best,' " says Rosenbaum. "It's an appealing idea to force nations and banks to be accountable. But they forgot to listen here to the people who have the greatest moral authority, the survivors themselves."

The Jewish Week:
"Survivors Balking At Lawyer's Fee" (More on pro bono
Holocaust  huckster) 03.02.2006

Editor's note: For more on Burt Neuborne & the Holocaust industry
 see:

          http://www.normanfinkelstein.com/article.php?pg=3&ar=68   

          http://www.jcpa.org/phas/phas-bazyler-f04.htm

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