Plaintiffs' attorneys who are accusing a few dozen of the nation's largest banks of ripping off consumers by manipulating overdraft fees have put on an impressive display of legal firepower in court, positioning themselves to potentially score massive settlements or verdicts.

Outside the court's confines, however, some of those same plaintiffs lawyers are putting on quite a spectacle among themselves.

Over the last three years, the consortium has been building a case that accuses the banks of systematically manipulating the processing of debit card transactions for millions of consumers in a deliberate bid to maximize the fees they pay when they overdraw their checking accounts. The class action firms have already leveraged a voluminous amount of internal documents proffered in discovery, as well as the banks' own mistakes, into a settlement with Bank of America, a certification of a federal class action against Union Bank and a raft of other cases divided up to overcome the banks' defenses.

Behind the scenes, however, the litigation has been tinged by reputational concerns and infighting.

Late Friday Jeremy Alters, a Miami, Fla., attorney, resigned from the executive committee. Alters is the attorney who originally brought the overdraft case against Bank of America that became the foundation of the class action. An Argentine law firm has sued Alters, claiming that it played a role in bringing him the plaintiff and deserves a quarter of Alters' possibly multi-million dollar fee. A series of articles in Miami's Daily Business Review and other publications recently detailed defections from his firm, a controversy involving a sports marketing firm he owns, and a preliminary complaint filed with the Florida Bar Association in an matter unrelated to the overdraft case.

Alters denies the substance of the sundry allegations, but acknowledges that the news stories pose a potential distraction.

"It is never easy living with the First Amendment," he told American Banker on Sunday, promising to "take the steps necessary" to refute the criticisms.

"I resigned from the PEC [plaintiffs' executive committee] because in my 15 years of practice, my clients, the consumers I represent against major corporations come first," he said.

In another dustup among the plaintiffs' attorneys in the overdraft cases, on Monday Barry Himmelstein, also a former member of the executive committee while at Lieff Cabraser Heimann & Bernstein, filed objections to the Bank of America settlement. Himmelstein alleges that his former legal allies sought to obscure from class members the fact that their proposed settlement would reward the class members they supposedly represent with recoveries of a mere $29.71 each — "less than a single overdraft fee," as Himmelstein put it in an objection filed with the court. Himmelstein has also feuded over fees and other matters with his former colleagues at Lieff Cabraser, which he has sought to dissolve.

With unconsolidated overdraft suits in various stages of litigation across the country, the executive committee has feuded with class action attorneys elsewhere as well. Meantime, attorneys outside the executive committee have complained of being excluded from cases they brought.

"Some things have come to light that might not be the prettiest to look at," said Alan Kaplinsky, who is defending banks at Ballard Spahr. But disagreements among plaintiffs attorneys in complex litigation are not uncommon, and Kaplinsky says he's seen no sign they're hampering the class action suit.

"Plaintiffs attorneys, they're a different type of lawyer," he said.

There is no disputing that plaintiffs attorneys have brought the case a great distance. While overdraft fees and "high-to-low" processing - which banks allegedly used to maximize overdraft fees - were a tempting target for mass tort suits, attorneys faced serious obstacles in putting together a case. A central challenge was the doctrine of preemption, which dictates that banks can't be sued under state laws for actions permitted by federal regulators such as the Office of the Comptroller of the Currency.

To overcome the preemption hurdle Alters and colleagues, including eventual coordinating counsel Bobby Gilbert, argued that the high-to-low overdraft processing was incidental to banking and could be challenged on common tort and contract grounds. In March of 2010, U.S. District Court Judge Lawrence King for the Southern District of Florida agreed. (His decision is under appeal.)

Teaming up with veteran Florida appellate attorney Bruce Rogow, Alters' firm and the eventual co-lead counsel, Aaron Podhurst of Podhurst Orseck, won permission to oversee the consolidated litigation in Judge King's court. In practice, say attorneys on both sides, Podhurst and Gilbert have played the biggest roles. (Gilbert has since left Alters' law firm for Grossman Roth, though his role in the case never substantively changed.)

The biggest banks have themselves partly to blame for remaining in the hot seat, say plaintiffs' attorneys unaffiliated with the executive committee. They describe as a series of unforced errors by the banks that prevented their cases from being remanded to the penny-stakes realm of consumer arbitration.

Last year, the Supreme Court ruled that such agreements were binding, as long as the terms of arbitration weren't "unconscionable."

The ruling was a serious defeat for the plaintiffs' bar, but many banks weren't equipped to take advantage. Some hadn't drafted such customers agreements. Others failed to initially seek enforcement and weakened their ability to assert such a defense now. Still more require consumers to jump through hoops that risk being deemed unconscionable.

Aaron Podhurst notes the case's progress and dismisses the Alters and Himmelstein matters as unrelated to the litigation. The firms on the executive committee have "a fine relationship," he says.

"It doesn't mean we don't argue over direction, but we have a very cordial relationship, and I intend to keep it that way," says Podhurst.

While perhaps unavoidable, there are also tensions with attorneys outside the plaintiffs' executive committee.

"There are a number of lawyers within the group who would appreciate a little more transparency and input," one says, asking for anonymity so as not to damage relationships.

Podhurst said that many non-executive committee attorneys are actively involved in the cases they brought, and in court there has been no dissent.

"None of [the friction] to my knowledge has surfaced in the litigation itself," said defense lawyer Kaplinsky last week. "I don't think any of it has gotten to be an issue in front of Judge King."

Miami corporate defense attorney Alvin Davis of Squire Sanders agreed. In legal circles, Alters has been "kind of a lightning rod for years," he said, though he added that he's seen far more contention than in the overdraft case.

"I've been involved in cases where the three plaintiffs firms were suing each other," he said.

Rogow's participation in the overdraft case also helps.

"You get Bruce on board, you get a prima facie appearance of legitimacy," Davis said. "He's up there in the pantheon."

The objection filed by Himmelstein to the Bank of America settlement marks the first possible intrusion of behind-the-scenes issues into the case, though its import is hard to gauge.

What is clear is that an attorney with a formidable understanding of the overdraft litigation is now representing two members of the proposed settlement class, and that he has put a significant effort into arguing that the Bank of America settlement is insufficient.

"The proposed $410 million settlement [$29.71 per class participant] with Bank of America, while large in the abstract, is only 9% of the over $4.5 billion in damages sustained by the class," Himmelstein wrote, noting that the plaintiffs executive committee had objected to settlements for similar portions of alleged damages in other jurisdictions. (Himelstein played a lead role in writing some of those objections on behalf of the plaintiffs executive committee.)

"The Plaintiffs' Executive Committee has itself formally objected to two separate settlements of overlapping claims-one with Fifth Third Bank, for 10% of class members' estimated damages, and another with National City Bank, for between 10% and 26% of class members' estimated damages — as grossly insufficient," the brief states. "Yet Class Counsel ask this Court to approve a lesser settlement, for a mere 9% of class members' damages, as "fair, reasonable and adequate."

There are arguments for why the Bank of America settlement made sense, not least of which is that a rival class action suit in California threatened to settle the claims of 80% of the class members for a much smaller amount.

But Himmelstein argues that his former colleagues have tried to hide from consumers that average recovery would be "less than the amount of a single overdraft charge," as he puts it.

"Instead of being told that they will receive a refund of less than one illegitimate overdraft charge for every ten they paid, class members were told — falsely — that the amount of their anticipated refund "cannot be determined at this time," he wrote.

Podhurst told American Banker that the plaintiffs' executive committee would respond to Himmelstein's brief in court.

A lot is at stake for the attorneys themselves. The Bank of America settlement alone is expected to yield as much as $120 million in fees, roughly standard given the size of the deal.

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