
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, September 18, 1994                   TAG: 9409200054
SECTION: VIRGINIA                    PAGE: D-9   EDITION: METRO 
SOURCE: Associated Press
DATELINE: RICHMOND                                LENGTH: Medium

RETIREES' LAWYER WANTS CUT OF SETTLEMENT

A lawyer who represented about 400 federal retirees has asked a judge to order the state to pay his firm 3.5 percent of the $340-million settlement he helped negotiate for a much larger group of pensioners.

The state has agreed to pay the $340 million over five years to about 186,000 pensioners to resolve claims that they were due more than $700 million in unconstitutionally collected state income taxes and interest.

Michael Kator, the attorney, said Thursday he wants a Richmond circuit judge to deduct the percentage from the amount due each pensioner and remit it to his firm.

Attorney General Jim Gilmore said of Kator's request, ``I vehemently oppose any award of attorneys' fees to the firm, and I certainly oppose the suggestion that money set aside for the retirees be used instead to pay a lawyer who only represented about 400 individuals in this case.

``The General Assembly chose not to provide for an attorney's fee for any lawyer in this case, and I intend to carry out the General Assembly's intent in passing the retirees' settlement law.''

Kator said the major retiree groups representing federal pensioners suggested to legislators that 3.5 percent would be appropriate during settlement negotiations. That would result in a total fee of $11.9 million. The firm's ``fee would be paid when and as received by the retirees,'' he said.

Kator said he is requesting the money under the ``common fund doctrine,'' which allows a lawyer to ask a court to award a fee when he obtains a large amount for the benefit of many people while representing a few.

That's clearly the case here, he contended. He said he put in more than 5,000 hours in five years on the case.

Law firms that represented pensioners in similar suits in other states received much larger amounts or a much higher percentage of the settlement for their work, Kator said. He acknowledged that those states, unlike Virginia, have laws that permit class-action suits.

The suits resulted from a U.S. Supreme Court ruling that a state cannot give a tax break to state and local retirees that it does not also provide for federal pensioners. For more than 40 years, Virginia had not collected income taxes on the pensions of state employees but had taxed federal pensions.

by CNB