Reuters (SEATTLE), September 16, 2004

Calif. Judge Cuts Microsoft Legal Fees

A San Francisco judge ordered Microsoft Corp. (MSFT.O: Quote, Profile, Research) to pay lawyers involved in its $1.1 billion class action settlement $100 million in legal fees, less than half of the original fees they requested, company officials said on Thursday.

The world's largest software maker had argued that the $258 million in fees that the lawyers had sought was too much for the work involved in the class action, which accused Microsoft of abusing its dominant market position to overcharge California consumers for software.

Redmond, Washington-based Microsoft argued that the original fees, the largest ever in an antitrust settlement, worked out to $3,019 per hour for Crew and more than $2,000 per hour for other attorneys as well as hourly fees of $1,000 for administrative work.

San Francisco County Superior Court Judge Paul Alvarado wrote in a ruling last week that the lawyers had relied on material the U.S. Justice Department had gathered for its landmark antitrust case against Microsoft.

Microsoft will pay the class action's lawyers $101 million plus $11.5 million for expenses. As part of the January 2003 settlement, Microsoft is issuing vouchers to consumers and businesses who bought its products between 1995 and 2001, with two-thirds of unclaimed funds to be used for computer equipment in California's schools.

Eugene Crew, the class action's lead attorney, had said the fees were justified because of the strain it put on his firm and was fair compensation for the risk of taking on Microsoft.

"We think the Judge did a very thoughtful job carefully and properly applied California law," said a Microsoft spokeswoman.