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Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 1 of 54 PageID 1802 U.S. DISTRICT COURT l NORTHERN DISTRICT OF TEXAS I FTLFD IN THE DISTRICT CO RT FOR THE NORTHERN DISTRICT OFT s r-:-············ ""l ! FORT WORTH I JUL - 6 2016 I STEVE SOUTH, AS TRUSTEE FOR, § AND ON BEHALF OF THE SOUTH § Ci;,~t:Zr!fC~URT puty ""'1 LIVING TRUST, PHILIP M. GARNER, § MICHAEL ARNOLD, JANET ARNOLD, § JOHNS. FERRIS, M.D., CHRISTINE § DUNCAN, AND ALL OTHERS § SIMILARLY SITUATED, § § CASE NO. 4:16-cv-00212-A PLAINTIFFS, § § ~ § § LIFE PARTNERS, INC., § § DEFENDANT. §

Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 2 of 54 PageID 1803

THE PARTIES' APPENDIX IN SUPPORT OF THEIR JOINT MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT

H. Thomas Moran II (the "Trustee"), as chapter 11 trustee for Life Partners Holdings,

Inc. ("LPHI"), 1 Life Partners, Inc. ("LPI"), and LPI Financial Services, Inc. ("LPIFS," and

together with LPI, the "Subsidiary Debtors," and together with LPHI, the "Debtors" or "Life

2 Partners") ; Plaintiffs Philip Garner, Michael Arnold, Janet Arnold, Christine Duncan, Dr. Jobn

Ferris, and Steve South as Trustee for the South Living Trust (the "Lead Plaintiffs"), on behalf of

themselves and all those similarly situated (altogether, the "Class Action Plaintiffs" or "Class

Members"); and the Official Committee of Unsecured Creditors (the "Committee") (collectively,

the "Parties") file this appendix in support of their joint motion for final approval of the class

action settlement. The appendix contains the following materials:

TABLE OF CONTENTS FOR APPENDIX

EXHIBIT DESCRIPTION OF EVIDENTIARY MATERIAL APP.PAGES

1 Langston Declaration APP. 1-57

2 Settlement Agreement APP. 58-117

3 Schmidt Declaration APP. 118-120

4 Miller Declaration APP. 121 -192

Case No. 15-40289-RFN-11. 2 The Trustee is serving as the sole director ofLPI and LPIFS pursuant to the Trustee's authority under the Bankruptcy Court's Order Authorizing the Trustee to Amend the Governing Documents and To File Voluntary Chapter 11 Petitions For Debtor's Subsidiaries (the "Subsidiary Filing Order") [Case No. 15-40289-RFN-11, Dkt. No. 261].

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5 Silver Declaration APP. 193-239

6 Cornerstone 2014 Review & Analysis APP. 240-269

7 Cornerstone 2015 Review & Analysis APP. 270- 299

8 Skelton Declaration APP. 300- 303

9 Cain Declaration APP. 304- 306

10 Baker & McKenzie Hourly Detail APP. 307- 399

11 LPID Press Release APP. 400-401

12 Leininger Declaration APP. 402- 404

13 Sternk:lar Declaration APP. 405 408

14 NERA 2015 Full Year Review APP. 409- 452

15 Ragan Declaration APP. 453 - 456

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Dated: July 5, 2016

Respectfully submitted,

Keith L. Langston Texas BarNo. 24015196 Langston Law Firm 109 W. Tyler Street Longview, Texas 75601 Telephone: (903) 212-3922 Facsimile: (903) 212-3892 [email protected]

Attorneys For Lead Plaintiffs and Class Action Plaintiffs

By: ______David M. Bennett Texas Bar No. 02139600 Nicole L. Williams Texas Bar No. 24041726 Jennifer R. Ecklund Texas Bar No. 24045626

Thompson & Knight LLP 1722 Routh Street, Suite 1500 Dallas, Texas 75201 Telephone: (214) 969-1700 Facsimile: (214) 969-1751 [email protected] [email protected] [email protected]

Case 4:16-cv-00212-A Document 56 Filed 07/06/16 Page 5 of 54 PageID 1806

CERTIFICATE OF SERVICE

I hereby certify that on July 5, 2016, the foregoing Motion was served on all parties entitled to service via the Court's Electronic Filing System ("ECF").

One of Counsel

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I

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION

In re: § § LIFE PARTNERS HOLDINGS, § Jointly Administered Under INC. ETAL., § Case No. 15-40289-RFN § Debtors. § Chapter 11

PHILIP M. GARNER § STEVER SOUTH, AS TRUSTEE § FOR AND ON BEHALF OF § THE SOUTH LIVING TRUST § CHRISTINE DUNCAN, AND ALL § OTHERS SIMILARLY SITUATED, § Plaintiffs, § § v. § Adversary No. 15-4061 § LIFE PARTNERS, INC. § Defendant §

MICHAEL ARNOLD, JANET ARNOLD § STEVE SOUTH, AS TRUSTEE FOR, § AND ON BEHALF OF § THE SOUTH LIVING TRUST § JOHNS. FERRIS, M.D. § CHRISTINE DUNCAN, AND ALL § OTHERS SIMILARLY SITUATED § Adversary No. 15-4062 Plaintiffs, § § ~ § § LIFE PARTNERS, INC. § Defendant. §

DECLARATION OF KEITH L. LANGSTON IN SUPPORT OF: PLAINTIFFS' MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND PLAINTIFFS' MOTION FOR AWARD OF ATTORNEYS' FEES

1 App.1

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Table of Contents

I. INTRODUCTION

II. THE SETTLEMENT AGREEMENT-SUMMARY OF BENEFITS TO THE CLASS

III. THE CLASS WAS GIVEN APPROPRIATE NOTICE OF THE PROPOSED SETTLEMENT AGREEMENT

IV. FACTORS SUPPORTING APPROVAL OF THE SETTLEMENT AGREEMENT

A. Evidence that the Settlement was not Obtained by Fraud or Collusion

B. The Complexity, Expense, and Likely Duration of the Litigation

C. The Stage of the Litigation and Available Discovery

D. The Probability of Plaintiffs' Prevailing on the Merits

E. The Range of Possible Recovery and Certainty of Damages

F. The Opinions of Class Counsel, Class Representatives, and Absent Class Members

V. THE CASE REQUIRED EXTRAORDINARY EFFORT AND DILIGENCE BY CLASS COUNSEL

A. Investigation, Preparation of Pleadings and Filing of the Petitions and LPI's Special Exception Thereto

B. Protective Order, Scheduling Order and Discovery

C. Motions for Summary Judgment

D. Appeal to the Court of Appeals

E. Appeal to the Texas Supreme Court

F. LPI files Chapter 11 bankruptcy in the Northern District of Texas-Fort Worth Division

2 App.2

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VI. THE RECORD FULLY SUPPORTS THE ATTORNEYS' FEE AWARD

A. The Class Representatives Retained Class Counsel on a Contingent Fee Basis

B. The Risk of Non-Payment Supports the Reasonableness of the Agreed Fee

C. The Quality of Performance Supports the Reasonableness of the Agreed Fee

D. The Amount of Work Necessary to Resolve the Litigation Supports the Reasonableness of the Agreed Fee

E. The Parties' Stakes in the Litigation Support the Reasonableness of the Agreed Fee

F. Rates Reflected in Negotiated Fee Agreements Support the Reasonableness of the Agreed Fee

G. Fee Awards in Similar Cases Support the Reasonableness of the Agreed Fee

H. To the Extent the Court Wishes to Conduct "Lodestar Cross­ check," the Lodestar in this Case Supports the Agreed Fee

VII. CONCLUSION

3 App.3

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Pursuant to 28 U.S.C. § 1746, Keith L. Langston ("Langston'' or "Class

Counsel") declares as follows:

I. INTRODUCTION

1. I am an attorney licensed by the Supreme Courts of Texas, Oklahoma,

Arkansas and Missouri. I have been deeply involved in this case for more than five

years. I respectfully submit this Declaration in Support of The Parties' Joint Motion

for Final Approval of Class Action Settlement and Brief in Support and the Motion

for Approval of Attorneys' Fees.

2. The purpose of this Declaration is to (a) submit and identify for the

Court true and correct copies of certain documents and evidence referenced in the

Final Approval Motion and (b) describe the history of the litigation efforts in this

case, as referenced in the Final Approval Motion and the Fee Motion.

3. A true and correct copy of the Class Action Settlement Agreement (the

"Settlement Agreement") can be found at Exhibit 2 of this Appendix.1 See Ex. 2 at

App. 58-117. A true and correct copy of the Class Notice sent to the Class Members

can be found in the Appendix to the Motion for Final Approval. See Final Approval

Appendix Ex. 1 at App. 111-119.

4. Along with my co-counsel, Scott Skelton of Skelton Slusher Barnhill

Watkins Wells, formerly of the Zeleskey Law Firm, and Robert Cain of Alderman

Cain & Neill, also formerly of the Zeleskey Law Firm, I initiated this case when

several Life Partners, Inc. ("LPI") investors contacted me regarding their

1 Any capitalized terms not herein defined have the meanings ascribed to them by the Settlement Agreement or the Final Approval Motion.

4 App.4

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investments in LPI's life settlements. I have been involved with the investigation,

preparation, filing, prosecution, appeals, and bankruptcy plan negotiations as a

member of the Plan Support Group ("PSG") and in relation to settlement of this

action. I make this declaration based on my personal know ledge and information

available to me to the best of my recollection, and I am competent to testify to the

matters set out herein.

II. THE SETTLEMENT AGREEMENT-SUMMARY OF BENEFITS TO THE CLASS

5. The Settlement Agreement, if given final approval, would result in the

release of all ownership claims against LPI for the fractional policy positions

purchased by the Class Members, and fully and finally resolve those claims. In the

Bankruptcy Cases, LPI has claimed that it is the owner of the life insurance policies

underlying the securities the Settlement Class Members purchased and that those

policies are property of the bankruptcy estates. The Plaintiffs dispute that the

policies, their proceeds, or any rights to which the owners of such policies are

entitled (including, without limitation, the cash surrender value of each such policy)

are property of the bankruptcy estates pursuant to 11 U.S. C. § 541. This dispute is

referred to in the Bankruptcy Cases and herein as the "Ownership Issue." Further,

the principal terms of the Settlement Agreement, which was preliminarily approved

by the Court, are summarized follows:

a. LPI (and any successor entity) will not sell or otherwise introduce into the market any securities unless those securities are (a) issued pursuant to the Plan or (b) properly registered as securities with all appropriate federal and state regulatory bodies;

5 App.5

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b. LPI will waive any claims to beneficial ownership in the fractional interests held in the name of the Class Members that are entitled to treatment as Continuing Fractional Holders, by election or otherwise, as set forth in the Plan and subject to the terms and conditions set forth in the Plan;

c. Subject to the terms and conditions set forth in the Plan, Debtors will provide each Settlement Class Member with the elections described in Sections 3.07(b), (c), (d) and (e) of the Plan for each Fractional Interest Holder and IRA Holder, respectively, which are summarized as follows: (i) be treated as a Continuing Position Holder with respect to their Fractional Position and be confirmed as the owner of a Fractional Interest or a New IRA Note, after making the related Continuing Position Holder Contribution; (ii) contribute their Fractional Position to the Position Holder Trust and receive an interest in the Position Holder Trust or the IRA Partnership; or (iii) (for Rescission Subclass Members only) rescind their purchase of the Fractional Interest and receive an interest in the Creditors' Trust.

d. In addition to the three election options listed above, IRA Holders will have a fourth option which allows the individual taxpayer who owns an IRA Holder to take an IRA Note out of his or her IRA Holder and exchange it for the related Fractional Interest, to be registered and owned individually, outside of the IRA in which case the individual owner will be deemed to have then made a Continuing Holder Election to become a Continuing Fractional Holder under the Plan.

e. Finally, Class Members will assign to the Creditors' Trust all of their rights in any and all claims that were or could have been asserted by the Assigning Parties arising out of or relating to their investment in LPI or arising out of or relating to any conduct, act, or omission of persons or entities involved in the business of the Debtor or Subsidiary Debtors, including but not limited to the Arnold State Court Action and the Arnold Class Adversary, as set forth more fully in the Settlement Agreement. The proceeds of the litigation that will be brought by the Creditors' Trust through the assignment of these claims will ultimately inure to the benefit of the Class Members choosing rescission andlor assigning claims pursuant to the Plan.

6. The value of the benefits provided by the Settlement Agreement to

Class Members exceeds $1,000,000,000. Plaintiffs' Counsel discovered, prosecuted,

and created for the benefit of the Class a common fund worth $1,283,607,944, which

6 App.6

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is the amount of claims entitled to rescission as a result of the opinion obtained

through the Litigation. Likewise, the Estate Representatives believe the common

fund traceable to Class Counsel's recoveries for Class Members results in

substantial value and direct benefits presently estimated to be $1,078,582,000 to

the Class Members on account of the claims award to them through the Litigation.

7. Under the Plan or Reorganization proposed by the Trustee and the

Committee (the "Plan"), Class Members who choose to be Continuing Position

Holders are contributing (i) 5% of each related policy position, (ii) 5% of all escrowed

funds for premiums relating to such position, and (iii) 5% of any maturity funds

relating to such position to the Position Holder Trust in exchange for a

corresponding beneficial interest in the Position Holder Trust This means that

Class Members will become beneficial owners of 95% of fractional interest relating

to their policy positions should they choose to remain a Continuing Position Holder,

subject to a servicing fee that will be no more than 3%. And in exchange, each

Continuing Fractional Holder receives a "Position Holder Trust Interest'' that

allows each Continuing Position Holder an opportunity to participate in

distributions by the Position Holder Trust after the Effective Date, and thus the

fractional interest holders may receive distributions returning a significant portion

of the 5% back to them, depending upon (1) the performance of the portfolio and (2)

any cost savings the Position Holder Trustee is able to achieve. Continuing Position

Holders thus receive an asset-an additional interest in the Position Holder Trust-

7 App.7

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in exchange for the 5% contribution.2 This means that Class Members may receive

more than 100% of their capital investment, depending on the amount of money the

Class Member has paid to support the position and the date each policy matures.

This is a remarkable recovery considering both the underlying class action litigation

and the filing of the bankruptcies in the Bankruptcy Court. To Class Counsel's

knowledge, this Settlement Agreement represents the first of its kind where class

members were potentially able to make a return on an investment after litigation

and bankruptcy proceedings have been undertaken.

8. Class Counsel believes the terms and conditions of the Settlement

Agreement are fair, reasonable, and adequate and in the Class Members' best

interest.

III. THE CLASS WAS GIVEN APPROPRIATE NOTICE OF THE PROPOSED SETTLEMENT AGREEMENT

9. In accordance with the District Court's granting of the Preliminary

Approval Motion, which included approval of the Class Notice, the Settlement Class

has been provided with sufficient notice of this Settlement Agreement, including an

appropriate opportunity to voice objections. The Class Notice fully informed Class

Members of the lawsuit and the proposed Settlement Agreement, and enabled them

to make informed decisions about their rights. Class Members also received notice

of the Settlement Agreement through the 9019 Motion in the Bankruptcy Court.

2 Further, under the Plan of Reorganization advanced by the Trustee and the Committee, each Continuing Position Holder whose post-Effective Date maturity proceeds are used for pre- or post-confirmation financing will be treated as a secured lender, and will have the right to receive payment in full of all amounts borrowed from maturities after the Effective Date, with interest paid to the Continuing Position Holder at a 10% rate.

8 App.B

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10. The Class Notice plan, as approved by the Court and implemented by

Class Counsel and the Trustee, consisted of Epiq Claims Administration, LLC (the

Trustee's Claims Administrator in the Bankruptcy Cases) mailing the Notice of

Proposed Settlement Agreement on June 7, 2016 to more than 20,000 Class

Members at the most current addresses listed in on the Master Service List that it

has kept throughout this case, as updated based on information provided by Class

Members. These notice procedures are in accordance with this Court's June 6, 2016

Order and the procedures for providing notices to Class Members pursuant to

Federal Rule of Civil Procedure 23(c)(2)(B) and 23(e). This Class Notice was also

posted on the www.lifepartnersinc.com website that has been maintained by the

Trustee throughout the pendency of the bankruptcy, the

www.lifepartnerscommittee.com website that has been maintained by the

Committee, and the www.lifepartnersclasssettlement.com website set up by Class

Counsel for purposes of the Class Notice.

11. The Court approved the form of the Class Notice prwr to

dissemination. It provided detailed information about the Settlement Agreement,

including: (i) a comprehensive summary of its terms; (ii) notice of Class Counsel's

intent to request attorneys' fees; (iii) detailed information about the Assigned

Claims, Additional Assigned Claims, and Released Claims; (iv) a summary of the

different elections provided to Class Members under the Settlement Agreement and

the Plan; (v) information about the Final Approval Hearing date and Class

Members' right to object (and deadlines and procedures for objecting); and (vi)

9 App.9

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contact information for Class Counsel, an e-mail address for inquiries, a website

address for further information, and the procedure to receive additional

information.

12. The forms and methods used for the Class Notice are the most

practical under the circumstances of this case, and are substantially similar to

those successfully used and approved by courts in other class action settlements and

satisfy the requirements of due process and Rule 23.

IV. FACTORS SUPPORTING APPROVAL OF THE SETTLEMENT AGREEMENT

13. To be approved, a settlement must be "fair, reasonable and adequate."

FED R. CIV. P. 23. Under Rule 23, a court may approve a class settlement "only after

a hearing and on a finding that it is fair, reasonable, and adequate." ld. at 23(e)(2).

Specifically, the Fifth Circuit requires courts evaluating a class action settlement to

consider the following factors to determine whether the proposed settlement is fair,

reasonable, and adequate: (1) evidence that the settlement was not obtained by

fraud or collusion; (2) the complexity, expense, and likely duration of the litigation;

(3) the stage of the litigation and available discovery; ( 4) the probability of plaintiffs'

prevailing on the merits; ( 5) the range of possible recovery and certainty of

damages; and (6) the opinions of class counsel, class representatives, and absent

class members. Reed v. Gen. Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983); see

also DeHoyos v. Allstate Corp., 240 F.R.D. 269, 286-87 (W.D. Tex. 2007) (applying

Reed factors to settlement of Rule 23(b)(2) class).

10 App.10

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14. The Settlement Agreement should be evaluated through inquiry to

assess its fairness, reasonableness, and adequacy without the need for considering

the disputed legal and factual issues that underlie the litigation. The Fifth Circuit

has explained: "In examining a proposed [settlement] ... the court does not try the

case. The very purpose of compromise is to avoid the delay and expense of such a

trial." Young v. Katz, 447 F.2d 431, 433 (5th Cir. 1971). In this case, the Reed

factors are all satisfied and weighs in favor of approving the Settlement Agreement.

A. Evidence that the Settlement Agreement was not Obtained by Fraud or Collusion

15. The Settlement Agreement is the product of months of arm's-length

negotiations between the Parties, including multiple in-person mediations with U.S.

Bankruptcy Judge Richard Schmidt (Ret.). See Declaration ofHon. Richard Schmidt

(Ret.) ("Schmidt'') See Ex. 3 at App. 118-120, n 2-5. This case was vigorously

litigated for five years all the way to the Texas Supreme Court. Every issue was

zealously contested. There was no collusion between the Parties, .either before or

after the commencement of the Bankruptcy Cases and the appointment of the

Trustee and Committee. The onlyreason the case settled is that both sides made

independent decisions to compromise rather than entertain the risks of an adverse

verdict in a trial. Class Counsel was prepared to proceed to trial, with no assurance

of receiving attorneys' fees or recouping their expenses if the Parties had not been

able to reach a favorable settlement.

16. This Reed factor weighs m favor of approving the Settlement

Agreement.

11 App.11

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B. The Complexity, Expense, and Likely Duration of the Litigation

17. In addition to involving the claims of more than 20,000 class members

and over $1 billion invested, this case presented complex legal issues against the

backdrop of unsettled law in the field of life settlements.

18. At the outset of this case, which was initially filed on March 14, 2011

by certain of the Lead Plaintiffs, Plaintiffs faced an uphill battle that had been won

by LPI in both the Texas state court system, Griffitts u. Life Partners, Inc., No. 10-

01-00271-CV, 2004 WL 1178418 (Tex. App.-Waco May 26, 2004, no pet.) (mem.

op.), and in federal court, S.E.C. u. Life Partners, Inc., 87 F.3d 536 (D.C. Cir. 1996).

Thus, not only did those Lead Plaintiffs face the same legal arguments that even

the United States Securities & Exchange Commission ("SEC") was unsuccessful in

advancing, Plaintiffs faced those arguments against the same defendant who was a

party to that litigation. In addition to the SEC's unsuccessful enforcement action

against LPI, the Texas State Securities Board likewise was unsuccessful on

multiple occasions on the same grounds pressed by Plaintiffs here. State u. Life

Partners, Inc., 243 S.W.3d 236, 244 (Tex. App.-Waco 2007, pet. denied)

19. In this case, as in those cases, LPI argued that it was not subject to

regulation by Texas or federal securities laws. LPI argued that the investment

product purchased by its investors was not a security because it did not fall within

the ambit of the Howey/Forman test. LPI claimed its argument was bolstered by

the fact that during the intervening 15-year span since the SEC enforcement action,

the Texas Legislature did not change the Texas Securities Act to expressly include

12 App.12

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life settlements in the laundry list of regulated securities, as so many other states

have done. These past victories and the silence of the Legislature emboldened LPI

to believe that Plaintiffs would never be successful. In fact, even after a unanimous

opinion from the Dallas Court of Appeals, LPI continued to argue that its

investment product was not a security. LPI continued to sell investments in

fractional shares of life insurance policies outside the Fifth Court of Appeals'

jurisdiction and issued press releases stating that it would only modify its business

"if and when an adverse ruling should ever become final." See

http://ir.lphi.com/releasedetail.cfm?ReleaseiD=790514 (last visited on June 1, 2016)

(See Ex. 11 at App. 400).

20. To date, Class Counsel has devoted over five years to the prosecution of

this and related actions. If Plaintiffs had prevailed on the merits at trial, Plaintiffs

estimate that post-trial motions and appeals would have proceeded for many more

years and that Plaintiffs would have incurred substantial additional time, effort

and expenses. This Settlement Agreement avoids the time, expense, and risk

associated with a trial and the appeal likely to follow trial. This Reed factor weighs

in favor of approving the Settlement Agreement.

C. The Stage of the Litigation and Available Discovery

21. By the time the Settlement Agreement was reached and formally

reduced to writing, the Parties had engaged in more than five years of protracted

litigation, including numerous rounds of potentially dispositive motions in various

courts. Class Counsel had filed its motion for class certification in the Bankruptcy

Court and was prepared to move forward with that motion when the negotiations of

13 App.13

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the resolution of the Consolidated Class Adversary began in earnest with the

Trustee and the Committee. As a result of the ongoing negotiations, the Parties

agreed to abate the class adversary proceedings.

22. Although no formal discovery had been conducted in the Consolidated

Class Adversary, there was substantial discovery conducted in the Arnold State

Court Action. Plaintiffs served LPI with multiple rounds of written discovery,

conducted the deposition of the single largest master licensee, and analyzed the

necessary documents to prosecute the claims. Class Counsel's efforts were thorough

and sufficient and allowed the Plaintiffs to obtain reversal of the district court on

appeal. Voluminous and formal discovery is not required to approve a settlement as

reasonable. Union Asset Mgmt. Holding A. G. v. Dell, Inc., 669 F.3d 632, 639 (5th

Cir. 2012). What is required, however, is that "the parties and the district court

possess ample information with which to evaluate the merits of the competing

positions." Id. Through the state court litigation discovery and appeals as well as

information adduced during the Bankruptcy Cases, the Lead Plaintiffs are well

aware of the strengths and weaknesses of their positions regarding class

certification and the ongoing dispute over the Ownership Issue.

23. Class Counsel conducted extensive investigation relating to the claims

and the underlying events and transactions alleged in the Consolidated Class

Adversary. Class Counsel has analyzed evidence adduced during its investigation

and has researched the applicable law with respect to the claims Lead Plaintiffs

have asserted against LPI, as well as the potential defenses thereto. Additionally,

14 App.14

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Class Counsel's efforts in the Texas courts were necessary to the ultimate resolution

of the Consolidated Class Adversary because the issue of whether the Class

Members' investments with LPI were securities, as that term is defined by the

Texas Securities Act, was a prerequisite to determining the claims being disputed in

this case. This Reed factor weighs in favor of approving the Settlement Agreement.

D. The Probability of Plaintiffs' Prevailing on the Merits

24. The proposed Settlement Agreement is fair, reasonable, and adequate

given the factual and legal hurdles still facing the Class. Lead Plaintiffs faced

several factual and legal risks in establishing liability and proving damages at the

trial of the Consolidated Class Adversary, and in sustaining any verdict through

post-trial motions and appeals. These significant hurdles include, but are not

limited to: (i) adverse rulings on class certification; (ii) adverse rulings on summary

judgment; (iii) the differences among certainly competing experts regarding the

calculation of the damages suffered by the Class; (iv) a adverse ruling by the fact

finder; and (v) the possibility that a favorable verdict might be disturbed or

overturned on appeal to the Fifth Circuit on a number of potential legal issues.

25. The Fifth Circuit has stated that settlement is appropriate when it is

difficult to assess the plaintiffs' case and the plaintiffs face substantial challenges in

obtaining a positive result. Parker v. Anderson, 667 F.2d 1204, 1209-10 (5th Cir.

1982). Here, LPI has strongly opposed the underlying legal principal of ownership of

the securities, and Lead Plaintiffs' ability to certify the Class, and in the absence of

the Settlement Agreement, is expected to continue to do so. These are matters that

15 App.15

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have been discussed at length during the settlement negotiations and mediation

process. These uncertainties-in addition to many others-are relevant if this case

were to proceed without the Settlement Agreement.

26. This Reed factor weighs strongly in favor of approving the Settlement

Agreement.

E. The Range of Possible Recovery and Certainty of Damages

27. The range of possible recovery in this case is wide. If the Lead

Plaintiffs were to lose the Ownership Issue at trial, the Debtors would be deemed to

be the owners of both the legal and beneficial interests of the insurance policies

underlying the securities at issue in this case. This would result in all policies being

assets of the bankruptcy estate and subject entirely to the control of the Trustee

and the Debtors, which would include the right to sell the policies. The last

estimated market value of all of the policies was under $500 million. In effect, this

means these assets, with a face value of approximately $2.4 billion, could have been

reduced to a value of $500 million or less.

28. Instead, the Class will recover benefits with an estimated value in

excess of $1 billion, based on the feasibility analysis in the Plan. This recovery is a

fair, reasonable, and adequate result by any objective measure. It represents at

least 95% of the compensatory damages Lead Plaintiffs reasonably might have

recovered if they had prevailed at trial and also on appeal. And, in some instances it

will represent more than 95% of those compensatory damages where an investor

16 App.16

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elects to be a Continuing Position Holder and the policy matures within a few years

after confirmation of the Plan.

29. This compares favorably to the customary recovery in analogous

securities fraud cases, which typically range from 1.2% to 3.6% of investor losses.

30. Even if Class Members received the return conservatively estimated by

the Estate Professionals-$1.078 billion, an amount Class Counsel believes is a

worst-case scenario-Class Members will still see a return of their invested capital

at a rate of 84% of their investment.

31. Additionally, Class Members will not be required to pay the Class

Counsel's fee from any portion of Fractional Positions owned by or contributed to

the Position Holder Trust by Class Members. Class Counsel has agreed to defer

payment of the fee and instead to be paid in kind and over time on the basis of the

face amount of Pre-Petition Abandoned Positions.

32. This Reed factor weighs strongly in favor of approving the Settlement

Agreement.

F. The Opinions of Class Counsel, Class Representatives, and Absent Class Members

33. The Parties and their counsel all support the proposed Settlement

Agreement.

34. As a member of the Plan Support Group, Class Counsel has engaged in

lengthy and thorough negotiations of the Plan with the Debtor, the Committee, and

the other members of the Plan Support Group. The remaining members of the Plan

17 App.17

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Support GroupS collectively represent more than 4,000 individual Class Members in

their capacity as creditors, and all members of the Plan Support Group have

indicated their support of the Settlement Agreement.

35. Class Counsel also believes, especially m light of the ongoing

Bankruptcy Cases, that the public interest is served by resolving claims on behalf of

over 20,000 Class Members with a fair, reasonable, and adequate settlement while

also avoiding the risk and expense of trial, post-trial proceedings, and appeals, and

allowing the Plan to become effective as soon as possible.

36. Class Counsel has also spoken to hundreds of Class Members who

have called at various times since the signing of the Term Sheet on September 24,

2015. Further, Class Counsel has also spoken to hundreds of Class Members since

LPI filed its Chapter 11 petition, and all Class Members have unanimously been in

favor of a settlement and getting a plan of reorganization in place as quickly and

efficiently as possible. Each Class Member to whom Class Counsel has spoken has

indicated that he or she is strongly in favor of this Settlement Agreement and the

Plan. Further, Class Counsel has spoken or corresponded via email with hundreds

more class members since the Notice was sent out about the Settlement Agreement.

Again, the class members have indicated their overwhelming support of the

Settlement Agreement.

3 The PSG consists of the following counsel and their creditor constituencies: Kevin S. Wiley, Sr. for the Amicus Curiae Fractional Holders; Jeffrey R. Erler and Sam Stricklin for Certain IRA Investors; James Orr for the Willingham MDL Plaintiffs; Susan B. Hersh for the Small Individual Investors Group; and David Ritter for the Ad Hoc Committee of Direct Fractional Interests Owners of Life Settlement Policies.

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37. Under the provisions of the Preliminary Approval Order, the deadline

for filing and serving objections is July 7, 2016. At this time, however, the Class has

expressed overwhelming support for the proposed Settlement Agreement.

38. Class Counsel is an experienced litigator with over fifteen years of

experience litigating complex cases, including class actions, toxic torts, and patent

litigation and other complex cases. Class Counsel operates as a solo practitioner in

Longview, Texas. Specifically, while working at Nix, Patterson ~ Roach, Class

Counsel was appointed as counsel for the class in Coffey v. Freeport McMoRan, a

community-wide environmental contamination case on. behalf of the people of

Blackwell, Oklahoma, resulting in a $119 million settlement, Class Counsel was

also involved in securities class action cases involving MoneyGram International,

Inc. ($80 million settlement approved), Brocade ($160 million settlement approved),

and Delphi Corporation ($241 million settlement approved). Class Counsel was

involved in the DataTreasury patent infringement lawsuits that resulted in over

$100 million in settlements. Class Counsel also participated in complex litigation

involving over 8,000 plaintiffs against hundreds of manufacturers of asbestos

containing products. Class Counsel supports the Settlement Agreement. In addition

to Class Counsel working on this case, Co-Counsel, Scott Skelton and Robert Cain4,

were intimately involved with the prosecution of the underlying Arnold State Court

Action, including the appeals. Co-Counsel also supports the Settlement Agreement.

4 At the outset of the case Mr. Skelton and Mr. Cain were both partners of the Zeleskey Firm in Lufkin, Texas. Since that time the Zeleskey Firm has dissolved. Mr. Skelton is now a partner at Skelton Slusher Barnhill Watkins Wells, and Mr. Cain is a partner at Cain, Alderman and Neil, both in Lufkin, Texas.

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39. This Reed factor weighs strongly in favor of approving the Settlement

Agreement.

V. THE CASE REQUIRED EXTRAORDINARY EFFORT AND DILIGENCE BY CLASS COUNSEL

40. Class Counsel has devoted enormous time and expenses to this case,

all of which were reasonably and necessarily expended in connection with the

prosecution of this lawsuit. In total, Class Counsel devoted more than 5,600

attorney and professional hours to the prosecution of this case. At all times Class

Counsel, along with Co-Counsel, endeavored to work efficiently. In addition, counsel

has also sought to minimize expenses whenever possible.

41. The following summary is provided to: (a) demonstrate the risks of

success, as they appeared at each phase of the litigation; and (b) illustrate the legal

services of Class Counsel to achieve the Settlement Agreement now before the

Court. This litigation was not a follow-up to any prior government action or

investigation, but was the product of private investigation.

A. Investigation, Preparation of Pleadings and Filing of the Petitions and LPI's Special Exception Thereto

42. Class Counsel began investigating this case in late 2010 on behalf of

Michael and Janet Arnold and Dr. John Ferris. Based on a review of the written

materials LPI sent to its investors, it appeared that the products being purchased

by Plaintiffs were securities and that these securities were not registered with

either the Texas State Securities Board or the SEC.

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43. LPI had a long, litigious history. There were numerous cases around

the country where LPI had been sued or had even filed suit itself that were

reviewed prior to taking on this case. Additionally, there were numerous stories in

the media about LPI and its business practices and, in particular, its business

model-the selling of fractional interests in the life insurance policies of third

parties. LPI touted itself as the oldest life settlement provider in the United States

and a leader in the industry. Although numerous causes of action had been brought

against LPI, including by the SEC, LPI had successfully fought off all of its

adversaries. Specifically, LPI had won the very battle about to be waged by Class

Counsel and Plaintiffs-whether the products it sold were in fact securities.

44. The SEC filed suit against LPI in 1995 and obtained several

injunctions from the United States District Court for the District of Columbia that

ultimately prevented LPI from continuing its business. LPI appealed these orders to

the United States Court of Appeals for the District of Columbia Circuit in early

1996, and in July of 1996, the District of Columbia Circuit held that "LPI's contracts

are not securities subject to the federal securities laws ...." SEC v. Life Partners,

Inc., 87 F.3d 536, 538 (D.C. Cir. 1996). Adding further weight to the opinion was

that its author, Judge Douglas Ginsburg, was at one time responsible for reviewing

all federal agency regulations for the Reagan administration.

45. LPI sought to silence anyone who questioned its business practices. In

1999, LPI went as far as to file a $1.5 million defamation against an author and

website publisher who wrote that LPI was violating securities laws. The same was

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true m this case where LPI sought in excess of $300,000 in sanctions against

Plaintiffs and Class Counsel. See Section IV C, infra for a more detailed discussion.

46. LPI was sued again in 2004, in McLennan County District Court by a

plaintiff alleging that it was selling unregistered securities under the Texas

Securities Act. In that case, the trial court ruled in favor of LPI and the plaintiff

appealed to the Waco Court of Appeals. The Waco Court of Appeals, relying largely

on the D.C. Circuit's 1996 opinion, held that the interests in life insurance policies

did not constitute securities, rejecting each of the multiple theories raised by the

plaintiff-the court held that the investments were not investment contracts, notes

or evidence of indebtedness. The Waco Court of Appeals also determined that the

LPI investments fell within an insurance product exception to the definition of

securities.

4 7. Despite the foregoing, and based on an thorough investigation of the

trend being set in other jurisdictions around the country, Class Counsel spent

considerable time and effort to create a comprehensive memorandum outlining the

blueprint for a lawsuit against LPI. This included (1) a comparison of Texas

securities laws to federal and other states' laws;5 (2) comparing the District of

Columbia and Waco courts' opinions to other decisions regarding life settlements;

(3) surveying and analyzing the decisions of state enforcement agencies against LPI

5 This included an evaluation of Alaska, Arizona, Arkansas, , Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New , North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Utah, Vermont, West Virginia, Wisconsin laws which define life settlements as securities by statute and an evaluation of Delaware, Louisiana, Maryland, Massachusetts, New Hampshire, New York, Oregon, Virginia, Washington state laws where life settlements have been held to be securities under the common law.

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and other life settlement companies; (4) a detailed analysis of whether there are any

bases for federal jurisdiction via CAFA, the PSLRA, or SLUSA; (5) the best ways to

mitigate the probability of LPI filing some sort of offensive action given the

company's long history of suing those who threaten its business in any way; (6) the

applicability of the discovery rule to the claims; (7) which claims to assert (and

which can be certified pursuant to Texas Rule of Civil Procedure 42); (8) whether

Dallas county will be the proper venue for the lawsuit; (9) whether punitive or other

exemplary damages are available; (10) the remedies available in law and equity

against both LPI and Abundant Income (a Licensee); (11) whether to request a jury

trial on the available claims; (12) the probability that Texas courts would rule

contrary to the prior Waco court decision against LPI in Griffitts; (13) the

probability that Texas courts will adopt the analysis in SEC. v. LPI from the D.C.

Circuit; and (14) whether the same legal analysis applies to the claims against

Abundant Income, the Dallas County venue defendant.

48. Class Counsel determined that the facts and the law supported a claim

against LPI under the Texas Securities Act for selling or offering to sell

unregistered securities. Counsel advised the Arnold State Court Action Plaintiffs

who authorized the drafting of a complaint and authorized Class Counsel to pursue

class action claims on behalf of a putative class of all LPI investors in the state of

Texas.

49. The case was initially filed on March 24, 2011, on behalf of putative

class representatives Mike and Janet Arnold in the 14th Judicial District Court of

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Dallas County, Texas before the Honorable Eric Moye against both LPI and LPHI

and included claims against Abundant Income, the Licensee who sold the Arnolds

their policies.

50. The original class action petition was carefully crafted to avoid many of

the pitfalls that plagued previous litigants in their cases with LPI. The cases was

brought on behalf of only Texas investors to avoid CAFA removal to federal court

and was filed in Dallas County to avoid the precedent set by the Griffitts case.

51. Plaintiffs' original petition alleged that: (1) LPI offered and sold

securities under the Texas Securities Act because they were "investment contracts"

and "evidence of indebtedness" as defined in Tex. Rev. Civ. Stat. art. 581-4A; (2) LPI

created securities and offered and actually sold those securities, as defined in Tex.

Rev. Civ. Stat. art. 581-4E, to Plaintiffs and the class of Texas investors; (3) the

securities LPI offered and sold to Plaintiffs and the Class were not registered as

securities in the State of Texas as required by Tex. Rev. Civ. Stat. art. 581-7; and (4)

the life settlements offered and sold were not exempt from registration by Tex. Rev.

Civ. Stat. art. 581-5 or 581-6.

52. Plaintiffs, individually and on behalf of a putative class, alleged that

they were entitled to relief in the form of rescission or damages pursuant to Tex.

Rev. Civ. Stat. art. 581-33(A)(1); including interest, costs and attorney's fees

pursuant to Tex. Rev. Civ. Stat. art. 581-33D. Plaintiffs also sought a temporary

and permanent injunction requiring LPI's investments to be registered as securities

with the Texas State Securities Board.

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53. The law firm of Baker & McKenzie filed LPI's answer, affirmative

defenses, and counterclaims in response to the original petition on April 15, 2011.

Therein, LPI alleged counterclaims for: (1) violation of Texas Rule of Civil

Procedure 13; (2) violation of Texas Civil Practice and Remedies Code § 9.011; and

(3) violation of Texas Civil Practice and Remedies Code § 10.001. LPI alleged that

Plaintiffs' claims were groundless, bad faith claims and asserted for the purpose of

harassment. LPI requested that Plaintiffs be sanctioned for the filing of the case

and be required to pay LPI's attorneys' fees and costs associated with defending the

claims.

54. LPI simultaneously filed ten special exceptions6 to Plaintiffs' original

class action petition, including a special exception alleging that it was exempt from

Plaintiffs' claims pursuant to the federal SLUSA statute.

55. Plaintiffs filed their response to LPI's special exceptions along with

their first amended petition on May 2, 2011, therein adding Dr. John Ferris and

Steve South, as trustee for and on behalf of the South Living 'l'rust, as additional

plaintiffs; and adding Milkie Ferguson Investment, Ferris's and South's Licensee,

as an additional defendant. Plaintiffs realleged the same causes of action at this

time and addressed a number of the issues raised in LPI's special exceptions to the

original petition. LPI filed its answer to the first amended petition on May 10, 2011,

BIn Texas, special exceptions are used to identify defects, omissions, obscurities, duplicity, generality or other insufficiencies in the allegations and can even be used as a basis to dismiss whole claims or entire cases. If the trial court sustains a special exception, the pleader must be given the opportunity to amend the pleading, unless the pleading defect is of a type that amendment cannot cure. In this case, LPI filed special exceptions claiming various defects in Plaintiffs' pleadings and sought dismissal of all claims based on its legal argument that it did not sell securities.

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again alleging the same counterclaims for sanctions as were alleged in its original

answer.

56. LPI also filed special exceptions to Plaintiffs' first amended petition on

May 13, 2011. LPI realleged most of the special exceptions as it did to the original

petition, claiming Plaintiffs had done nothing to address the exceptions made to the

original class action petition.

57. On May 31, 2011, Plaintiffs filed their response to LPI's second round

of special exceptions, responding to LPI's spurious use of Texas' special exception

practice wherein LPI asserted affirmative defenses, motion for dismissal on the

merits claiming that non-binding authority mandated a dismissal, and claim that

Plaintiffs had not properly invoked the discovery rule.

58. On June 11, 2011, Plaintiffs filed their second amended class action

petition, adding the final Arnold State Court Action plaintiff, Christine Duncan, as

a putative class representative. Simultaneously, Plaintiffs added allegations that

LPI offered and sold securities to Plaintiffs and the class members by means of an

untrue statement of a material fact or an omission to state material facts in

violation of Tex. Rev. Civ. Stat. art. 581-33(A)(2). Specifically, Plaintiffs claimed

that the life settlement securities were sold with express statements that the

investments were not securities and that the securities were sold without any of the

information required by Tex. Rev. Civ. Stat. art. 581-7(A)(l), which constituted an

omission of material facts.

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59. LPI filed its answer to the second amended petition on July 11, 2011,

when it again asserted its counterclaims for sanctions against Plaintiffs.

60. LPI then set its second set of special exceptions for hearing on June 1,

2011. At the hearing, the Texas district court sustained several of the special

exceptions and Plaintiffs agreed to dismiss LPHI from the case. Plaintiffs had not

yet had a fair opportunity to conduct discovery, and did not have what the court

believed was an adequate factual basis for those claims.

61. Several months later, Plaintiffs had a pleading to which LPI was no

longer able to object. At this point Plaintiffs were able to move the case past the

initial pleading phase and into the discovery phase.

B. Protective Order, Scheduling Order and Discovery

62. Plaintiffs served LPI with a significant amount of discovery on three

separate occasions. Plaintiff's' first set of written discovery included ninety-three

requests for admission, two interrogatories, and seventeen requests for production.

In response to Plaintiffs' written discovery, LPI filed a 20-page motion for protective

order.

63. In its motion for the protective order, LPI argued that Plaintiffs'

requests were premature, unduly burdensome, overly broad, and harassing on their

face. Additionally, as many class -action defendants argue, LPI argued that

Plaintiffs were not entitled to merits-based discovery and should be limited to

discovery solely related to the issue of certification of the putative class.

Additionally, LPI again argued that Plaintiffs' claims were barred by either the

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statute of limitations or the statute of repose, or legally barred because the Waco

Court of Appeals had previously decided in the Griffitts case. Furthermore, despite

the fact that Plaintiffs sought documents specifically related to proceedings against

LPI in other jurisdictions on the issue of whether LPI was in the business of selling

securities, LPI also objected and sought a protective order on the basis that

Plaintiffs were on a "fishing expedition" in violation of the Texas Supreme Court's

ruling in Texaco, Inc. v. Sanderson.

64. In reality, the motion for protective order was no such thing. It was

instead a twenty-page missive requesting that the court improperly bifurcate

discovery and preemptively and prematurely excuse LPI from answering any

discovery in this case and lodge objections to discovery requests without having to

answer them.

65. On July 1, 2011, Plaintiffs filed their response to the motion for

protective order and explained to the district court that, with the exception of one

sentence in the motion, LPI spent the entirety of its motion urging the Court to

bifurcate discovery between class certification and merits issues and inexplicably

argued against a phantom motion to compel discovery that Plaintiffs had not filed.

LPI muddled together the concepts of bifurcated discovery and general discovery

objections and without so much as a citation to any authority in support; LPI

suggested that all of Plaintiffs' discovery should be somehow limited because this

case was a class action. As in many other instances, what LPI was attempting to do

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was improper in terms of both the substantive legal position it set forth and the

procedural tactic it took to get those objections before the Court ..

66. The Court ultimately did not bifurcate discovery as LPI requested.

Subsequently the district court entered a scheduling order setting the case for trial

on June 19, 2012.

67. Plaintiffs' second set of discovery included forty-two requests for

admission and nine requests for production. Plaintiffs' third set of discovery

included forty-eight requests for admission and nine requests for production. Each

of these sets of written discovery was met with copious objections by LPI.

68. As a result of the barrage of objections to the written discovery,

Plaintiffs were required to draft a motion to compel LPI to respond. As required by

the Texas Rules of Civil Procedure, Class Counsel met and conferred, numerous

times, with LPI's counsel at Baker & McKenzie. As part of that meet and confer

process, Class Counsel sent a courtesy copy of the motion to compel to LPI's counsel.

After numerous phone calls over the course of several weeks, LPI agreed to

withdraw a number of their objections and respond to most of the Plaintiffs'

discovery requests.

69. Plaintiffs also served discovery on LPI's co-defendants, Abundant

Income and Milkie/Ferguson Investment, Inc.

70. In addition to the written discovery served on LPI, Class Counsel took

the critical deposition of Abundant Income owner James E. Sundelius. Mr.

Sundelius was the largest LPI Master Licensee and claimed to have been selling

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LPI products for longer than any other licensee. LPI had paid Mr. Sundelius and his

company Abundant Income more than $15,000,000 in sales commissions.

71. Class Counsel specifically chose to depose Mr. Sundelius instead of

others within LPI because of the likelihood that he had not been prepared as

vigorously as Class Counsel anticipated that LPI principals like Brian Pardo and

Scott Peden had. It was critically important for Class Counsel to obtain information

relating to LPI's business necessary to respond to LPI's pending motions for

summary judgment, discussed in more detail infra.

72. Class counsel spent countless hours researching Mr. Sundelius and his

history and preparing a detailed outline for his deposition. Mr. Sundelius was

deposed on two separate days.

73. During the more than six hours when Mr. Sundelius was deposed,

Plaintiffs sought information regarding the corporate structure of LPI, its pyramid

scheme marketing, and the sales procedure employed by LPI and its licensees.

C. Motions for Summary Judgment

74. On July 8, 2011, LPI filed its first motion for partial summary

judgment. This 38-page motion, with almost 200 pages of exhibits in support,

sought dismissal of all claims asserted by the Arnold State Court Action Plaintiffs.

LPI argued that the claims should be dismissed as a matter of law because the life

settlements LPI "facilitated" were not securities.

75. First, LPI asserted that the holdings of either the United States Court

of Appeals for the D.C. Circuit in SEC v. Life Partners Inc. and/or the Waco Court of

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Appeals in Griffitts were dispositive and controlling in Dallas County. Additionally,

as with its special exceptions, LPI asserted that it was exempt from regulation by

the Texas Insurance Code and that the Plaintiffs' claims were likewise barred by

the statute of limitations or repose.

76. On August 19, 2012, LPI filed an amended motion for partial summary

judgment, attaching additional evidence in support of its previous arguments.

Defendant Abundant Income also filed its motion for partial summary judgment on

August 25, 2012, incorporating the arguments LPI had made.

77. Class Counsel spent most of early July through early September

preparing and assembling the 54-page response to the motion for summary

judgment, including locating, interviewing, and meeting· with expert witnesses who

could support Plaintiffs' legal arguments and regarding whether the LPI

investments were in fact securities.

78. Class Counsel retained life settlement expert Joseph C. Long (who has

since retired) in support of its response to LPI's motion for summary judgment.

Professor Long was the foremost expert on life and viatica] settlements in the

United States. In addition to being a professor at the University of Oklahoma

College of Law, the University of South Dakota, and Stetson University, he is also

the former Director of the New Hampshire Bureau of Securities Regulation, special

counsel to the North American Securities Administrators, Inc., the Reporter for the

National Conference of Commissioners on Uniform State Laws Committee in charge

of drafting the Revised Uniform Securities Act, and consultant to the Oklahoma

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Securities Commission. Professor Long was also the author of numerous articles,

books, and treatises on the subject of securities laws and multiple amicus curiae

briefs, including one in SEC v. Edwards, 540 U.S. 389 (2004).

79. Class Counsel worked closely with Professor Long in preparation of his

19-page report that was submitted in support of Plaintiffs' response to LPI's

motions for summary judgment.

80. Class Counsel conducted extensive legal research to respond to LPI's

motion for summary judgment on the putative class's claims. LPI's (and Abundant

Income's) motions for summary judgment were made pursuant to Texas Rule of

Civil Procedure 166a and claimed that there was no genuine issue of material fact

on Plaintiffs' claims, forcing Plaintiffs to submit sufficient evidence to raise a

genuine issue of material fact. Class counsel was therefore required to marshal as

much evidence as possible to respond to LPI's (and Abundant Income's) motions. On

September 19, 2011, Plaintiffs filed their response to LPI's (and Abundant Income's)

motions for summary judgment. Plaintiffs' response to LPI's motion was 54 pages

long and was supported by 731 pages of exhibits. These exhibits included all of the

Plaintiffs' documents, Professor Long's expert report, selected discovery responses,

transcript excerpts from the Sundelius deposition, marketing materials from LPI,

organizational charts from LPI, LPI's public filings with the SEC, and important

rulings from the Texas State Securities Board.

81. On September 20, 2011, the court held a hearing on LPI's motion. for

summary judgment. After the hearing, on September 26, 2011, the court issued an

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order dismissing Plaintiffs' claims in their entirety. The court's ruling was based on

the conclusion that the life settlements did not meet the definition of a security in

the Texas Securities Act.

82. On October 14, 2011, LPI filed a second motion for partial summary

judgment, this time seeking summary judgment on its counterclaims for sanctions

against Plaintiffs and Class Counsel. In this motion, LPI asked the court to sanction

Class Counsel for the violations of: (1) Texas Rule of Civil Procedure 13; (2) Texas

Civil Practice and Remedies Code § 9.011; and (3) Texas Civil Practice and

Remedies Code § 10.001. In its motion, LPI sought $355,433.96 in monetary

sanctions against Class Counsel for its attorneys' fees and costs.

83. On November 22, 2011, Plaintiffs filed their 13-page response to the

motion for sanctions arguing that: (1) LPI's "claims" were not claims upon which it

could seek summary judgment; (2) even if summary judgment on its counterclaims

were properly couched as a motion, none of the provisions was applicable and that

LPI had failed to provide any evidence to support its claims. The district court

nonetheless granted LPI's motion and entered an order of sanctions on November

29, 2011, ruling that under Rule 13 of the Texas Rules of Civil Procedure and

Chapter 9 of the Texas Civil Practice and Remedies Code, the pleadings were

"frivolous and without basis in law or fact." When the Court entered this order, it

had not heard evidence as to the amount of the sanction and ordered the parties to

mediation to resolve the amount of the sanction. The district court entered a final,

appealable order on November 29, 2011.

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84. On December 22, 2011, the parties participated in a full day of

mediation with mediator Will Pryor. Class Counsel and three of the plaintiffs and

proposed class representatives were present for the mediation. A proposal was made

that Plaintiffs agree to waive their right to appeal the summary judgment and

sanctions orders entered by the district court in exchange for LPI withdrawing its

request for sanctions. Class Counsel, in consultation with the plaintiffs, believed the

district court's orders would be reversed on appeal and rejected LPI's offer.

85. On December 29, 2011, LPI filed a 21-page motion to modify the

judgment, with over 100 pages of exhibits. LPI's motion was an attempt to modify

the judgment to add an additional ground for sanctions against Class Counsel

because the district court's prior ruling only granted sanctions pursuant to Rule 13

and Chapter 9 of the CPRC. LPI also attempted to improperly use an affidavit from

Baker & McKenzie lead counsel Elizabeth Yingling to prove up the billing records

and support a monetary sanction amount.

86. Class Counsel filed a 15-page response to LPI's motion to modify the

judgment on January 2, 2012. The district court did not modify the prior judgment

it had entered and left the prior sanctions order intact without ever determining a

monetary amount for the sanction.

D. Appeal to the Court of Appeals

87. On January 19, 2012, Plaintiffs filed their notice of appeal in the Court

of Appeals for the Fifth District of Texas at Dallas. Class Counsel filed Plaintiffs'

brief on jurisdiction in the Court of Appeals to address issues created by the

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sanctions order and questions from the Dallas Court of Appeals regarding the

finality of the judgments in the trial court.

88. Class Counsel arranged for both the clerk's record and the reporter's

record to be properly before the Dallas Court of Appeals. Class Counsel then spent

several months conducting additional research and drafting Plaintiffs' 50-page

appellate brief on the merits, which was filed on May 15, 2012.

89. On June 13, 2012, LPI filed its 50-page appellate brief on the merits.

On August 2, 2012, Plaintiffs filed their 25-page reply brief. Both sides had waived

oral argument and the appeal was submitted to the court on the briefs on March 13,

2013.

90. On August 28, 2013, the Dallas Court of Appeals issued its unanimous

opinion holding that the life settlements sold by LPI were securities as a matter of

law. The Court of Appeals reversed the district court's prior orders granting

summary judgment in LPI's favor, reversed the order of sanctions, held that

Plaintiffs' claims were not frivolous, and. remanded the case to the district court for

further proceedings.

91. On September 24, 2013, LPI filed its motion for rehearing in the Dallas

Court of Appeals. That motion was denied on January 7, 2014.

92. In the meantime, the State of Texas was also prosecuting a case

against LPI in Travis County. In that case, the trial court had ruled against the

State on the issue of whether the LPI investment products were securities. The

State appealed that issue to the Third Court of Appeals at Austin. On February 6,

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2014, the Third Court of Appeals issued a short three-page opinion in which it

"agree[d] with the conclusions reached by the Dallas Court [in Arnold] and fully

incorporate[d] its analysis." LPI sought review of this decision in the Texas

Supreme Court.7

E. Appeal to the Texas Supreme Court

93. On March 24, 2014, LPI filed its Petition for Review in the Texas

Supreme Court. LPI's petition was 25 pages in length and included over 200 pages

of record excerpts. Co. defendant Milkie/Ferguson filed its own petition for review on

March 21, 2014.

94. In addition to its counsel in the trial court, Baker & McKenzie, LPI

retained former Texas Supreme Court Justice Harriet O'Neil and former Texas

Supreme Court Chief Justice Wallace Jefferson of the law firm of Alexander Dubose

Jefferson & Townsend to represent it on its petition for review to the Texas

Supreme Court.

95. On May 5, 2014, Plaintiffs filed their 25-page response to LPI's petition

for review with over 350 pages of record excerpts. Plaintiffs urged the court to deny

LPI's petition and affirm the decisions of the Dallas and Austin Courts of Appeals.

Plaintiffs argued that those decisions correctly determined that investors depended

on LPI for its entrepreneurial and managerial skill for the success of the

investments. Therefore, the Dallas Court of Appeals' determination that LPI's

investment products were securities was consistent with the Texas Supreme Court's

7 The State's case and the Arnold case were consolidated for oral argument purposes only in the Texas Supreme Court.

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opm10n m Searsy v. Commercials Trading Corp., 560 S.W.2d 637 (Tex. 1977),

wherein the Texas Supreme Court adopted the United States Supreme Court's

decision and analysis in S.E.C. v. Howey, 328 U.S. 293 (1946).

96. On May 20, 2014, LPI filed its 20-page reply to Plaintiffs' response to

the petition for review. On June 20, 2014, the Texas Supreme Court requested

briefs on the merits from the parties. Thereafter on August 20, 2014, LPI filed its 59

-page brief on the merits with 230 pages of record excerpts. LPI again argued that

its life settlements were not securities because LPI did not use its skill to make

money for its investors. LPI also sought to have any opinion issued by the court to

apply only prospectively.

97. On October 23, 2014, Plaintiffs filed their 70-page response to LPI's

brief on the merits, with over 650 pages of record excerpts. Despite the underlying

premise of LPI's arguments being the same-LPI did not use its entrepreneurial

and managerial skills to create profits for investors-the arguments advanced by

LPI in the Texas Supreme Court were new and novel, and required significant

additional research and drafting to address.

98. On November 11, 2014, LPI filed its 33-page reply brief in the Texas

Supreme Court. During the pendency of the appeal to the Texas Supreme Court,

Class Counsel was contacted by and worked with the North American Securities

Administrators, Inc. ("NASAl") in assisting its counsel with its amicus curiae brief.

Class Counsel provided the NASAl with non-privileged documents, background

material, and briefing in the lower courts to assist NASAL

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99. On December 19, 2014, the Texas Supreme Court granted LPI's

petition for review and set the case for oral argument on January 15, 2015. Because

the Court had consolidated the Arnold case with the State's case for the purposes of

oral argument, Class Counsel coordinated with counsel for the Texas Attorney

General regarding how to handle the argument. Class Counsel spent the next 25

days, including considerable time over the holidays, preparing for the oral

argument. Oral argument was held in Austin on January 15, 2015.

100. On May 8, 2015, the Texas Supreme Court issued a unanimous opinion

affirming the rulings of the Dallas and Austin courts of appeal and holding that as a

matter of law, the investments sold by LPI were securities under the Texas

Secmities Act as a matter of law. The Court also rejected LPI's suggestion that its

ruling should apply prospectively.

F. LPI files Chapter 11 bankruptcy in the Northern District of Texas-Fort Worth Division

101. On January 20, 2015, LPHI, the parent holding company of LPI, filed a

voluntary petition for relief under chapter 11 of title 11 of the United States Code,

commencing its bankruptcy case in this District. On the following day, LPHI moved

for the appointment of an examiner. Two days later, the SEC filed a motion for the

appointment of a Chapter 11 trustee.

102. On January 30, 2015, the United States Trustee appointed the Official

Committee of Unsecmed Creditors.

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103. On February 3, 2015, LPHI filed a motion to modifY the automatic stay

to allow continuation of the Arnold case that had been argued and remained

pending before the Texas Supreme Court.

104. Class Counsel attended each of the hearings held in connection with

the appointment of a Chapter 11 trustee, including preliminary hearings held on

,January 26, 2015 and February 6, 2015. Class Counsel officially entered an

appearance in the Bankruptcy Court on February 9, 2015, the first day of the

presentation of evidence by the SEC on its motion for the appointment of a Chapter

11 trustee. The hearing on the motion to appoint a trustee, or alternatively an

examiner as suggested by LPHI, lasted several full days. Class Counsel actively

participated in questioning witnesses during the hearing. The hearing continued on

February 10, 12, 17 and 19, 2015.

105. On March 10, 2015, the Court granted the SEC's motion to appoint a

Chapter 11 trustee. On March 13, 2015, the U.S. Trustee appointed H. Thomas

Moran as the Chapter 11 trustee in the LPHI case, and on March 19, 2015, the

Bankruptcy Court affirmed Mr. Moran's appointment.

106. From the time LPHI filed its Chapter 11 petition, Class Counsel met,

interviewed, and vetted several candidates to serve as bankruptcy counsel for the

Plaintiffs in the Arnold State Court Action and for Class Counsel. As described

supra, Class Counsel is almost exclusively litigation counsel and believed it was

important to retain qualified bankruptcy counsel to adequately protect the interests

of the putative class during the bankruptcy proceeding. Class Counsel chose Mr.

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John Leininger of Bryan Cave to serve as bankruptcy counsel. Later, Class Counsel

employed Mr. Jeffrey Sternklar to serve as additional bankruptcy counsel.

107. There were continuous and ongoing discussions throughout the course

of the Bankruptcy Cases related to the Ownership Issue. The Ownership Issue has

arisen in numerous contexts and seemed to be a continuous undercurrent in the

Bankruptcy Cases. LPI believed the life insurance policies were its property in the

Bankruptcy Cases, and the Investors believed they were the owners of the policies.

The Bankruptcy Court determined that the Ownership Issue could only be resolved

through litigation. The outcome of this dispute was fully dependent on the Texas

Supreme Court's ruling regarding whether the LPI investments were securities.

108. On May 19, 2015, the Trustee filed voluntary petitions for relief under

Chapter 11 for LPI and LPIFS, the operating subsidiaries of LPHI. And shortly

thereafter, the U.S. Trustee sent notice to the creditors that it would possibly be

seeking additional members for the Official Unsecured Creditors Committee. Class

Representative Steve South sought appointment to the Committee, and Class

Counsel consulted with Mr. South and attended the meeting and interview with the

Trustee's counsel, Committee counsel, and the U.S. Trustee's office. Ultimately, Mr.

South was not chosen to sit on the Committee, and on June 4, 2015, the U.S.

Trustee added two members to the Committee, Mr. Trimble and Mr. Reddus.

109. As part of the Bankruptcy Cases, Class Counsel has been responsible

for reviewing the pleadings filed in the Bankruptcy Court. As of June 2, 2015 there

were 648 docket entries in the consolidated case. Additionally, Class Counsel

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attended 17 hearings in the Bankruptcy Court through June 2, 2015, mostly in

person but on two occasions telephonically. Class Counsel also attended several

meetings in Dallas with counsel for various other creditors and potential plan

proponents regarding the ongoing chapter 11 proceedings.

110. On May 20, 2015, the Trustee filed motions for authority to replace the

record policy beneficiaries and to access cash surrender value in the policies. The

Trustee sought to consolidate both legal and beneficial title to the underlying

securities instrument-the life insurance policies-in LPI. Numerous creditors,

including Lead Plaintiffs through Class Counsel, opposed these motions. There was

a series of hearings related to these matters on June 12, 25, and 29, 2015.

Ultimately, a temporary agreement was reached to allow the Trustee to use

premiums on hand and the cash value in the policies to ensure that there were no

policy lapses that would harm investors and the Debtors.

111. On June 19, 2015, creditor KLI Investments LP and several Penumbra

entities (the "KLI Plaintiffs") filed an adversary proceeding against LPI. As part of

that adversary proceeding, the KLI Plaintiffs, the Committee, and the Trustee

agreed on a scheduling order. This scheduling order would have required all

creditors who sought to claim a beneficial interest in the policies underlying their

securities to intervene in the KLI Adversary case. Class Counsel and other creditors

objected to this scheduling order as an attempt to deprive Investors of a substantive

right with a scheduling order in an adversary proceeding.

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112. After the Texas Supreme Court's opinion in the Arnold State Court

Case, Lead Plaintiffs, acting through Class Counsel, filed two adversary

proceedings in the Bankruptcy Court. On or about July 20, 2015, Lead Plaintiffs

Philip Garner (later joined by Steve South and Christine Duncan), through Class

Counsel, filed Garner et al. v. LPI and then Lead Plaintiffs Michael and Janet

Arnold, Dr. John S. Ferris, Steve South, and Christine Duncan filed Arnold et al. v.

LPI. The Garner adversary proceeding sought a declaration that: (1) the Class

Members are the owners of the life settlement securities they purchased from LPI

(including all death benefit proceeds); and (2) the securities the Class Members

purchased (including all death benefit proceeds) along with any other monies held

in escrow are not part of LPI's bankruptcy estate. The Arnold adversary sought

relief in the form of rescission on behalf of all Class Members for LPI's sale of

unregistered securities.

113. On or about July 30, 2015, Class Counsel filed its motion for class

certification in the Garner adversary proceeding. This 17-page motion sought to

certify a class under Rules 23(b)(l) and 23(b)(2) to have this Court declare that the

Class Members owned their securities and the proceeds from those securities, and

that such securities were not property of Life Partners' bankruptcy estate. Shortly

after the filing of the motion for certification in the Garner case, and before Class

Counsel had the opportunity to file a motion for class certification in the Arnold

class adversary, Class Counsel and counsel for the Trustee agreed to abate those

adversary proceedings while the parties attempted to negotiate the settlement of

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the claims in both adversary proceedings. This abatement agreement was filed with

the Court on September 18, 2015.

114. Shortly thereafter, Class Counsel, along with other counsel for various

Investors, began to negotiate with the Trustee and the Committee with respect to a

plan of reorganization. On August 6, 2015, Class Counsel went to the first of many

meetings with the Trustee, the Committee, and the PSG. This initial meeting

occurred at the LPI offices in Waco, Texas. Due to the fact that this initial meeting

was a crucial beginning of the plan support negotiation process, Class Counsel flew

back to Texas during a family vacation to attend this initial meeting. At this

meeting, a very rough outline of a possible plan was discussed and drawn out on a

white board, with contributions from all members of the PSG, the Committee, and

the Trustee and his counsel. Lead Plaintiff Philip Garner also attended this

meeting.

115. An outline of a term sheet based on the items outlined at the Waco

meeting was then circulated for comment to the PSG and the Committee. On

August 17, 2015, Class Counsel attended a hearing on a motion to terminate

exclusivity. It was at this hearing that counsel for the Trustee, Mr. Bennett, first

announced that the PSG, the Committee, and the Trustee were in negotiations to

come up with a consensual, self-funded plan that would allow the Debtors to

reorganize in a way that was intended to maximize the return to creditors.

116. During the months of August and September 2015, Class Counsel

attended at least ten other in-person meetings in Dallas at the offices of Trustee's

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counsel or Committee's counsel to further discuss and finalize the Term Sheet.

Additionally, Class Counsel personally conferred with other members of the PSG on

various provisions of the Term Sheet, and, specifically, those provisions related to

the compromise and settlement of the Consolidated Class Adversary, which was an

integral part of the Term Sheet and the forthcoming Plan. Class Counsel also

contributed to the drafting, editing, and finalizing of the Term Sheet. The Term

Sheet was ultimately finalized and signed by the Trustee and LPI, the Committee,

and the PSG on September 24, 2015. The Trustee filed the Term Sheet on

September 25, 2015. Class Counsel spent approximately 120 hours during the

months of August and September solely for the purpose of preparing for, traveling

to, and attending meetings associated with the Term Sheet. Class Counsel spent an

additional approximately 40 hours during August and September conducting

negotiations and discussions with the other PSG members, the Committee's

counsel, and the Trustee's counsel via telephone and email, as well as drafting and

editing the Term Sheet.

117. A crucial aspect of the Term Sheet was the resolution of the class

action adversaries and the ownership issue. As a mechanism to all the creditor body

to fund the plan during the pendency of the bankruptcy and give each creditor

various rights under the contemplated Plan, the class adversaries would be

resolved. The Plan Term Sheet outlined a Plan that would offer creditors three

options: (1) continue to pay premiums and maintain their beneficial interest in the

policy originally purchased from LPI; (2) be relieved of their ongoing premium

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obligations and contribute their beneficial interest to the "Policy Trust" and receive

an interest in the entire pool of policies that are contributed to the Trust; or (3)

rescind their transaction and become a beneficiary of the Creditors' Trust.

Importantly, as part of the Plan and in connection with the resolution of the class

adversaries, the estates agreed to waive any claim to ownership in the life

settlement policies and the beneficial interests associated with them. In exchange

for this treatment under the Plan and in compromise of the claims asserted by the

Class Representatives in the Garner and Arnold adversaries, the Plan would allow

for an across the board contribution to the Policy Trust of 5% of all outstanding

fractional positions, escrowed premiums and funds generated by policy maturities

during the pendency of the bankruptcy. Each continuing ho]der would have a

corresponding 5% interest in the Policy Trust that may result in the repayment of

some or all of that contribution at a time when the Plan is confirmed and the post­

confirmation policy holder trust deems the trust solvent and capable of returning

such funds to creditors. The resolution of the Consolidated Class Adversary and the

Ownership Issue, and served as. the basis for the Plan and the elections offered to

Class Members in the Plan and through the Settlement Agreement.. The resolution

of the Consolidated Class Adversary is an essential element of the Plan, without

which continued funding of premiums, establishment of the post-confirmation

trusts and servicing agreements, and capitalization of the reorganized debtor would

not be possible.

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118. Additionally, as part of the Term Sheet, the PSG and the Committee

supported the Trustee's motion for financing that was filed on September 16, 2015.

This motion sought permission for the Trustee to access sufficient funds to pay (1)

the ongoing premium obligations on the policies to keep the policies in force and (2)

other operating expenses for the Debtors. The Bankruptcy Court granted the

financing motion on October 5, 2015. This allowed the Trustee to keep current the

policies of which the Class Members claimed to be the beneficial owners.

119. Over the course of the next five months after the approval of the

financing motion, the Committee and its counsel and the Trustee and its counsel,

with input from the PSG counsel, worked tirelessly and diligently to draft the Plan

that would implement the complicated structure outlined in the Term Sheet. This

effort required numerous meetings during that time-usually one meeting per

week, with each meeting taking an entire work day. Depending on the

circumstances at the time, there were numerous occasions where the Plan

Proponents and the PSG or various counsel met for multiple days during a week.

These meetings included a wide variety of issues including: (1) tax issues associated

with the Plan; (2) treatment of IRA investors under the Plan; (3) financial

projections and financial modeling of the Plan; (4) viability of the Plan based on

complicated mortality projections of the underlying insureds; (5) exit financing; (6)

allocation of beneficial interest in the post-confirmation trusts; (7) general plan

modeling; (8) settlement discussions regarding the Consolidated Class Adversary

and the Class Proofs of Claim; (9) the sale and functioning of the servicing company;

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(10) analysis of creditors who abandoned their positions prior to the filing or during

the pendency of the bankruptcy; (11) capitalization of and a litigation plan for the

Creditors' Trust; (12) analysis of Plan confirmation requirements; (11) treatment of

current position holders who failed to file a proof of claim; (13) resolution of

ancillary litigation; and (14) drafting and editing of the disclosure statement, and

timing and sequencing of all documents associated with the Plan. Also discussed at

numerous meetings were other potential plan proponents and a comparison of those

plans with the Term Sheet to determine how to maximize creditors' recoveries. The

Trustee and his Counsel, the Committee and its counsel, and certain members of

the PSG also spent significant time discussing and reviewing Plan-related

documents, including, but not limited to, the servicing agreement, the trust

agreements for each of the proposed post-confirmation trusts, escrow agreements, a

trust indenture, deposit account control agreement, effective date cash flow

analysis, solicitation and voting procedures motion, preliminary class action

approval motion and Rule 9019 motion, settlement agreement of the Willingham

MDL Plaintiffs, class action notice and confirmation hearing notice, and various

other documents that are necessary to finalize confirmation of the Plan. The

Committee, the Trustee, and the PSG, including Class Counsel, also discussed and

interviewed numerous potential post-Confirmation Trustees.

120. These efforts resulted in the filing of the Second Amended version of

the Plan and accompanying Disclosure Statement on March 24, 2016, the same day

that the Settlement Agreement was fully executed and included in the Plan filing.

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Subsequently, on June 22, 2016, a Third Amended verswn of the Plan and

accompanying Disclosure Statement were filed to incorporate a proposed servicing

and financing arrangement with Vida Capital. None of the changes from the Second

Amended to the Third Amended version of the Plan and accompanying Disclosure

Statement affected the elections for Class Members or other material terms of the

Settlement Agreement. The Plan and Disclosure statement are over 500 pages in

total length and represent the culmination of months of collaboration by the

Trustee, the Committee, the PSG, and, now, Vida Capital. The Plan affords Class

Members the opportunity to recover a significant amount of their invested capital.

121. Class Counsel participated in extensive discussions and interviews

with as many as nine candidates for the job of Position Holder Trust Trustee over

the course of several weeks. These were extensive and detailed interviews of each

candidate in order to determine their suitability and capability to serve in this role.

122. In addition to the pleadings discussed supra through June 2, 2015,

Class Counsel has been responsible for reviewing all additional pleadings filed in

this Court since that time. As of July 1, 2016, there were 2613 docket entries in the

Bankruptcy Cases. Class Counsel attended more than 40 additional hearings in the

Bankruptcy Court from June 2, 2015 through July 4, 2016 and countless meetings

and conference calls with counsel for the Trustee, the Committee, and the PSG.

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VI. THE RECORD FULLY SUPPORTS THE ATTORNEYS' FEE AWARD

A. The Class Representatives Retained Class Counsel on a Contingent Fee Basis

123. The Lead Plaintiffs agreed to pay a contingent fee of at least one-third

(33.3%) of the recovery.

124. Class Counsel respectfully submits that the result obtained for the

benefit of the Class Members and the extraordinary effort required to achieve that

result justify a fee award consistent with the contingent fee agreements signed by

the clients: one-third of the recovery from the Debtors in this case. However, Class

Counsel understands that there are serious financial limitations to which the

estates and the reorganized debtor are subject to, and Class Counsel therefore has

agreed to make significant concessions with regard to his fee in an effort to not add

additional financial stress to the estates and the Class Members. Pursuant to the

terms of the Settlement Agreement, Class Counsel is applying to the Court for an

award of attorneys' fees to be paid over time (potentially as long as 30 years or

more) on the basis of the face amount of Pre-Petition Abandoned Positions that are

assets of the Debtors. Class Members will not be required to pay Class Counsel's fee

from any portion of fractional positions owned by or contributed to the post-

confirmation trust.

B. The Risk of Non-Payment Supports the Reasonableness of the Agreed Fee

125. As described above, this case presented numerous potential risks

including:

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a. Complex and novel legal theories;

b. LPI's affirmative defenses, including the statute of limitations and the statute of repose;

c. Non-certification under Rule 23;

d. Advancing significant costs;

e. Foregoing representation of clients in other matters;

f. Loss at trial;

g. Likelihood of appeal;

h. Possibility of the verdict being overturned on appeal;

1. Remand/retrial and additional delay; and

J. Risk of Chapter 7 liquidation or other adverse consequences of bankruptcy.

126. Class Counsel accepted this matter on a contingent fee basis, with the

attendant risk that they would receive no fee or reimbursement of expenses. Class

Counsel should therefore be rewarded for overcoming the risks involved and

bringing this case to a successful resolution.

C. The Quality of Performance Supports the Reasonableness of the Agreed Fee

127. Over the course of five years of litigation, including an appeal to the

Texas Supreme Court, this demanding case presented difficult factual, procedural,

and legal issues. It involved significant amounts of money and a tremendous

amount of time, especially devoted to legal research and competent and persuasive

writing. During that time, Class Counsel was subjected to the possibility of

sanctions be awarded in an amount in excess of $350,000. LPI and its trial counsel

50 App.SO

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Baker & McKenzie were often very contentious and created lengthy legal battles

over many issues. LPI's bankruptcy counsel and Class Counsel also zealously

represented their respective clients in staking out their respective positions.

128. Moreover, Class Counsel litigated the case to the state's highest court

and successfully obtained a unanimous opinion and was prepared to use that

opinion and four years of experience to litigate the Consolidated Class Adversary in

the Bankruptcy Court. LPI was well financed and hired sophisticated, talented

counsel at every level of the case, and the issues involved in the case were

complicated, both legally and factually. The Bankruptcy Court has recognized on

more than one occasion that these issues are complex and have been hard fought by

all parties in the Bankruptcy Cases. Class Ccunsel respectfully submits that the

same is true in each of the courts where it has litigated this matter prior to this

Court.

Lead Plaintiffs are extremely satisfied with the quality of the legal services

they received and the results achieved, and have expressed their support for the

Agreed Fee by signing the Settlement Agreement.

D. The Amount of Work Necessary to Resolve the Litigation Supports the Reasonableness of the Agreed Fee

130. As discussed above, this case has been zealously litigated by both sides

over the course of the last five years. Class Counsel has devoted more than 5,600

attorney and professional hours to the successful prosecution of this case. Class

Counsel was required to do so in order to counter LPI's vigorous defenses at every

phase and stage of this case.

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131. In addition, if the Parties had not reached a settlement, Class Counsel

would have expended hundreds of more hours in continued preparation of the

Consolidated Class Adversary for trial. This would have included additional briefing

and discovery on the issue of class certification and discovery and trial of the claims

asserted in those cases. Class Counsel would also have expended many more hours

on the inevitable appeal.

132. Furthermore, Class Counsel will continue to expend future time and

effort overseeing administration of the Settlement Agreement and the Plan,

including communicating with Class Members to answer questions and resolve

issues that may arise during the solicitation and notice period, as well as any other

circumstances that may require Class Counsel to serve as an advocate for Class

Members. All additional settlement administration work performed by Class

Counsel will be done for no additional compensation.

E. The Parties' Stakes in the Litigation Support the Reasonableness of the Agreed Fee

133. Both Parties faced tremendous stakes in this litigation. LPI was faced

with potential financial exposure in the Arnold State Court Action of up to $1.2

billion, without taking into account an award for statutory interest or attorneys'

fees·. In this court, LPI was faced with total administrative insolvency because,

other than for a few small assets like real and personal property, the Debtors'

ownership rights were in dispute from the Class Members. But LPI had very

serious financial obligations which it had no way of meeting now that the Trustee

had been appointed and it was no longer perpetrating a fraudulent scheme on new

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investors so it could not bring in new investors to pay LPI bloated commissions. The

Trustee was faced with the choice of either paying premium shortfalls from the

Debtors' limited funds, where able, or letting the life insurance policies lapse.

Absent a resolution of the Ownership Issue in the Consolidated Class Adversary

and a consensual plan of reorganization, the entire insurance portfolio, with a total

amount invested of over $1 billion and a total face value of over $2 billion, was at

risk. The stakes. were unbelievably high. Likewise, the stakes were just as high for

the Class Members. If LPI chose to litigate the Consolidated Class Adversary and

had prevailed, the beneficial interests in the policies would have been deemed

assets of the Debtor's Estate and not assets owned by the Class Members. Such a

result would have allowed the Trustee, had he so chosen, to sell these assets and

pay Class members their pro rata share of the proceeds. Estimates in the early part

of the bankruptcy were that the portfolio value was approximately $500 million.

This would have resulted in a loss for every Class Member. Under the Plan, Class

Members have the opportunity to recognize the benefits of their investments.

134. Likewise, Class Counsel had much at stake in this litigation. Class

Counsel made the commitment to see this case through, even though it imposed

exceptional demands on attorney resources, finances, and the ability to take on or

service other clients. Class Counsel faced a significant risk of non-payment and loss

of the invested expenses. This enormous investment of time and energy should be

reflected in the Court's fee award.

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F. Rates Reflected in Negotiated Fee Agreements Support the Reasonableness of the Agreed Fee

135. The Lead Plaintiffs agreed to pay a contingent fee of at least one-third

of the recovery.

G. Fee Awards in Similar Cases Support the Reasonableness of the Agreed Fee

136. I have reviewed other class action cases involving similarly complex

and novel issues, both inside and outside of bankruptcy court, in which courts in the

Fifth Circuit have previously awarded attorney's fees as a percentage of the

common fund as high as 26% and in "mega-fund" cases with recoveries over $100

million as high as 20%.

137. Based on my knowledge of settlements in this district, other districts

in the Fifth Circuit, and courts outside of this Circuit, a requested fee in amount

that is less than 5% of the common fund is well below the going rate for contingent

attorneys' fee in complex class actions like this one.

H. To the Extent the Court Wishes to Conduct a "Lodestar Cross­ Check," the Lodestar in this Case Supports the Agreed Fee

138. Class Counsel, co-counsel, and bankruptcy counsel have all maintained

records of the time spent by the lawyers on this case. Each has kept daily time

records, noting both the amount of time spent on each discrete task and a detailed

description of the task.

139. The following table summanzes the time spent by all counsel and

other professionals in this litigation on behalf of the Class Members, and the

lodestar calculation based on their respective firm's billing rates from the inception

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of the case through May 1, 2016. These figures exclude all time spent on matters

other than those associated with LPI and exclude all time expended on the

negotiation of the fee portion of this settlement and the preparation of this

declaration and the attendant fee petition. The Declarations of Class Counsel's co­

counsel in the Arnold State Court Action Scott Skelton and Robert Cain, and

bankruptcy counsel John C. Leninger and Jeffrey D. Sternklar, attesting to their

hours and expenses in this litigation, which are being submitted as additional

appendix materials in support of the Fee Motion, corroborate these numbers.

140. The hourly rates charged by Class Counsel in this case are usual and

customary hourly rates for work performed in securities litigation. These rates have

been approved for payment by federal and state courts in other class action cases for

many years and throughout the time this litigation has been pending. As an

additional crosscheck on the benchmark rates, I have in the appendix materials

being submitted in support of the Fee Motion, the hourly rates of the attorneys who

unsuccessfully defended this action in the Texas state court system. That

declarations was submitted to the court in support of LPI's motion for attorneys'

fees, and it definitively establishes "market" rates for attorneys in this case. There

is no need to look elsewhere to try to divine the general market rate for the kind of

work performed by Class Counsel on a contingency fee basis when you have the

actual rates performed by counsel who defended this very case.

141. If these hours have been billed on a "straight" hourly basis (i.e. no

contingency and no risk of non-payment) the lodestar (hours times current billing

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rates) for this professional time would be approximately $3,290,462.00. On a

lawyer-by-lawyer basis, the lodestar calculations are as follows:

Hourly Rates for Plaintiffs' Counsel

Provider Rank Hourly Hours Lodestar Rate Expended Calculation Keith Langston Partner $600 2934.75 $1,760,850.00 Erika Neill Associat $350 14.25 $4,987.50 e Robert Partner $630 9.50 $5,985.00 Alderman Robert Cain Partner $630 525.00 $330,750.00 Scott Skelton Partner $600 772.45 $463,470.00 Todd Kassaw Partner $600 852.70 $511,620.00 Jeffrey D. Partner $400 257.00 $102,800.00 Sternklar John Leniniger Associat $400 275.00 $110,000.00 e Total 5640.65 $3,290,462.00

142. The lodestar figures are based on each firm's current billing rates and

contemporaneous time records. For all firms, expense items are billed separately,

and such charges are not duplicated in a firm's billing rates.

143. Based on Class Counsel's collective current lodestar, the fee sought by

Plaintiffs represents a multiplier of 1.59.

144. Significant additional attorney hours have been incurred and will be

incurred after May 1, 2016, the date on which the above numbers were compiled, to

complete the remaining work on this case and for Class Counsel's role. In addition

to incurring hours in connection with the final approval hearing and the

confirmation hearing, Class Counsel will likely spend a substantial amount of

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additional time over the next several years to ensure the best possible recovery for

Class members. However, for the purpose of evaluating the reasonableness of the

fee request, and in performing the lodestar crosscheck, it is appropriate for the

Court to consider the additional time and effort that Class Counsel will expend.

Class Counsel conservatively estimates that, at a minimum, additional fees will be

$150,000. Thus, where the current lodestar is $3,290,462.00, the estimated final

lodestar will be at least $3,290,462.00 + $150,000 totaling $3,440,462, representing

a final multiplier of 1.52.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on July 5, 2016

57 App.57

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EXHIBIT A

SETTLEMENT AGREEMENT

App. 58

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CLASS ACTION SETTLEMENT AGREEMENT This Class Action Settlement Agreement ("Settlement Agreement" or "Agreement") is

entered into as of March 'ZJf, 2016, by and among the following parties (referred to collectively

as the "Parties" and each individually as a "l:'ll!!y"): (a) Lead plaintiffs Philip Garner, Steve

South as trustee for the South Living Trust, and Christine Duncan, in the class action adversary

proceeding captioned Garner et al. v. Life Partners, Inc., Adversary No. 15-CV-04061-RFN

(Bankr. N.D. Tex.) (the "Garner Class Adversary"), lead plaintiffs Michael Arnold, Janet

Arnold, Dr. John Ferris, Steve South as trustee for the South Living Tmst, and Christine

Duncan, in the class action adversary proceeding captioned Arnold et al. v. Life Partners, Inc.,

Adversary No. 15-CV-04064-RFN (Bankr. N.D. Tex.) (the "Arnold Class Adversary"), and lead

plaintiffs Michael Arnold, Janet Arnold, Dr. John Ferris, Steve South as trustee for the South

Living Trust, and Christine Duncan, in the state court putative class action captioned Arnold et

a!. v. Life Partners, Inc., Case No. DC-11-02995 (Tex. Dist. Ct. 14th Dist.) (the "An1o1d State

Court Action") (collectively, "Lead Plaintiffs"), on behalf of themselves and all members of the

Ownership Settlement Subclass and/or the Rescission Settlement Subclass as defined herein; (b)

Lead Plaintiffs' counsel, Langston Law Finn, Skelton Slusher Barnhill Watkins Wells PLLC

(flkla Zelesky Law Finn PLLC), and Aldennan Cain & Neill PLLC ("Plaintiffs' Counsel"); (c)

H. Thomas Moran II ("Moran" or the "Trustee"), chapter 11 Trustee for Life Partners Holdings,

Inc. ("LPHJ"); (d) LPHJ, Life Partners, Inc. ("LPJ") and LPI Financial Services, Inc. ("LPJFS",

and together with LPI, the "Subsidiary Debtors") (collectively, the "Debtors"); and (e) The

Official Committee of Unsecured Creditors (the "Committee") (the Trustee, Subsidiary Debtors,

and Committee shall be referred to collectively as the "Estate Representatives").

Page 1 of 52

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BACKGROUND

I. For years, LPI was engaged in the business of acquiring life insurance policies

known as viatica! settlements or life settlements. Generally speaking, viatica! settlements and life

settlements involve the holder of a life insurance policy selling his or her interests in a life

insurance policy to a third party in exchange for a lump-sum cash payment less than the policy's

death benefit. LPI marketed and sold investment contracts relating to those policies to investors.

2. LPI's marketing and business operations were successful in large part because of its

intense efforts to create and to maintain a public perception that its investtnent products held the

prospect of substantial returns. These efforts included a vigorous effort to silence and discredit

any attempt to question LPI's claims. These efforts were made by LPI, its affiliates, principals,

and hundreds of sales agents. Thus, for example, when a media report suggested that LPI's life

expectancy projections were inaccurate, LPI engaged in a contra campaign to support those

projections, point to returns generated when policies did mature, conceal the large number of

policies that had not matured as represented, and thus to perpetually convince investors that the

maturity of their policy was just around the corner. Similarly, when, in January 2011, the SEC

announced that it was investigating LPI, a concerted and sustained effort to disparage the SEC was

undertaken by LPI, LPHI, and their principals. LPI also initiated a "resale" program that bought

out unhappy investors for a time. As lawsuits were filed, LPI spent millions of dollars opposing

the various cases, including those discussed below, and was able to obtain a number of favorable

rulings and considerable delays and thus drive up the costs of those working to oppose or expose

LPI. Through these combined efforts, LPI was able to maintain its favade essentially throughout

the litigation described below.

Page 2 of 52

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3. In March 2011, the Arnold State Court Action was filed, alleging that LPI violated

various federal and state securities laws, as LPI's life settlement investments were securities that

were not registered with either the Texas State Securities Board or the United States Securities and

Exchange Commission and therefore LPI was selling unregistered securities. The Arnold State

Court Action sought relief in the form of rescission pursuant to the Texas Securities Act § 33,

along with attorneys' fees, costs, and interest. As indicated, this litigation, like others that

followed, was vigorously opposed, and was at one point dismissed by the trial court.

4. After more than four years of litigation, in May 2015, the Texas Supreme Court

held in the Arnold State Court Action that the agreements LPI used to solicit money from investors

are "investment contracts" and therefore securities pursuant to the Texas Securities Act. Life

Partners, Inc. v. Arnold, 464 S.W.3d 660 (Tex. May 8, 2015).

5. On January 20, 2015, LPHI filed a voluntary petition for relief under chapter 11 of

title 11 of the United States Code (as amended, the "Bankruptcy Code"), thereby commencing its

bankruptcy case captioned In re Life Partners Holdings, Inc., Case No. 15-40289-rfn11 (the

"LPHI Bankruptcy Case"). On March 13, 2015, the U.S. Trustee appointed Moran as the Chapter

11 Trustee in the LPHI Bankruptcy Case, and on March 19, 2015, the United States Bankruptcy

Court for the Northern District of Texas (the "Bankruptcy Court") affirmed Moran's appointment.

6. On May 19, 2015, the Subsidiary Debtors filed their respective voluntary petitions

for relief under chapter 11 of the Bankruptcy Code, captioned In re Life Partners, Inc., Case No.

15-41995-rfn 11 and In re LPI Financial Services, Inc., No. 15-41996-rfn11, thereby initiating their

bankruptcy cases in the Bankruptcy Court (the "Subsidiary Bankruptcy Cases"). On May 22,

2015, the Bankruptcy Court granted the Subsidiary Debtors' request to jointly administer the LPHI

Page 3 of 52

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Bankruptcy Case and the Subsidiary Bankruptcy Cases (collectively, the "Bankruptcy Cases").

7. The Arnold State Court Action was stayed due to the Bankruptcy Cases.

8. In the Bankruptcy Cases, LPI has claimed that it is the owner of the life insurance

policies underlying the securities the Settlement Class Members purchased and that those policies

are property of the bankruptcy estates. The Plaintiffs (as defined herein) dispute that the policies,

their proceeds, or any rights to which the owners of SLtch policies are entitled (including, without

limitation, the cash surrender value of each such policy) are property of the bankruptcy estates

pursuant to 11 U.S.C. § 541. This dispute is referred to herein as the "Ownership Issue."

9. Lead plaintiff Philip Garner filed the Garner Class Adversary on July 19, 2015 in

the Bankruptcy Court on behalf of a class of "All persons or entities who invested in viatica!

settlement or life settlement securities sold by LPI. Excluded from the Class are LPI, all affiliated

Life Partners companies or entities and any individual who served as an officer, director, advisor,

board member, or otherwise was employed by LPI, including but not limited to all insiders of

LPI," alleging that the class members were the equitable owners of the life settlement securities

they purchased from LPI (including all death benefit proceeds), and that the securities held by the

class members (including all death benefit proceeds) along with all other monies held in trust are

not the property of LPI or its bankruptcy estate. The Garner Class Adversary sought relief in the

form of a declaratory judgment pursuant to Federal Rule of Bankruptcy Procedure 7001, 28 U.S. C.

§ 2201 et seq., and 11 U.S. C. § 541. On July 31, 2015, a motion for class certification [Dkt. No.8]

was filed in the Garner Class Adversary.

10. Lead plaintiffs Michael Arnold, Janet Arnold, Dr. John Ferris, Steve South as

trustee for the South Living Trust, and Christine Duncan, filed the Arnold Class Adversary on July

Page 4 of 52

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28, 2015 in the Bankruptcy Court on behalf of a class of "All persons or entities who invested in

viatica! settlement or life settlement securities sold by LPI. Excluded from the Class are [LPI], all

affiliated Life Partners companies or entities and any individual who served as an officer, director,

advisor, board member, or otherwise was employed by LPI, including but not limited to all

insiders of LPI," alleging that LPI's life settlement investments were securities that were not

registered with either the Texas State Securities Board or the United States Securities Exchange

Commission, and therefore LPI was selling unregistered securities. The Arnold Class Adversary

sought relief in the form of rescission pursuant to the Texas Securities Act § 33, along with

attorneys' fees, costs, and interest.

11. There was an unopposed Motion for Leave to File Consolidated Amended

Complaint for the Garner Class Adversary and the Arnold Class Adversary filed on March 11,

2016 (when this motion is granted, the resulting proceeding will be the "Consolidated Class

Adversary"). The Consolidated Class Adversary is captioned South. et al. v. Life Partners, Inc.

There also will be a Joint Motion to Withdraw the Reference for the Consolidated Class Adversary

filed on March 16,2016 (the "Motion to Withdraw Reference").

12. LPI filed an answer to the Garner Class Adversary on August 18, 2015 [Dkt. No.

10], and an answer to the Arnold Class Adversary on August 28, 2015 [Dkt. No. 8]. LPI denied

that class treatment was appropriate and also denied that the relief sought in both the Garner Class

Adversary and the Arnold Class Adversary was appropriate.

13. The Lead Plaintiffs, on behalf of the Plaintiffs, have filed Claim Nos. 18810,

22128, 22662, 22670, 23205, and 23212 (the "Class Proofs of Claim"), and the Lead Plaintiffs

individually have filed Claim Nos. 18813, 18987-19000, 19121-29, 19132, 19753-74, 22663,

Page 5 of 52

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23666, 23667, 23213, 23215, 23216, 23600, and 23601 (the "Lead Plaintiff Proofs of Claim") in

the Bankruptcy Cases.

14. Plaintiffs' Counsel has filed Claim Nos. 23211 and 22661 (the "Plaintiffs' Counsel

Proofs of Claim").

15. Counsel for the Parties, following preliminary correspondence and discussions over

telephone, email, and in person, engaged in and conducted in-person settlement meetings among

counsel, as well as additional correspondence and discussions over telephone and email from

August 2015 through March 2016. Due to these settlement negotiations, and as part of a joint

effort to conserve the resources of the bankruptcy estates and maximize the benefits to the

Plaintiffs, counsel agreed to stay all deadlines in the Garner Class Adversary and the Arnold Class

Adversary.

16. As a result of complex and protracted discussions, the following settlements were

agreed to: (a) Term Sheet for Compromise to a Plan of Reorganization of LPHI, LPI, and LPIFS

(Sept. 24, 2015) [Exhibit A to Dkt. No. 1032, filed Sept. 25, 2015] (the "Term Sheet"); (b)

Debtors' Expedited Motion for Interim and Final Orders (I) (A) Authorizing Debtors to Obtain

Post-Petition Financing, (B) Granting Security Interests and/or Superpriority Administrative

Expense Status; and (II) Granting Related Relief [Dkt. No. 958, filed Sept. 16, 2015] (the

"Financing Motion"); (c) the Plan (as defined below); and (d) this Settlement Agreement.

17. Plaintiffs' Counsel conducted extensive investigation relating to the claims and the

underlying events and transactions alleged in the Consolidated Class Adversary. Plaintiffs'

Counsel has analyzed evidence adduced during its investigation and has researched the applicable

law with respect to the claims Plaintiffs have asserted against LPI, as well as the potential defenses

Page 6 of 52

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thereto. Additionally, Plaintiffs' Counsel's efforts in the Arnold State Court Action were traceable

and necessary to the ultimate resolution of the Consolidated Class Adversary because, inter alia,

the issue of whether the Settlement Class Members' investments with Debtors were securities, as

that term is defined by tbe Texas Securities Act, is a prerequisite to determining the ultimate

Ownership Issue and the right to rescission in the Consolidated Class Adversary.

18. Due to the complex nature of the issues involved, the Parties recognize that the

outcome of the Consolidated Class Adversary is uncertain. The Plaintiffs have the burden of proof

on some of the issues in the Consolidated Class Adversary, and LPI has the burden on others. The

trial of the Consolidated Class Adversary would be lengthy and complex, adding to cost and

potential delay. Importantly, the Plan cannot be formulated or confirmed without resolution of the

Consolidated Class Adversary and the Ownership Issue. The interests of creditors of the Debtors

are served if the compromise and settlement transactions contemplated in this Settlement

Agreement (which resolves the Consolidated Class Adversary and the Ownership Issue) and the

Plan are approved and implemented.

19. Based upon investigation, the circumstances surrounding the Bankruptcy Cases and

the Consolidated Class Adversary, and the negotiation of the Term Sheet and the Plan, Lead

Plaintiffs and Plaintiffs' Counsel have agreed to settle the Consolidated Class Adversary pursuant

to the provisions of this Settlement Agreement after considering such factors as: (a) the substantial

benefits to the Settlement Class Members under the terms of this Settlement Agreement; (b) the

attendant costs, risks, and uncertainty of litigation, including trial and potential appeals; (c) the

benefit to all creditors, including the Settlement Class Members, arising from the implementation

of the transactions contemplated by this Settlement Agreement and the Plan; (d) the distraction and

Page 7 of 52

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diversion of personnel and resources as a result of continuing litigation; (e) the desirability of

consummating this Settlement Agreement and the Plan promptly; and (f) the current financial

condition of the Debtors.

20. The Estate Representatives have perfonned extensive due diligence and conducted

extensive analysis of the issues that are the subject of this Settlement Agreement and believe that

the terms of this Settlement Agreement, and the corresponding tenns of the Plan, are an exercise of

the Trustee's and the Subsidiary Debtors' sound business judgment and in the best interest of the

Debtors' estates, their creditors, including the Settlement Class Members, and all other parties in

interest, including, without limitation, the class of creditor interests represented by the Committee.

21. The Parties and their counsel negotiated the terms regarding the attorneys' fees and

the attorney releases provided for in paragraphs 46-52 below after reaching agreement regarding

material tenns of the Settlement Agreement. Plaintiffs' Counsel has not received any payment for

their services in the Consolidated Class Adversary or the Arnold State Court Action on behalf of

the Lead Plaintiffs or the Settlement Class. ln addition to the risk of non-payment that Plaintiffs'

Counsel assumed in pursuing the Arnold State Court Action and the Consolidated Class

Adversary, prior to the commencement of its Bankruptcy Case, LPI also moved for, and the state

trial court entered an order granting, sanctions against Plaintiffs' Counsel for asserting a frivolous

lawsuit and sought an award of attorneys' fees against Plaintiffs' Counsel in an amount in excess

of $360,000.00, which order of sanction subsequently was reversed and vacated after extensive

litigation by Plaintiffs' Counsel.

22. This Settlement Agreement is the product of sustained, arm's-length settlement

negotiations, including two day-long mediation sessions mediated by retired Federal Bankruptcy

Page 8 of 52

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Judge Richard Schmidt, and the Parties believe that the terms of this Settlement Agreement,

including the provisions regarding the payment of attorneys' fees to Plaintiffs' Counsel are fair,

reasonable, and adequate. Therefore, the Estate Representatives, joined by Lead Plaintiffs and

Plaintiffs' Counsel, will seek Court approval of this Settlement Agreement as set forth below.

23. This Settlement Agreement shall in no way be constmed or deemed to be evidence

of, or an admission or concession on the part of any Party, with respect to any claim of fault or

liability or wrongdoing or damage whatsoever, or any infirmity in the defenses that any Party has,

or could have, asserted. Any and all statements, representations, and findings herein regarding, or

in any way related to the Plaintiffs and Plaintiffs' Counsel (including, but not limited to, whether

the Plaintiffs in the Consolidated Class Adversary can be certified as a "class" pursuant to

Bankmptcy Rule 7023 or Federal Rule of Civil Procedure 23 or whether the Class Proofs of Claim

can proceed on a "class" basis pursuant to Bankmptcy Rule 9014 or 7023) are made solely for the

purpose of this Settlement Agreement, and shall not be deemed an admission or concession on the

part of the Trustee or the Debtors; however, upon the Court's entry of the Final Approval Order

(as defined below) and the Confirmation Order (as defined herein), the stipulations,

representations, and findings in this Settlement Agreement shall be final, conclusive, and binding

on the Parties as among each other solely (i) to enforce or construct this Settlement Agreement and

(ii) in any proceeding or matter in which the terms of this Settlement Agreement are at issue,

subject to the reversal or modification of the Final Approval Order or the Confirmation Order on

appeal and the rescission rights under the terms of this Settlement Agreement. The Parties

recognize that the Consolidated Class Adversary was filed and defended in good faith and that the

Consolidated Class Adversary is being voluntarily settled on terms that the Parties believe to be

Page 9 of 52

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reasonable considering the merits of the claims or defenses and taking into account the expense

and uncertainty of continued litigation and the Bankruptcy Cases. This Settlement Agreement has

resulted from extensive, good-faith, and arm's-length negotiations among the Parties. The Parties

agree that each has complied fully with the strictures of Federal Rule of Bankruptcy Procedure

9011 and Federal Rule of Civil Procedure 11 and that no sanctions or other relief against any Party

is warranted or appropriate under such circumstances.

24. NOW, THEREFORE, subject to the approval of the Bankruptcy Court and

confirmation of the Plan, and in consideration of the agreements and releases and assignments set

forth herein and other good and valuable consideration, and intending to be legally bound, the

Parties agree that the Consolidated Class Adversary and all other claims of the Plaintiffs and the

Settlement Class Members encompassed within the scope of this Settlement Agreement and as set

forth in the Plan be fully, finally, and forever settled, compromised, released, or assigned, and that

the Consolidated Class Adversary, the Arnold State Court Action, and all other proceedings

described herein or in Appendix B be: (i) dismissed with or without prejudice, without costs to the

Parties except as provided herein; and/or (ii) assigned to the Creditors' Trust, as set forth herein,

on the following terms and conditions:

DEFINITIONS'

25. When used in this Settlement Agreement, unless otherwise specifically indicated,

the following terms shall have the meanings set forth below:

a. "Amended Schedule F" has the meaning set forth in the Plan.

1 All other defined terms included throughout this Settlement A!,>Teement shall have the meanings ascribed in this Settlement Agreement.

Page 10 of 52

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b. "Assigning Position Holder" has the meaning set forth in the Plan.

c. "Class Notice" means the notice to the Settlement Class as shall be given in the

form deemed sufficient by the Court.

d. "Confirmation Order" means tbe order of tbe Bankruptcy Court confirming tbe

Plan pursuant to Bankruptcy Code section 1129.

e. "Continuing Fractional Holder" has tbe meaning set forth in the Plan.

f. "Continuing Position Holder'' has the meaning set forth in the Plan.

g. "Continuing Position Holder Contribution" has the meaning set forth in tbe Plan.

h. "Court" means any court of competent jurisdiction, including but not limited to the

Bankruptcy Court and the United States District Court for the Northern District of Texas.

i. "Creditors' Trust" has the meaning set forth in the Plan.

j. "Current Position Holder" has the meaning setforth in tbe Plan.

k. "Days," unless specified as "business days," means all calendar days, including

Saturdays, Sundays, and legal holidays, but if the last day of a period is a Saturday, Sunday, or

legal holiday, the period continues to run until the end of the next day that is not a Saturday,

Sunday, or legal holiday,

I. "Effective Date" means the first date by which all ofthe folloWing have occurred:

(I) no Party has availed itself of any right to withdraw from or terminate the Settlement tbat has

arisen pursuant to paragraphs 39-40 herein; (2) the Court has entered the Final Approval Order; (3)

tbe Court has entered a final Confirmation Order; and (4) the Plan Effective Date has occurred and

the Plan has become effective in accordance With its terms. Neitber tbe provisions of Rule 60 of

the Federal Rules of Civil Procedure nor the All Writs Act, 28 U.S. C. § 1651, shall be taken into

Page 11 of 52

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account in determining the above-stated times.

m. "Final 9019 Order'' means a Final Order approving this Settlement Agreement and

authorizing, empowering, and directing the Parties to enter into and perform their respective

obligations under and pursuant to this Settlement Agreement under Rule 9019 of the Federal Rules

of Bankruptcy Procedure.

n. "Final Approval Order" means a Final Order approving the Settlement Agreement

as fair, reasonable, and adequate pursuant to Federal Rule of Bankruptcy Procedure 7023 or

Federal Rule of Civil Procedure 23.

o. "Final Order'' has the meaning set forth in the Plan.

p. "Fractional Interest" has the meaning setforth irt the Plan.

q. "Fractional Interest Holder" has the meaning set forth in the Plan.

r. "Fractional Position" has the meaning set forth in the Plan.

s. "Investment Contract" has the meaning set forth in the Plan.

t. "IRA Holder" has the meaning set forth in the Plan.

u. "IRA Partnership" has the meaning set forth in the Plan.

v. "MDL Plaintiffs" means the plaintiffs in the multi-district litigation caption~d in re

Life Partners, inc. Litigation, MDL No. 13-0357 (Tex. Dist. Ct. Dallas Cnty., created Sept. 9,

20 13) identified on Appendix C, and limited to the capacity in which they are identified on

Appendix C.

w. "New IRA Note" has the meaning set forth in the Plan.

x. "Objection Date" means the date by which Settlement Class Members must file any

written objection or opposition to the Settlement Agreement or any part or provision thereof in the

Page 12 of 52

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Court, to be set by the Court and set forth in the Class Notice.

y. "Original IRA Note Issuers" has the meaning set forth in the Plan.

z. "Ownership Settlement Subclass" means the class to be certified for settlement

purposes composed of:

All persons or entities (including all IRAs and their respective individual owners and related IRA custodians) who purchased and hold, as of the Plan Effective Date, securities issued or sold by LPI (directly or in the name of any Original IRA Note Issuer) related to viatica! settlements or life settlements, regardless of how the investments were denominated (whether as fractional interests in life insurance policies, promissory notes, or otherwise) and who are Current Position Holders under the Plan, regardless of whether or not a claim was filed by a class member. Excluded from the Ownership Settlement Subclass are LPI; all affiliated LifePartners companies or entities; Linda Robinson~Pardo; Paget Holdings Ltd.; and investors whose only investments relate to Pre-Petition Abandoned Interests under the Plan. aa. "Ownership Settlement Subclass. Member" (plural "Ownership Settlement Subclass

Members") means each person and entity who is a member of the Ownership Settlement Subclass.

bb. "Plan" means the Second Amended Joint Plan of Reorganization of Life Partners

Holdings, Inc., et al. Pursuant to Chapter 11 of the Bankruptcy Code [Dkt. No. __, filed March

t.!i, 2016], including the Plan Supplement and all exhibits, schedules, and attachments thereto, all

as may be amended, supplemented, or otherwise modified, provided, however, that no such Plan

may materially change the terms of the Plan to be inconsistent with this Settlement Agreement

without the written consent of Plaintiffs' Counsel.

cc. "Plan Effective Date" has the meaning of "Effective Date" set forth in the Plan.

dd. "Policy" (plural "Policies") has the meaning set forth in the Plan.

ee. "Position Holder Trust" has the meaning set forth in the Plan.

ff. "Preliminary Approval Order" means an order preliminarily approving the

Page 13 of 52

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Settlement Agreement as fair, reasonable, and adequate pursuant to Federal Rule of Civil

Procedure 23 and/or Federal Rule of Bankruptcy Procedure 7023 and approving the sending of the

Class Notice to the Settlement Class.

gg, "Pre-Petition Abandoned Positions" has the meaning set forth in the Plan.

hh. "Pre-Petition Default Amount" has the meaning set forth in the Plan.

iL "Qualified Plan Holders" has the meaning set forth in the Plan,

JJ, "Rescission Settlement Subclass" means the class to be certified for settlement

purposes composed of:

All persons or entities (including all IRAs and their respective individual owners and related IRA custodians) who purchased and hold, as of the Plan Effective Date, securities issued or sold by LPI (directly or in the name of any Original IRA Note Issuer) related to viatica! settlements. or life settlements, regardless of how the investments were denominated (whether as fractional interests in life insurance policies, promissory notes, or otherwise) and who are Current Position Holders under the Plan, regardless of whether or not a claim was filed by a class member. Excluded from the Rescission Settlement Subclass are LPI; all affiliated Life Partners companies or entities; Linda Robinson-Pardo; Paget Holdings Ltd.; investors whose only investments relate to PrecPetition Abandoned Interests under the Plan; Qualified Plan Holders; and all persons and entities listed on Appendix A.

kk "Rescission Settlement Subclass Member" (plural "Rescission Settlement Subclass

Members") means each person and entity who is a member of the Rescission Settlement Subclass.

lL "Settlement Class" means, collectively, the Ownership Settlement Subclass and the

Rescission Settlement Subclass.

mm, "Settlement. Class Member" (plural ''Settlement Class. Members" or "Plaintiffs")

means each person and entity who is an Ownership Settlement Subclass Member or the Rescission

Settlement Subclass Member.

Page 14of52

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COURT APPROVAL

26. This Settlement Agreement shall be binding on the Parties as of the date set forth in

the introductory paragraph of this Settlement Agreement, provided that (a) the Court enters the

Final 9019 Order; (b) the Court enters the Final Approval Order; (c) the Effective Date occurs; and

(d) no Party has availed themselves of any right to withdraw from or terminate the Settlement that

has arisen p\trsuant to paragraphs 39-40 of this Settlement Agreement. The Parties shall use

reasonable best efforts as soon as reasonably practicable after execution of this Agreement to

obtain entry of the Final9019 Order and Final Approval Order including: (a) filing joint motions

pursuant to Sections l05(a) of the Bankruptcy Code, Federal Rules of Bankruptcy Procedure 9014,

9019, and/or 7023, and/or Federal Rule of Civil Procedure 23, as applicable, to seek entry of the

Final 9019 Order, Preliminary Approval Order, and Final Approval Order to authorize and approve

this Settlement Agreement, to approve the Class Notice, and to approve the allowance of the Class

Claim (as defined herein) and the voting rights and procedure of the Class Representatives (as

defined herein) as set forth herein; (b) on or before the Effective Date, or at another time as set

forth in this Settlement Agreement, causing the Parties to fully perform their respective obligations

under this Settlement Agreement; (c) not encouraging any person or entity to oppose, object to, or

obstruct the approval of the Settlement Agreement or entry of the Final Approval Order; and (d)

approving exculpation language the same or similar to that in Section 18.02 of the Plan as filed on

March VI, 2016.

STIPULATION TO CLASS CERTIFICATION

27. Pursuant to Federal Rule of Civil Procedure 23, Federal Rule of Bankruptcy

Procedure 7023, incorporated herein as necessary under Federal Rule of Bankruptcy Procedure

Page 15 of 52

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9014, and incorporating Federal Rule of Civil Procedure 23, the Parties hereby stipulate that the

requirements of Federal Rule of Civil Procedure 23(a) and 23(b )(2) are satisfied with respect to the

Ownership Settlement Subclass defined in paragraph 25(z) and the Rescission Settlement Subclass

defined in paragraph 25(ii). The Ownership Settlement Subclass and Rescission Settlement

Subclass shall each be certified as a mandatory subclass under Federal Rule of Civil Procedure

23(b )(2), with no right of any Settlement Class Member to opt out of either subclass, including for

the purposes of a class proof of claim and class voting of the class ballots to the extent provided for

in paragraph 28; provided, however, that, in the event the Effective Date does not occur or this

Settlement Agreement is later rescinded in accordance with its terms: (a) no class or subclass shall

be deemed to have been certified by or as a result of this Settlement Agreement; (b) the Trustee and

the Subsidiary Debtors shall not be deemed to have consented to the allowance or priority of any

claim or the certification of any class; (c) the agreements and stipulations in this Settlement

Agreement concerning class definition or class certification shall not be used as evidence or

argument to support class definition or class certification; (d) the Trustee and the Subsidiary

Debtors shall retain all rights to object to the claims in the Bankruptcy Cases asserted by Lead

Plaintiffs, Plaintiffs, and Plaintiffs' Counsel; and (e) Lead Plaintiffs, Plaintiffs, and Plaintiffs'

Counsel reserve all rights and remedies, including without limitation, the right to seek certification

of one or more classes in the Consolidated Class Adversary.

28. Claim No. 22670 shall be allowed on behalf of the Settlement Class pursuant to the

Plan as a class proof of claim ("Class Claim") to which Federal Rule of Bankruptcy Procedure

7023 applies pursuant to Federal Rule of Bankruptcy Procedure 9014, and allocation of that claim

for each individual holder is in the amount set forth in Amended Schedule F. The Class Claim

Page 16 of 52

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shall be classified as an allowed claim in each of Classes B2, B2A, B3, and B3A in the Plan as

appropriate. The Lead Plaintiffs, in their capacity as Class Representatives, shall be authorized to

cast one or more ballots (as applicable) to accept the Plan on behalf of those Settlement Class

Members with claims and interests in Class B2, B2A, B3, or B3A who do not cast a vote to accept

or reject the Plan in the respective Class B2, B2A, B3, or B3A.

29. The Parties also stipulate to the designation of Lead Plaintiffs to be appointed class

representatives ("Class Representatives") on behalf of the Settlement Class, the Ownership

Settlement Subclass and the Rescission Settlement Subclass for purposes of this Settlement and the

Plan.

30. The Parties also stipulate to the designation of Keith L. Langston of the Langston

Law Firm to be appointed class counsel ("Class Counsel'') on behalf of the Settlement Class, the

Ownership Settlement Subclass and the Rescission Settlement Subclass for purposes of this

Settlement and the Plan.

31. The Estate Representatives, joined by Lead Plaintiffs and Plaintiffs' Counsel, shall

obtain entry of the necessary order( s) of the Court authorizing, empowering, and directing the

Trustee and Subsidiary Debtors to send the Class Notice to the Settlement Class Members in a form

and manner deemed sufficient by the Court. This Notice will include, at a minimum: (a) a

summary of the terms of the Settlement Agreement and instructions as to where the full terms of

the Settlement Agreement can be obtained; (b) the definition of the stipulated Settlement Class and

an explanation that the class will be mandatory with no right of the Settlement Class Members to

exclusion or to opt-out, but with an opportunity to object; (c) an explanation of the Class Claim that

will be allowed and treated in accordance with the Plan; (d) an explanation of Class Counsel's

Page 17 of 52 App. 75

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Agreed Fee as defined herein, subject to Court approval; and (e) an explanation that all Settlement

Class Members will have the opportunity to vote on the Plan themselves, but that any Settlement

Class Members who do not vote will have their claims and interests voted by the Class

Representatives in favor of the Plan.

EQUITABLE RELIEF

32. The Final Approval Order shall be incorporated into and become part of the

Confirmation Order. The Parties shall seek for the Court to enter, as part of the Final Approval

Order or the Confirmation Order, or both, as applicable, equitable and declaratory relief

summarized as follows and set forth fully in the Plan:

a. LPI (and any successor entity) will not sell or otherwise introduce into the market

any securities unless those securities are (i) issued pursuant to the Plan or (ii)

properly registered as securities with all appropriate federal and state regulatory

bodies;

b. Debtors waive any claims to beneficial ownership in the Fractional Interests held in

the name of the Settlement Class Members that are entitled to treatment as

Continuing Fractional Holders, by election or otherwise, as set forth in the Plan and

subject to the terms and conditions set forth in the Plan;

c. Subject to the terms and conditions set forth in the Plan, Debtors will provide each

Ownership Settlement Subclass Member, for each Fractional Position, except for

those Fractional Positions where a Pre-Petition Default Amount is owed and not

paid by the close of business on the deadline set forth in the Plan, with the elections

described in Section 3.07(c) and (e) of the Plan for each Fractional Interest Holder

Page 18 of 52

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and IRA Holder, respectively, which are summarized as follows: (i) be treated as a

Continuing Position Holder with respect to their Fractional Position and. be

confirmed as the owner of a Fractional Interest or a New IRA Note, after making the

related Continuing Position Holder Contribution; or (ii) contribute their Fractional

Position to the Position Holder Trust or the IRA Partnership and receive an interest

in the Position Holder Trust or the IRA Partnership. In addition, IRA Holders will

have the option to distribute the IRA Note to the individual owner of the IRA Holder

so that it is owned outside of the IRA, in which case the individual owner will be

able to make a Continuing Holder Election to become a Continuing Fractional

Holder under the Plan;

d. ·Subject to the terms and conditions set forth in the Plan, Debtors will provide the

Rescission Settlement Subclass Members, for each Fractional Position, except for

those Fractional Positions where a Pre-Petition Default Amount is owed and not

paid by the close of business on the deadline set forth in the Plan, with the elections

described in Section 3.07(b) and (d) of the Plan, which include the options

summarized in paragraph 32(c) and the additional third option to rescind their

purchase of the Fractional Interest and receive an interest in the Creditors' Trust.

e. The Settlement Class Members who are IRA Holders stipulate that there was never

any transfer of ownership of any Fractional Interest or other interest in any Policy

made to any IRA Note Issuer Trust by them or on their behalf, nor any effective

conveyance of any property to any of the IRA Note Issuer Trusts. The Settlement

Class Members who are IRA Holders further stipulate that (i) any authority Brian

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Pardo had to act on their behalf or for their benefit, as Trustee of an IRA Note Issuer

Trust or otherwise, is revoked effective as of the Effective Date; (ii) the Settlement

Class Members who are IRA Holders are not looking to Brian Pardo to take, and he

is not authorized to take, any actions on their behalf, as such a Trustee or in any

capacity; and (iii) all claims and causes of action they have or that may be asserted

on their behalf against Brian Pardo in any capacity are included in the Assigned

Claims; and

f. The Rescission Settlement Subclass Members who assign their Additional Assigned

Claims (as defined herein) to the Creditors' Trust pursuant to paragraph 37 and the

Plan shall receive an additional Allowed Claim in Class B4 in an amount equal to

0.5% (one-half of one percent) of their Allowed Claim amount on Amended

Schedule F, for which the Rescission Settlement Subclass Member will receive a

corresponding interest in the Creditors' Trust (the "Additional Allowed Claim").

This interest shall be in addition to any interest in the Creditors' Trust granted under

paragraph 32(d) of this Agreement.

RELEASE AND ASSIGNMENT OF CLAIMS AND DISMISSAL OF ACTIONS

33. Upon the Effective Date, the Lead Plaintiffs (individually and as Class

Representatives of all Settlement Class Members), all Settlement Class Members, Plaintiffs'

Counsel, Class Counsel, and all of their current and former parents and subsidiaries, affiliates,

partners, officers and directors, agents, employees, and any of their legal representatives (and the

predecessors, heirs, executors, administrators, successors, purchasers, and assigns of each of the

foregoing) (collectively, the "Settling Parties") shall be deemed to have conclusively, absolutely,

Page 20 of 52

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unconditionally, irrevocably, and forever, released, waived, and discharged the claims against the

Debtors asserted in Count II of the Consolidated Class Adversary, or that could have been asserted

as part of Count II of the Consolidated Class Adversary (the "Released Claims").

34. Upon the Effective Date, the Settling Parties shall be deemed to have conclusively

compromised and exchanged for the treatment under the Plan all claims against the Debtors'

estates, including but not limited to any proof of claim or interest filed by any Settlement Class

Member, the claims asserted in the Plaintiffs' Counsel Proofs of Claim, the Lead Plaintiff Proofs of

Claim, the Class Proofs of Claim, and any claim for rejection damages resulting from the rejection

of an Investment Contract, except for the Class Claim that will be allowed and treated as set forth

in paragraph 28 of this Settlement Agreement and the Plan (the "Compromised Claims"), provided

that nothing herein shall be deemed to release the Assigned Claims or Additional Assigned Claims,

as defined and referenced in paragraphs 36-37 herein. After the Effective Date, the Settling Parties

shall not seek, and are hereafter barred and enjoined from seeking, to recover from the Debtors'

estates based in whole or in part upon any of the Compromised Claims or conduct at issue in the

Compromised Claims.

3 5. In addition, as to the Released Claims and the Compromised Claims, the Settling

Parties hereby expressly waive and release upon the Effective Date any and all provisions, rights,

and benefits conferred by Section 1542 of the California Civil Code and Section 20-7-11 of the

South Dakota Codified Laws, each of which provides that a general release does not extend to

claims which the creditor does not know or suspect to exist in his favor at the time of executing the

release, which if known by him must have materially affected his settlement with the debtor, and

any similar provision, statute, regulation, rule, or principle of law or equity of any other state or

Page2lof52

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applicable jurisdiction. The Settling Parties acknowledge that they are aware that they may

hereafter discover facts in addition to, or different from, those facts which they know or believe to

be true with respect to the subject matter of this Settlement Agreement, but that it is their intention

to release fully, finally, and forever all Released Claims and to conclusively compromise and

exchange for the treatment under the Plan the Compromised Claims, and in furtherance of such

intention, this release and/or compromise shall be and will remain in effect notwithstanding the

discovery or existence of any such additional or different facts.

36. Upon the Effective Date, the Lead Plaintiffs (individually and as Class

Representatives of all Rescission Settlement Subclass Members), Rescission Settlement Subclass

Members (excluding the MDL Plaintiffs, who will assign the same character of claims to the

Creditors' Trust via separate settlement agreement), Plaintiffs' Counsel, and all of their current and

former parents and subsidiaries, affiliates, partners, officers and directors, agents, employees, and

any of their legal representatives (and the predecessors, heirs, executors, administrators, successors,

purchasers, and assigns of each of the foregoing) (collectively, the "Assigning Parties") assign all

of their rights in any and all claims, damages, demands, suits, causes of action, obligations,

remedies, debts, rights, and liabilities, whether known or unknown, liquidated or unliquidated,

fixed or contingent, foreseen or unforeseen, matured or unmatured, whether class or individual, in

law, equity, or otherwise, including claims for costs, fees, expenses, penalties, and attorneys' fees

(except those that are the subject to the Fee Application, as defined below, or otherwise deemed

allowed and treated pursuant to this Settlement Agreement or the Plan), asserted by the Assigning

Parties, or that could have been asserted by the Assigning Parties, or that the Assigning Parties

have, may have, or are entitled to assert directly, representatively, derivatively, or in any other

Page 22 of 52

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capacity, against the Debtors, Brian Pardo, Deborab Carr, Kurt Carr, R. Scott Peden, Linda

Robinson a/k/a Linda Robinson-Pardo, Pardo Family Holdings, Ltd., Pardo Family Holdings US,

LLC, Pardo Family Trust, Paget Holdings, Inc., Paget Holdings Ltd., Tad M. Ballantyne, Fred

DeWald, and Harold E. Rafuse (collectively, the "Assigned Claims"), to the Creditors' Trust. The

Assigning Parties, as of the Effective Date, transfer and assign all aspects of title to the Assigned

Claims to the Creditors' Trust, including but not limited to the right to bring suit on the Assigned

Claims, to recover any form of relief whatsoever on the Assigned Claims, including but not limited

to money damages, and to distribute funds to the creditors of the Debtors' estates in accordance

with the terms of the Plan. No further action on the part of the Assigning Parties is necessary to

effectuate the assignment of the Assigned Claims set forth in this paragraph, and the Assigning

Parties confirm that it is their present intent to retain no right or interest in the Assigned Claims.

The Assigning Parties further acknowledge that after the Effective Date the Creditors' Trust has the

exclusive legal right and power to prosecute, compromise, settle, assign, receive proceeds from, or

otherwise control the Assigned Claims. The Assigning Parties represent that they will do nothing

in the future to impair, release, compromise, waive, or relinquish the Assigned Claims, to defend or

take the position that the Assigned Claims were released or do not belong to the Creditors' Trust, or

to assist any person in defending any of the Assigned Claims or arguing that the Assigned Claims

do not belong to the Creditors' Trust. The Assigned Claims include, but are not limited to, the

claims asserted in the Arnold Class Adversary, the Arnold State Court Action, and the other

pending litigation listed in Appendix B. The assignee (as determined by the Plan) of the Assigned

Claims shall cause the appropriate substitution of parties and counsel to the litigation listed in

Appendix B within 30 days of the Effective Date.

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37. The ballot sent to all Rescission Settlement Subclass Members will contain a

statement and opportunity for a Rescission Settlement Subclass Member (excluding the MDL

Plaintiffs, who will assign their claims to the Creditors' Trust via separate settlement agreement) to

elect not to provide an assignment to the Creditors' Trust of any claims other than the Assigned

Claims. Upon the Effective Date, the Lead Plaintiffs, individually, and all Rescission Settlement

Subclass Members who do not elect through their ballot not to provide an assignment of the

Additional Assigned Claims (as defined herein) (excluding the MDL Plaintiffs, who will assign

their claims to the Creditors' Trust via separate settlement agreement), and all of their current and

former parents and subsidiaries, affiliates, partners, officers and directors, agents, employees, and

any of their legal representatives (and the predecessors, heirs, executors, administrators, successors,

purchasers, and assigns of each of the foregoing) (collectively, the "Additional Assigning Parties")

assign all of their rights in any and all claims, damages, demands, suits, causes of action,

obligations, remedies, debts, rights, and liabilities, whether known or unknown, liquidated or

unliquidated, fixed or contingent, foreseen or unforeseen, matured or unmatured, whether class or

individual, in law, equity, or otherwise, including claims for costs, fees, expenses, penalties, and

attorneys' fees (except those that are the subject to the Fee Application, as defined below, or

otherwise deemed allowed and treated pursuant to this Settlement Agreement or the Plan), asserted

by the Additional Assigning Parties, or that could have been asserted by the Additional Assigning

Parties, or that the Additional Assigning Parties have, may have, or are entitled to assert directly,

representatively, derivatively, or in any other capacity, against Life Settlement Exchange, LLC;

Fred A Cowley; Security Reserve Financial, Inc.; Gallagher Financial Group; Edward G. Burford

Corporation; Sun Safety, Inc.; Faye Bagby; Ella Oliver d/b/a Investingmakesmesick.com;

Page 24 of 52

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Wealthstone Financial; Falco Group, LLC; Mark McKay; Kainos Asset Management, LLC; Peyton

Inge a/k!a :HI Peyton Inge; Life Strategy Services, LLC; Ted Hasson; James Sundelius; Abundant

Income, LLC; B G & S Management Consultants; BG & S Consultants; BG & S; Tim Harper;

Brian Harper; American Safe Retirement, LLC; ASR AJternative Investments, LP; Joe Barkate dba

MTLRC, LLC; Rich DePaolo; Alpha & Omega Global Risk Mgt, LP; AO Global, LLC; Petra

World Wide, Inc.; Tolleson Investments, LLC; William M. Tolleson; Tolleson Holdings, LLC;

Steadfast Endeavors, LLC; New Asset Advisors, LLC; Curtis M. Cole; New Asset Alternative,

LLC; Lakeside Equity Partners, Inc.; Dewitt & Dunn, LLC; Frank W. Bice; The Retirement &

Investment Council; Russell Hagan; and all prior officers, directors, affiliates, associates, members,

principals, partners, officers, directors, trustees, control persons, employees, agents, brokers,

attorneys, shareholders, advisors, investment advisors, banks, IRA advisers, IRA brokers, IRA

custodians, insurers, insiders, licensees, master licensees, and representatives of the Debtors, and

any entities in which any of these persons or entities has a direct or indirect interest, and any other

persons or entities against whom the Additional Assigning Parties have a claim arising out of or

relating to their investment with LPI or interest in the Debtors, arising out of or relating to any

conduct, act, or omission of any of these persons or entities or otherwise related to the business of

the Debtors from the beginning of the world until the Effective Date (collectively, the "Additional

Assigned Claims"), to the Creditors' Trust. Excluded from Additional Assigned Claims are all

claims against any legal or tax professional retained on or after January 20, 2015. The Additional

Assigning Parties, as of the Effective Date, transfer and assign all aspects of title to the Additional

Assigned Claims to the Creditors' Trust, including but not limited to the right to bring suit on the

Assigned Claims, to recover any form of relief whatsoever on the Additional Assigned Claims,

Page 25 of 52

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including but not limited to money damages, and to distribute funds to the creditors of the Debtors'

estates in accordance with the terms of the Plan. No further action on the part of the Additional

Assigning Parties is necessary to effectuate the assignment of the Additional Assigned Claims set

forth in this paragraph, and the Additional Assigning Parties confirm that it is their present intent to

retain no right or interest in the Additional Assigned Claims. The Additional Assigning Parties

further acknowledge that after the Effective Date the Creditors' Trust has the exclusive legal right

and power to prosecute, compromise, settle, assign, receive proceeds from, or otherwise control the

Additional Assigned Claims. The Additional Assigning Parties represent that will do nothing in the

future to impair, release, compromise, waive, or relinquish the Additional Assigned Claims, to

defend or take the position that the Additional Assigned Claims were released or do not belong to

the Creditors' Trust, or to assist any person in defending any of the Additional Assigned Claims or

arguing that the Additional Assigned Claims do not belong to the Creditors' Tmst. As

consideration for assigning the Additional Assigned Claims to the Creditors' Trust, each Additional

Assigning Party shall receive an Additional Allowed Claim, as defined in paragraph 32(±).

38. Nothing in this Settlement Agreement or in any ballot signed by any Settlement

Class Member shall affect or limit: (a) the right of the Tmstee, Debtor, Creditors' Trust and its

trustee, or their successors to prosecute: (i)Moran v. Pardo, eta/., Case No. 4:15-cv-00905-0; (ii)

Moran v. Sundelius, et al., Adversary No. 15-40289-rfn11; (iii) Moran v. Abundant Income, LLC et

at., Adversary No. 15-04110-rfn; (iv) Moran, et al. v. 72 Vest, et at., Case No. 16-04035; (v)

Moran, et al. v. Ostler, eta/., Case No. 16-04022; (vi) Moran, et al. v. A. Roger 0. Whitley, Group,

Inc., et al., Case No. 16-04038; (vii) Moran, et al. v. Happy Endings, Case No. 16-04024; (viii)

Moran, e/ al. v. Robin Rock, et al., Case No. 16-04034; (ix) Moran, et al. v. Ballantyne, e/ al., 16-

Page 26 of 52

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04039; (x) Moran, et al. v. Funds for Life, et al., Case No. 16-04029; (xi) Moran, eta/. v. Averritt,

eta/., Case No. 16-04032; (xii) Moran, eta/. v. Coleman, el al., Case No. 16-04037; (xiii) Moran,

et al. v. Atwell, et al., Case No. 16-04030; (xiv) Moran, eta/. v. Atwell, et al., Case No. 16-04030;

(xv) Moran, eta/. v. Blanc & Otus, eta/., Case No. 16-04031; (xvi) Moran, eta/. v. Alexander, et

a/., Case No. 16-04036; (xvii) Moran, et al. v. ESP Communications, Case No. 16-04027; (xviii)

Moran, eta/. v. Cassidy, Case No. 16-04033; (xix) Moran, eta/. v. Brooks, Case No. 16-04025;

(xx) Moran, et al. v. Summit Alliance Settlement Co., LLC, eta/., Case No. 16-04026; (xxi) Moran,

et al. v. American Heart Association, et a!, Case No. 16-04028; (xxii) any other adversary

proceedings brought by or against the Trustee pending on March 15, 2016; and (xxiii) any

objections to any and all claims filed by, scheduled or listed for, or otherwise asserted by any

person or entity listed on Appendix A, or any other individual who served prior to January 20, 2015

as an officer, director, advisor, board member, or otherwise was employed by LPI or any of its

affiliates, including but not limited to all insiders ofLPI or any of its affiliates, or any sales agents,

brokers, IRA advisors, IRA custodians, IRA brokers, or other individuals affiliated with Life

Partners' sales or business, or any licensee or master licensee; or (vi) any other claims owned by

the Trustee, the Debtors, or any of their successors; or (b) the Creditors' Trust and its trustee's or

their successor's right to prosecute: (i) the Arnold State Court Action; (ii) In re Life Partners

Holdings, Inc. Shareholder Derivative Litigation, Case No. DR-1!-CV-43-AM (W.D. Tex.); (iii)

the litigation matters identified in Appendix B; (iv) the litigation matters assigned to the Creditors'

Trust by the MDL Plaintiffs; (v) any claims assigned to the Creditors' Trust by the Plan, the

Trustee, or the Debtors; (vi) the Assigned Claims; (vii) subject to the terms of paragraph 37, the

Additional Assigned Claims; or (viii) any other claims assigned to or otherwise owned by the

Page 27 of 52

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Creditors' Trust, its trustee, or their successors.

RESCISSION

39. If the Court does not approve or enter the Final Approval Order or the Final 9019

Order; if the Final Approval Order or the Final9019 Order is modified or set aside on appeal; or if

the Confirmation Order is modified, reversed, or vacated on appeal, then the Party or Parties

adversely affected by or who opposed such refusal to provide or affirm the requested relief,

modification, vacation, or appeal shall each, in their sole discretion, have the option to rescind this

Settlement Agreement in its entirety by written notice to the Court and to counsel for the other

Parties that is filed and served within ten (10) days of the event triggering the right to rescind. Any

decision with respect to an application for or award of attorneys' fees, costs, or expenses, by the

Court, on appeal, or otherwise, shall not be considered material to the Settlement Agreement and

shall not be grounds for rescission.

40. If the Settlement Agreement is rescinded in accordance with its terms, rs not

approved by the Court, or otherwise fails to become effective in accordance with its terms,

including if the Effective Date fails to occur, then this Settlement Agreement will not take effect

and will become null and void for all purposes, and the Parties will be restored to their respective

positions in the Consolidated Class Adversary and the Arnold State Court Action as of the

Execution Date of this Agreement, which shall be the date set forth in the introductory paragraph of

this Settlement Agreement. In that event, this Settlement Agreement, and representations made in

conjunction with it, may not be used in the Consolidated Class Adversary, the Arnold State Court

Action, or otherwise for any purpose. The Parties expressly reserve all rights if the Settlement

Agreement does not become effective or if it is rescinded.

Page 28 of 52

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PLAN SUPPORT AND ENTRY OF FINAL 9019 ORDER, FINAL APPROVAL ORDER, AND CONFIRMATION ORDER

41. The Estate Representatives, joined by the Lead Plaintiffs and Plaintiffs' Counsel,

shall seek entry of the Final Approval Order and Final 9019 Order, which as applicable shall

include the provisions in Paragraph 32 of this Settlement Agreement and provisions: (a)

authorizing the Trustee and the Debtors to enter into this Settlement Agreement; (b) approving this

Settlement Agreement, and directing its implementation pursuant to its terms and conditions; (c)

approving the allowance of the Class Claim as a class proof of claim pursuant to Bankruptcy Rules

9014 and/or 7023; (d) deeming the Plan and Confirmation Order to incorporate and include the

terms and conditions of this Settlement Agreement and to approve the compromise and settlement

that is contemplated in this Settlement Agreement as part of the Plan pursuant to II U.S. C.

§ 1123(b); (e) as of the Effective Date, releasing the Released Claims, and permanently barring and

enjoining all Settling Parties from instituting, maintaining, or prosecuting, either directly or

indirectly, any lawsuit that asserts Released Claims; (f) as of the Effective Date, approving the

assignment of and assigning the Assigned Claims and Additional Assigned Claims to the Creditors'

Trust; (g) appointing Lead Plaintiffs as Class Representatives of the Ownership Settlement

Subclass and Rescission Settlement Subclass, and authorizing and empowering Lead Plaintiffs, in

their capacity as Class Representatives of the Settlement Class, to complete the class ballots and

vote to accept the Plan on behalf of all Settlement Class Members who do not cast an individual

ballot, subject to and in accordance with this Settlement Agreement; and (g) reserving to the Court

that enters the Final Approval Order continuing jurisdiction over the Parties with respect to the

Settlement Agreement and the Final Approval Order.

Page 29 of 52

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42. Class Representatives and Plaintiffs' Counsel agree to fully support the Plan, and,

pursuant to the Class Claim allowed under this Settlement Agreement, Class Representatives agree

to vote in favor of the Plan on behalf of themselves and in their capacity as Class Representatives

on behalf of any Settlement Class Members who do not cast an individual ballot, provided,

however that if the Class Representatives, in consultation with Plaintiffs' Counsel, determine in

the good faith exercise of their fiduciary duty and taking into consideration all relevant risk factors

including, but not limited to, the opinions of the Plan Proponents and the Plan Supporters, potential

delay, financial outcome, and other legal and regulatory factors, that there is a proposed plan other

than the Plan that fully incorporates the terms of and is not inconsistent with this Settlement

Agreement and is in the best interest of the Settlement Class Members (the "Alternate Plan"), then

Class Representatives and Plaintiffs' Counsel may choose to support that Alternate Plan.

DISCOVERY AND COOPERATION

43. Discovery from Arnold State Court Action. Within 30 days after the Effective Date,

Class Counsel shall deliver to the Trustee, by and through his attorneys at Thompson & Knight,

1722 Routh Street, Suite 1500, Dallas, Texas 75201, Attn: Jennifer R. Ecklund, a copy of all

written discovery, deposition transcripts and exhibits, and documents that are not subject to any

privilege or immunity that were produced in the Arnold State Court Action that have not already

been provided to the Trustee, through counsel.

44. Cooperation from Lead Plaintiffs. Upon reasonable notice, each Lead Plaintiff

agrees to make himself or herself available for an interview, at mutually convenient times and at a

location or locations of his or her choice within the United States, or by telephone. Each Lead

Plaintiff will provide truthful information and requested documents (if reasonably available), and

Page 30 of 52

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shall cooperate in the preparation of truthful declarations and/or affidavits if requested by the

Trustee or his successor, the trustee of the Creditors' Trust, or their counsel. Nothing herein shall

require the Debtors to pay any expense of the Lead Plaintiffs or his or her attorney in connection

with any interview provided for in this paragraph 44. An "interview" for purposes of this

paragraph 44 shall last no longer than two hours, excluding reasonable breaks.

45. Cooperation from Class Counsel. Class Counsel for the Rescission Settlement

Subclass agrees to reasonably cooperate with a designee of the Trustee or his successor, the trustee

of the Creditors' Trust, or their counsel, free of any charge, to provide information relevant to tbe

Settlement Class Members' investments with LPI, including consulting with a designee of the

Trustee or his successor, the trustee of the Creditors' Trust, or their counsel on the discovery and

events from the Arnold State Court Action, securing documents requested from Lead Plaintiffs, and

providing work product from the Arnold State Court Action or the Consolidated Class Adversary

relevant to the Creditors' Trust's prosecution of the Assigned Claims, the Additional Assigned

Claims, or other litigation to benefit the bankruptcy estates or the Creditors' Trust, up to fifty (50)

hours of attorney time, including travel time. Provided, however, tbat Class Counsel shall not be

required to provide requested cooperation if Class Counsel reasonably believes providing such

cooperation is unlawful, would result in Class Counsel violating any ethical rule governing the

practice of law, and/or expose Class Counsel to risk of liability to any person or entity.

ATTORNEYS' FEES

46. Class Counsel will apply to the Court for an award of attorneys' fees in an amount

not to exceed $33,000,000 (the "Agreed Fee"), to be paid over time through the mechanism

described below (the "Fee Application"). The Trustee and Subsidiary Debtors estimate the present

Page 31 of 52

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value of the Agreed Fee to be $5,219,043. The Fee Application is subject to approval by the Court,

and the fmal amount awarded by the Court on the Fee Application (the "Approved Fee") will be

paid through the mechanism described below and set forth in Section 4.03(b) and 4.13(e) of the

Plan.

47. Settlement Class Members will not be required to pay the Approved Fee from any

portion of Fractional Positions owned by or contributed to the Position Holder Trust by Settlement

Class Members pursuant to the Plan. Class Counsel agrees to defer payment of the Approved Fee

and instead to be paid the Approved Fee in accordance with the Plan in kind and over time on the

basis of the face amount of Pre-Petition Abandoned Positions, and through transfer to Class

Counsel (or a designee of Class Counsel) of ownership of a pro rata share2 of the Pre-Petition

Abandoned Positions to Class Counsel in the aggregate face amount of the Approved Fee (the "Fee

3 Positions" ) on or before the later of: (i) the completion of Catch-Up Reconciliation (as defined in

the Plan); or (ii) ten (1 0) days after the Fee Application is approved in the amount of the Approved

Fee, regardless of whether the Approved Fee or Final Approval Order is appealed or sought to be

modified by any person or entity. If the Approved Fee or Final Approval Order is appealed,

maturity proceeds allocated to the Fee Positions will be placed into escrow pending the outcome of

the appeal, and if the Approved Fee or Final Approval Order is modified or reversed on appeal, the

registered ownership of the affected Pre-Petition Abandoned Positions (or maturity proceeds

therefrom) will be transferred to the Position Holder Trust, but only to the extent of the

2 The Fee Positions will be a percentage of every Pre-Petition Abandoned Position detennined by taking the Approved Fee and dividing it by the total value of the Pre-Petition Abandoned Positions. For example, if the total value of the Pre-Petition Abandoned Positions is $180 million and if the Approved Fee is $33 million, the Fee Positions will be 18.3333% of each of the Pre-Petition Abandoned Positions. 3 Also referred to as "Class Action Litigants' Counsel Fee Positions" in the Plan.

Page 32 of 52

App. 90

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 44 of 52 PageID 1899

modification or reversal. Plaintiffs' Counsel's ownership of the Fee Positions will be subject to a

3% (three percent) servicing fee and no other encumbrances, including but not limited to "catch­

up" payments or ongoing premium payment obligations. The Fee Positions will be governed by

and treated under the Plan. In no event will Class Counsel have the right to recover payment or

recovery of its attorneys' fees pursuant to this Settlement Agreement in excess of the Approved

Fee.

48. The Estate Representatives: (a) shall not directly or indirectly oppose and shall

advance and support the Fee Application and entty of one or more appropriate orders authorizing

and directing the payment and allowance of the Agreed Fee, in full, payable as set forth in this

Agreement; and (b) shall not take any position that would be inconsistent with the positions

asserted by Class Counsel in support of the Agreed Fee. The Trustee and Subsidiary Debtors shall:

(a) cooperate with Class Counsel as reasonably requested with respect to the Fee Application; and

(b) oppose any request by any person or entity to reduce the amount of the Allowed Fee below the

Agreed Fee. The Trustee and Subsidiary Debtors agree that payment and allowance of an

Approved Fee to Class Counsel in the amount of the Agreed Fee, payable as set forth in this

Agreement, is a fair and reasonable fee calculated as a percentage of the common fund under

applicable non-bankruptcy law, based upon and directly traceable to the work performed by

Plaintiffs' Counsel and the significant benefits conferred on the Settlement Class, inter alia,

traceable to the relief awarded to the Settlement Class Members in the terms of this Settlement

Agreement.

49. The Trustee and Subsidiary Debtors recognize that the Agreed Fee is less than the

amount that Class Counsel may otherwise be entitled to receive, as a percentage of a common fund,

Page 33 of 52

App. 91

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 45 of 52 PageID 1900

a fund that Plaintiffs' Counsel discovered, prosecuted, and created for the benefit of the Settlement

Class. Class Counsel asserts the common fund traceable to the amounts recovered by Class

Counsel for the benefit of the Settlement Class Members is $1,283,607,944, which is the amount of

claims entitled to rescission as a result of the opinion obtained through Plaintiffs' Counsel's

litigation in the Arnold State Court Action. Regardless, under an actual monetary value approach,

the Plan results in substantial value and direct benefits presently estimated to be $1,078,582,000 to

the Settlement Class Members on account of the claims awarded to them through the Arnold State

Court Action and the settlement of the Consolidated Class Adversary. This value is comprised of

· at least the sum of the stream of payments that will be paid to Settlement Class Members through

the Plan. If the common fund is calculated using the "actual monetary value" method, then the

Agreed Fee is only 3.06% of the common fund.

50. Accordingly, the Trustee and Subsidiary Debtors acknowledge and agree that

regardless of the methodology employed to calculate the common fund, the amount of the common

fund is sufficiently large that the amount of fees to be requested by Class Counsel pursuant to this

Agreement in the Fee Application (i.e., the Agreed Fee) is fair and reasonable as a percentage of

the common fund and should be allowed and is a significant concession by Class CounseL

51. Moreover, the Trustee and Subsidiary Debtors recognize that that the resolution of

the Ownership Issue is required in order to permit the formulation and confirmation of the Plan,

and Class Counsel's acceptance of payment over time through the mechanism described in

paragraph 47, rather than in a lump sum in cash on the Effective Date, significantly increases the

Debtors' liquidity and ability to perform the fhture obligations that benefit all creditors under the

Plan and is a significant factor supporting the averment that the Plan is feasible and satisfies, inter

Page 34 of 52

App. 92

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 46 of 52 PageID 1901

alia, II U.S. C. § 1129(a)(11). Therefore, the Trustee and Subsidiary Debtors acknowledge that the

Agreed Fee is both fair and reasonable, considering the factors expressed in Johnson v. Georgia

Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).

52. A reduction, by the Court, on appeal, or otherwise, of the Agreed Fee or Approved

Fee is not considered material to this Agreement and shall not affect any other rights or obligations

under this Agreement. In the event the amount payable to Class Counsel is reduced, by the Court,

on appeal, or otherwise, the related funds or Pre-Petition Abandoned Interests will remain part of

the Debtors' bankruptcy estates and be treated in accordance with the Plan.

ADDITIONAL PROVISIONS

53. Reasonable Best Efforts to Obtain Final Approval of the Settlement Agreement.

Counsel for all Parties agree to use their reasonable best efforts to obtain final approval of this

Settlement Agreement, subject to the Parties' rights to rescind the Settlement Agreement as set

forth in paragraphs 39-40 and fiduciary obligations of the Parties.

54. Audit Rights. Debtors agree to cause the Position Holder Trust to be required to

keep sufficient books, records, and accounts regarding its collection and distribution of death

benefits and its other obligations under this Agreement, and to maintain such records until the

expiration of seven (7) years after the year to which such records pertain. Upon ten (10) days

notice, Class Counsel shall have the right, at its own expense and not more than once every other

calendar year, to have an independent auditor, who shall be a certified public accountant from an

accounting firm of Class Counsel's choice, inspect and audit the Position Holder Trust's relevant

records and practices during the Position Holder Trust's normal business hours solely to verify the

accuracy of payments and compliance with the Position Holder Trust's obligations under this

Page 35 of 52

App. 93

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 47 of 52 PageID 1902

Agreement, subject to the independent auditor signing a confidentiality agreement with the Position

Holder Trust. The independent auditor shall only disclose to Class Counsel the amount of death

benefits collected and distributed and the amount of any underpayment or overpayment, and shall

not disclose to Class Counsel documents, invoices, investor identities, or any other confidential or

proprietary information of the Position Holder Trust. If any such audit should disclose an alleged

insufficient payment to Class Counsel, the independent auditor shall deliver a report to the Position

Holder Trust, and the Position Holder Trust shall have thirty (30) days to review the report and

either accept or object to the findings of the report. If the Position Holder Tmst accepts the

findings of the report, the Position Holder Trust shall bring itself into compliance with the

Agreement within fifteen (15) days after acceptance and pay Class Counsel for any shortfall

determined. If the Position Holder Trust objects to the findings of the report, Class Counsel and the

Position Holder Trust will jointly hire a third-party certified public accountant unaffiliated with

either side to prepare a report within thirty (30) days. If the third-party report identifies a shortfall

owed to Class Counsel, the Position Holder Trust shall bring itself into compliance with the

Agreement within fifteen (15) days after issuance of the third-party report determining any

shortfall. In the case of an accepted audit report or third-party audit report showing underpayment

of more than one percent (1%) for any calendar year, the Position Holder Trust shall also pay for

Class Counsel's reasonable expenses of such audit (including attorneys' fees and fees paid to the

auditor). In the case of an accepted audit report or third-party audit report showing no

underpayment for any calendar year, Class Counsel shall pay for the Position Holder Tmst's

reasonable expenses of such audit (including attorneys' fees and fees paid to the auditor), if any.

55. No Admission. This Settlement Agreement, whether or not it shall become final,

Page 36 of 52

App. 94

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 48 of 52 PageID 1903

and any and all negotiations, communications, and discussions associated with it, shall not be: (a)

offered or received by or against any person as evidence of, or be construed as or deemed to be

evidence of, any presumption, concession, or admission by a Party of the tmth of any fact alleged

or defense asserted, of the validity of any claim, of the deficiency of any defense, or of any

liability, negligence, fault or wrongdoing on the part of any Party; (b) offered or received by or

against any person as a presumption, concession, admission or evidence of the violation of any

state or federal statute, law, rule, or regulation or of any liability or wrongdoing by any Party, or of

the tmth of any of the claims, and evidence thereof shall not be directly or indirectly, in any way,

offered or received (whether in the Consolidated Class Adversary, or in any other action or

proceeding), except for purposes of enforcing this Settlement Agreement and the Final Approval

Order and Confirmation Order, including, without limitation, asserting as a defense the release and

waivers provided herein; (c) offered or received by or against any person as evidence of a

presumption, concession, or admission with respect to a decision by any court regarding the

certification of a class, or for purposes of proving any liability, negligence, fault, or wrongdoing, or

in any way referred to for any other reason as against the Trustee or the Debtors, in any other civil,

criminal, or administrative action or proceeding, other than such proceedings as may be necessary

to effectuate the provisions of this Settlement Agreement; provided, however, that if this Settlement

Agreement is approved by the Court, then the signatories to the Agreement may refer to it to

enforce their rights hereunder; or (d) construed as an admission or concession by an Party that the

consideration to be given in this Settlement Agreement represents the relief that could or would

have been obtained through trial in the Consolidated Class Adversary or the Arnold State Court

Action.

Page 37 of 52

App. 95

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 49 of 52 PageID 1904

56. Arm's-Length Negotiations. The Parties agree that the terms of this Settlement

Agreement were negotiated at arm's length and in good faith, and reflect a settlement that was

reached voluntarily after consultation with experienced legal counsel. This Settlement Agreement

shall not be construed more strictly against one Party than another merely by virtue of the fact that

it, or any part of it, may have been prepared by counsel for one of the Parties, it being recognized

that it is the result of arm's-length negotiations between the Parties and their counsel, and all

Parties have contributed substantially and materially to the preparation of this Settlement

Agreement.

57. Only written modification. This Settlement Agreement, including the appendices to

this Settlement Agreement, may not be modified or amended, nor may any of its provisions be

waived, except by a writing signed by all signatories to this Settlement Agreement or their

successors-in-interest. Any condition in this Settlement Agreement may be waived by the Party

entitled to enforce the condition in a writing signed by that Party or its counsel. The waiver by any

Party of any breach of this Settlement Agreement by any other Party shall not be deemed a waiver

of the breach by any other Party, or a waiver of any other prior or subsequent breach of this

Settlement Agreement by that Party or any other Party. Without further order of the Bankruptcy

Court, the Parties may agree to reasonable extensions of time to carry out any of the provisions of

this Settlement Agreement.

58. Headings. The headings herein are used for the purpose of convenience only and

are not meant to have legal effect.

59. Authority of the Court. The administration and consummation of this settlement as

embodied in this Settlement Agreement shall be under the authority of the Court orders approving

Page 38 of 52

App. 96

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 50 of 52 PageID 1905

this Settlement Agreement and authorizing and directing the Parties to effectuate and implement

this Settlement Agreement pursuant to Federal Rules of Bankruptcy Procedure 9019 and 7023 and

Federal Rule of Civil Procedure 23 and the Confirmation Order, and the Court that enters the Final

Approval Order shall retain continuing and exclusive jurisdiction for the purpose of, inter alia,

entering orders providing for the enforcement of the terms of this Settlement Agreement.

60. Taxes. The Plaintiffs and Plaintiffs' Counsel acknowledge that neither of the

Trustee, the Debtors, any of their counsel, nor Plaintiffs' Counsel, have provided, made, or are

making in connection with the Settlement Agreement, any tax advice or any representations

regarding possible tax consequences relating to the Settlement Agreement or the Plan. The

Plaintiffs and Plaintiffs' Counsel further acknowledge that neither the Trustee, the Debtors, the

Committee,' and their successors under the Plan, any of their counsel, nor Plaintiffs' Counsel, have

or will have any responsibility for any taxes due based upon the equitable relief provisions in

paragraph 32 or based upon any other provision of the Settlement Agreement or the Plan except for

the Approved Fee. Plaintiffs' Counsel acknowledges that neither the Trustee, the Debtors, the

Committee, and their successors under the Plan, nor any of their counsel, have or will have any

responsibility for any taxes due based upon payment of the Approved Fee. Each Settlement Class

Member's tax obligations, if any, and the determination thereof, are the sole responsibility of the

Settlement Class Member. The Debtors shall comply with all applicable reporting and withholding

obligations imposed by law, including reporting the payment of the Approved Fee and backup

withholding if Class Counsel does not furnish its taxpayer identification number to the Debtors

4 Nothing in this paragraph is intended to diminish or affect in any manner any responsibility for any taxes due, based upon the equitable relief provisions in paragmph 32, that any Committee member may have by virtue of such individual's status as a Settlement Class Member.

Page 39 of 52

App. 97

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 51 of 52 PageID 1906

using Form W-9, Request for Taxpayer Identification Number and Certification.

61. Entire Agreement. This Settlement Agreement (inclusive of its appendices) and the

Plan constitutes the entire agreement among the Parties concerning this settlement, and no

representations, warranties or inducements have been made by any Party concerning this

Settlement Agreement (inclusive of its appendices) other than those contained and memorialized in

the Settlement Agreement (inclusive of its appendices) or the Plan. In the event of a conflict

between the terms of this Settlement Agreement and the terms of the Plan, the terms of this

Settlement Agreement shall control.

62. No Third Party Beneficiaries. This Settlement Agreement is not intended to confer

any rights, obligations, or remedies on any person other than the Parties and their successors and

assigns.

63. Multiple Counterparts. This Settlement Agreement may be executed in one or more

original, e-mailed, and/or faxed counterparts. All executed counterparts and each of them shall be

deemed to be one and the same instmment.

64. Binding Nature. This Settlement Agreement shall be binding upon, and inure to the

benefit of, the successors and assigns of the Parties.

65. Choice of Law. The construction, interpretation, operation, effect and validi1y of

this Settlement Agreement shall be governed by the laws of the State of Texas without regard to the

applicable choice of law mles, except to the extent that federal law requires that federal law govern.

66. Representations and Warranties. All counsel and any other person executing this

Settlement Agreement and any of its appendices, or any documents related to the Settlement

Agreement, warrant and represent that they have the full authority to do so and that they have the

Page 40 of 52

App. 98

Case 4:16-cv-00212-A Document 56-1 Filed 07/06/16 Page 52 of 52 PageID 1907

authority to take appropriate action required or permitted to be taken pursuant to the Settlement

Agreement to effectuate its terms. The Parties agree to use their reasonable best efforts to

consummate the settlement in accordance with the terms of this Settlement Agreement and shall

execute and deliver any document or instrument reasonably requested by any of them after the date

of this Settlement Agreement to effectuate the intent of this Settlement Agreement.

67. Severability. Any determination that any provision of this Settlement Agreement or

any application thereof is invalid, illegal, or unenforceable in any respect in any instance shall not

affect the validity, legality, and enforceability of such provision in any other instance, or the

validity, legality, or enforceability of any other provision of this Settlement Agreement. No Party

shall assert or claim that this Settlement Agreement or any provision hereof is void or voidable if

such Party performs under this Settlement Agreement without prompt and timely written objection.

IN WITNESS WHEREOF, the Parties hereto have caused this Settlement Agreement to be

executed, by their duly authorized attorneys as of March tH, 2016.

[THE REMAINDER OF TIDS PAGE IS INTENTIONALLY BLANK]

Page 41 of 52

App. 99

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 1 of 52 PageID 1908

By:_-=-=-"'.L-~~-t:===~~=-..,.,...~· H. Thoma.\ Moran II,Chapie ll Trusteefor Life PartnersHoldin.gslnc. ::ffi·~~ Date: 1-t Thomali Mo~anJ!, S

Date: By: .'-'-=:-::l-f--J¥:-L,~LJ""=-;::n~~~±-'­ H. Thoma.\ Moran II, Sqle Dlte,torqfLPl Financial Sercvi.<;o~s, In.c:

OFFICIAL C6MMitiEEOF.UNsli:ciJR.EUtCREDlTORS

Date:

Dl'tte: B)':_,...,..,=~~~~~~~~~~ Skip Ti-iin\lle; M.e11Jb,r ··

L!!,AD. PLA!Nl;lFFSAHOPROP(jsEJ) Cl.A$5

Date:

Date:

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 2 of 52 PageID 1909

LIFE PARTNERS HOLDINGS, INc.

Date: ______By:_~=----o-o---:;:;-;::;--:-:-;-;;o--;--;:­ H. Thomas Moran II, Chapter 11 Trustee for Life Partners Holdings Inc. ·

LIFE PARTNERS, INC.

Date: By:~~~~~~~~~--~--­ Colette Pieper, CEO of Life Partners, Inc.

LPI FINANCIAL SERVICES, INC.

Date: By: ---:::-:--:-:::----:=~=:::---:--;-;;----:­ Colette Pieper, CEO ofLPI Financial Services, Inc.

Date:

Date: 'E -f7-Zojb

Date: By: -~~~~~~------­ Skip Trimble, Member

LEAD PLAINTIFFS AND PROPOSED CLASS REPRESENTATIVES

Date: By: ~~~~------­ Philip Garner

Date: By: ~~:;-:::------­ Christine Duncan

Page 42 of 52

App. 101

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 3 of 52 PageID 1910

LIFE PARTNERS HOLDINGS, INC.

Date: ______By: H. Thomas Moran Il, Chapter 11 Trustee for Life Farmers Holdings Inc.

LIFE PARTNERS, INC.

Date: By:~~~~~~~~~--~-­ Colette Pieper, CEO ofLife Partners, Inc.

LPI FINANCIAL SERVICES, INC.

Date: By:~~~~--~~~~--~~~ Colette Pieper, CEO ofLPI Financial Services, Inc.

OFFICIAL COMMITTEE OF UNSECURED CREDITORS

Date: By: ------~------­Mmk Reddus, Member

Date: By: ______Be11 Scalzo, Member

Date: By: ·~ c;Z;U-v Skrp rnnble, Membe1·

LEAD PLAINTIFFS AND PROPOSED CLASS REPRESENTATIVES

Date: By: ------Philip Garner

Date: By: ------Christine Duncan

Page 42 of 52

App. 102

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 4 of 52 PageID 1911

LIFIS PARTNERS HOLll!NGS, iNC.

Date:. ______By:_-,.:--:: H. Thomas Moran lf, Chapter II Trustee for Life Pa•tners Holdings Inc.

LIFE PARTNERS, iNC.

Date: By: Colette Pieper, CEO of Life Partners, Inc.

LPl FINANCIAL SERVICES, lNC.

Date: By: -~--~--~~=~~~~~~--~ Colette Piepe1·, CEO of LPI Financial Services, Inc.

OFF!Clo\.L COMMITTEE OF UNSECURED CREDITORS

Date: By: ~~~~~~~~------­ Mark Reddus, Member

Date: By: ~~~~~~------­ Bert Scalzo, Member

Date: By: ~~~~~~~------­ Skip Trimble, Member

LEAD PLAINTIFFS AND PROPOSED CLASS REPRESENTATIVES

Date: By:C~fZ Ph!l1p 'arner

Date: By: ~~~--:~------­ Christine Duncan

Page 42 of 52

App. 103

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 5 of 52 PageID 1912

LIFE !'ARTNERi:i HOLDINGS, INC.

Date: By '--:::-:::o:--o-:---:::--;:;----::-;-;o:----::­ H. Thomas Moran II. Chapter 11 Trustee for Lile Partners Holdings Inc.

LiFE PARTNERS, INC.

Date: By: -::-:---=:------::=-:c-::-:-:-:-:-::---:c--­ Colette Pieper. CEO ofLile Partners. Inc.

LPI FINANCIAL SERVICES, iNC.

Date: By: :--~--~--~~~~~~~~ Colette Pieper, CEO of LPI Financial Services, Inc.

OFFICIAL COMMITTEE OF UNSECURED CREDITORS

Date: By: ------Mark Reddus. Member

Date: By: ·····-·-················ ·--···---···' ------Bert Scalzo, Member

Date: By: Skip Trimble, Member

LEAD PLAINTIFFS AND PROPOSED CLASS REPRESE.NTATlVES

Date: By:

Date: By:

Page 42 of 52

App. 104

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 6 of 52 PageID 1913

Date: By: -++~-----""·~--L-~--'>i,--::------___ _ ~as trustee for the South Living Trust

LJate: 3-J(rZO/L

Date:

Date: Bv:~~ anct Arnold

PLAINTIFFS' COUNSEL

LJate:

Date: By: ---~~~~~-~--~~~--­ Scott Skelton, Skelton Slusher Barnh.ill Watkins Wells PLLC (flk/a Zelesky Law Firm PLLC)

Date: By: ~:-:--::::--:---:-:----:c-c-----c--:-:-:c:-:---­ Robert Cain, Alderman Cain & Neil PLLC

Page 43 of 52

App, 105

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 7 of 52 PageID 1914

Date: By: Steve South as trustee for the South Living Trust

Date: By: Dr. John Ferris

Date: By: --"~·-- Michael Arnold

Date: By: Janet Arnold

Date:

Date: By: ____~~------~--- Scott Skelton, Skelton Slusher Barnhill Watkins Wells PLLC (flk/a Zelesky Law Finn PLLC)

Date: By:~~--~------~~~~~~ Robert Cain, Alderman Cain & Neil PLLC

Page 43 of 52

App. 106

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 8 of 52 PageID 1915

Date: ll): ------StC\'f: South ns tru:-;icc for the Snuth Living Trust

Dntt:: lly: -c::c--:-:-----:c-:------­ Dr. John Ferri:-i

[l; : -~--:--c---:-:------­ \1ic:had Arnuld

Datt:: Ll) : ~----~-~------Janet /\rno!d

PJ.,\I:-\TIFFs' Cot-_\SEl.

Date.::

Date:

Dat(': By: -::-:--:::--:---:-:----:::-:-----:-:-:--::-~:-=-­ Rohen Cain. Alderman Cain & Neil PLLC

Pag~ 43 or 52

App. 107

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 9 of 52 PageID 1916

Date: By:~~~~------~~------­ Steve South as trustee for the South Living Trust

Date: By:~~~~~------­ Dr. John Ferris

Date: By: Michael Arnold

Date: By: Janet Arnold

PLAINTIFFS' COUNSEL

Date: By:~77~~----~~~--~---­ Keith L. Langston, Langston Law Firm

Date: By:~~~~~~--~~~~~-­ Scott Skelton, Skelton Slusher Barnhill Watkins Wells PLLC (f/k/a Zelesky Law Finn PLLC) aJ,_!)- 0..-o . ' Date: By:~~\~~~-----~~~~~~~~­ Robcrt Cain, Alderman Cain & Neil PLLC

Page 43 of 52

App. 108

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 10 of 52 PageID 1917

Appendix A

A Roger 0. Whitley Group, Inc. Char! otte Hardin Dee Wayne Cullum A Silver Lining, LLC Charmaine Wages Dennis Carpenter A. Nick Coppolo Charter Insurance Brokerage, Inc. Dennis Lagow Achim Reinhart db a LifeSet TBB Chidester Investment, LLC Dennis 0. Harris Afrain Cavazos Cindy Bulloch Descartes Limited Alexandra Agencies Limited Clear Sum, LLC Diamond Safe Financial, LLC Alternative Investment Advisors, LLC Clint Perrin Dipak Patel Andrew Walvoord Clyde Jones Diversified Metroplex Investors, LLC Andy Hines Concierge Life Settlements, Inc. Don Ballew Anne Stilwell Kleefisch Connie Forbes Donald B. Bergis Assured Retirement, LLC Connie Langley Donald L. Ashberry Bagby Investments LP Craig C Perkins Wealth Solutions LLC Donald Whittenburg and Mgmt Barlas & Chamber, LLC Craig C. Perkins Douglas Allison Bay Wine, Inc. Crossroads Agency Eagle One Investments, LLC Becky Weatherby CUB Investments Earl Stewart Betty J. Horton Dallas Air Charter EBS III Financial, Inc. Bill Enlow Dan Lahey Educated Investment Group Billie Hall Danny J. Markham Edward G. Burford aka Eddie Burford Blackstone Family Partnership DAT Interests, Inc. Edward G. Burford Corporation Brad Wilemon Dave F. Dallons Edward 0. Reeves Brent Husted David Barr ENR Enterprises, LLC Brian E. Prechtl David Bendel F. R. Harden Brian Harper David Eiland Faye Bagby Brian Murray David F. Brockman Fei Havenor Byron T. Gannaway David M Bruce TR Fellowship Financial, LLC Cade Smith David Norcom Fidelis Fetsch Caperton Enterprises, Inc. David Taliaferro Filpansick Holdings, LLC Carrie Bitros David Valencia Forward Financial & Ins Services, Inc. Carteya Limited David Youzva Forward Focus International Corp. Centerline Resources, LLC dba Positive Rate Investments, LLC Frank Dimicelli

Page 44 of 52

App. 109

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 11 of 52 PageID 1918

Fritz J Aldrine Jack R. Barnes Ken Comeaux Gain Plan Financial, LLC Jack Rosenquist Ken Higdon Garry Madaline Jacob Moran Kenneth Holland Gary Brosseit Jacqueline M. Tyler Kenneth J. McGovern Gary Cassill James B Sloan Kenneth Nelson Gary Henderson James C. Calmes Kenneth Smith George Filpansick James H. Cobb KL Grace, LLC Gerald DnBose James Moriarty III K's Marketing, Inc. Gil DeShazo James Rose Lana Borbas Glenda L. Cooper James Sundelius Larry Darnall GO Financial Services, Inc. James T. Payton Laura Olbeter Good Life Financial Janet Kusch Lead Masters Insurance Marketing & Grace Life Investments Jay Heimburger Financial Network, Inc. GreggMCune Jeannette Bajalia Life Financial Group, LLC Gregory Dailey Jeff Martel LifeMatters International, Inc. Guy Smith Jeff S. Garrett Linda Harper Hans P. Reinhart Jerry Weakley Enterprises, Inc. Lloyd Lowe Sr. Harmon Insurance Agency Jody Ashford Lori Herzog Harry J Wilson Joe Bollinger Luxury Management, LLC Hollis Steven Hufstetler, Sr. Joel F. Woods Lynn Investments, LLC Homer H. Stout John Crooks Marianne Honea Howard J. Boutte John Guess Mark Bronson Huilen E Tseng John Harper Mark House Humberto Alcazar, Jr. John J. Gannon Mark McKay IPS Financial Services John P. Ley Matt Pashby Innovative Charitable Solutions, Inc JohnR. Gove Maxing Money Solutions, Inc. Integrity Capital Advisory, LLC John R. Harkey Sr. MCH Advisors Inc. Inter Consulting John S. Muratore MDH Investments Internet Aces Corp Johnson Financial Consulting, Inc. Melinda Mangrum Investment Income Group, LLC Joseph Barkate, PLLC Merrie M. Kelly Isidore Enterprises Inc. Joseph Feldman Michael Lloyd IWM Investments, LLC Joseph Hopkins Michael McGarrah Jack Lee Dixon TR U Julie Cepelak dba Wealth Watchers, LLC Michael Mishler Jack M. Pausman Keith Randolph-Lipscomb Michael T. Ty Ier

Page 45 of 52

App. 110

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 12 of 52 PageID 1919

Miles Babcock Rick Curtis The Arbitrage Advisory Group, Inc. Money Team Coach, LLC Robert D. Phillips The Elisha Group, LLC Mustang Ins. Group Robert H. Watlington The Perfect Enhancement, LLC Nathaniel Hawkins ill Robert M. Rountree The Property People, LLC Necia B. Cobb aka Necia Bishop-Cobb Robert Newton The Retirement & Investment Council New Alternative Investments, Inc. Robert Quick Thomas Burk Massey Norman Lorentz Robert Rountree Jr. Thomas C. Zyroll NW Safe Retirement Robert Westrup Thomas Quinn Ohlhaber Asset Management, LLC Robert Whipple, Inc. Thomas R. McElroy Omnium International Group, Inc. Robin Rock, Ltd. Thomas R. Wilson OPV Enterprises, LLC Roger Lane Timothy Joyce Paget Holdings, Ltd. Ronald Coleman Todd Shevlin Pamela Ball RonnieKnoy United Senior Advisors Group Pamela M. Burton Ronnie McAda, Jr. Vernon Bell Pamela S. Davis Root Hospitality Solutions, LLC Vicki C. Flannery Paul Nick Russell Hagan Victor Pantuso Paula Izzard Properties, LLC Ryan Cowley WadeL Hampton Phillip Bellingan Safe Alternative Investments, LLC Wealth Associates Incorporated PowerStream Investment Corporation Sean Maness Wellspring Enterprise Mgmt, Inc. Presidents Marketing Group Secure Retirement Solutions, LLC Wendelin Labio-Balallo Professional Insurance Elite Agency, LLC Shamrock Life Settlement, Inc. Wheetley Financial Services R Squared Inc. Sherwood International Corporation William Knoy Randal Wallis Sidney Evans William M Tolleson Randel Brookings Spectrum Advisors, Inc. William Michael Tolleson Rands Agency, Inc. Stephanie M. Lucke William V. Mozek, Jr. Raymon G. Chadwick Jr. Steve F eeken Windfall Development, Inc. Raymond Croteau Sun Safety, Inc. Winners Only Team, Inc. Raymond Fox Sundbridge Financial, LLC Retirement Options, LLC Susan Carver Retirement Rescue, LLC Susan l Payton Rich DePaolo T. Brooks Moore Richard Shaw TEK 2001, Inc. Richard W. Kemp Tena Wilson Richard Wong Texas Fifty Plus, Inc.

Page 46 of 52

App. 111

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 13 of 52 PageID 1920

Appendix B

Jack and Jolene Wasson v. Cathy Dewitt, Lakeside Equity Partners, Inc. v. Life Partners, Inc., No. 16-04040-rfn (United States Bankruptcy Court for the Northern District of Texas, filed Dec. 26, 2012, removed March 14, 2016)

William S. Eastwood, Russell J. Bowman, and Kristina A. Bowman v. Life Partners Inc. and LPI Financial Services, No. 16-06003 (United States Bankruptcy Court for the Western District of Texas, filed Nov. 20, 2014, removed March 14, 20!6)

JMD Resources, LLC v. Life Partners Inc., Life Partners Holdings, Inc., No. 16-05016 (United States Bankruptcy Court for the Western District of Texas, filed May 13, 2014, removed March 14, 2016)

Michael Arnold, Janet Arnold, Steve South, JohnS. Ferris, and all others similarly situated v. L{fe Partners, Inc., Life Partners Holdings, Inc., Abundant Income, and Mil/de/Ferguson Investment, Inc., No. DC-11-02995 (Tex. Dist. Ct. Dallas Cnty., filed Mar. 14, 2011)

Anthony Sansone, on behaif of himseif and all others similarly situated v. Life Partners, Inc., No. !5-1628-CI (Fla. Cir. Ct. Pinellas Cnty., filed March 12, 2015)

Pillar Life Settlement Fund I, LP et al. v. Life Partners, Inc., No. 15-041 06-rfn (United States Bankruptcy Court for the Western District of Texas, filed Dec. 22, 2015)

KLI Investments, LP et al. v. Life Partners, Inc., No. 15-04051-rfn (United States Bankruptcy Court for the Western District of Texas, filed June 19, 2015) (including all intervenors and proposed intervenors)

Page 47 of 52

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Appendix C

1. Allen, Jr., James 2. Armstrong, Sandra 3. Babb, Joseph 4. Balady, Louis 5. Barbarin, Joy C 6. Beal, Christopher 7. Bingiel, Alana 8. Bingiel, Joseph 9. Bingiel, Joseph & Alana 10. Birtcher, Danny 11. Blackwell, Hurshel Dwayne 12. Blackwell, Patricia 13. Broderick, Matthew 14. Brown, Emily 15. Padron, Eladio 16. Byram, Jimmie 17. Carey, Nancy 18. Carey, Robert 19. Carey, Robert & Nancy 20. Carpenter, Barbara 21. Carpenter, Michael 22. Chapman, Rita 23. Chidester, John D. 24. Coffey, Mary Jane 25. Collins, Bruce 26. Collins, Deborah 27. Colvin, James 28. Contella, Charles Joseph 29. Cooper, Glenda 30. Cooper, Glenda (Custodian for Lina Grace Assaad UGMA) 31. Cooper, Glenda (Custodian for Samuel Mark Assaad UGMA) 32. Harvey Living Trust (Glenda Cooper as Trustee) 33. Cooper, Thomas 34. Cotten, Bill & Nancy 35. Cumbest, Glenda (obo Joseph B. Cumbest, Sr., Deceased) 36. Cummings, Lucinda 37. Cummings, Terry 38. DeMars, Sandra (abo Larry Engen DeMars, Deceased) 39. Dinsmore, Gerald 40. Dirks, Sherra 41. Douma, Paul

Page 48 of 52

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42. DuKet, Thomas 43. Eccles, Stephen & Daryl 44. Evans, Donna 45. Evans, Robert 46. Falvo, Elaine M. 47. Falvo, lll, Louis 48. Fisher, Warren 49. Funke, Henry & Diana 50. Gallina, Pamela 51. Gartenberg, Joel 52. Gillespie, Carolyn 53. Goldstein, Janet 54. Guion, DDS, H. Don 55. Halman, Douglas 56. Harris, Dennis 57. Hilliard, Robert J. 58. Hillman, Rebecca 59. Holland, Theresa 60. Hubbard, John 61. Hubbard, William Brent 62. Hutchinson, George 63. Hutchinson, Laura 64. Hutto, Don 65. Inglis, Lona 66. Inglis, Ronald 67. Ira M. Sabbagh Trust (Ira M. Sabbagh as Trustee) 68. Ivory Artists, Inc. 69. Jacobi, Richard & Anna 70. Jennings, Joe 71. Johnson, Clara 72. Johnson, Gary 73. Johnston, Ross 74. Jones, Henry & Nancy 75. Jones, Shana 76. Gerald Williams Jr & Shana Jones Rev. Living Trust (Gerald Williams, Jr. & Shana Jones as Trustees) 77. Jortner, DDS, Wayne 78. Joshi, Sanjay 79. Kanouse, Thomas J. 80. The Kaye Family Trust (Michael C. Kaye & Pamela S. Gerver-Kaye as Trustees) 81. Kellogg, Alan 82. Kitchen, Richard 83. Kohler, Janet 84. Kohler, Kirk

Page 49 of 52

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85. Kovac, David L. 86. The George and Jacqueline Krabbe Family Trust (George & Jacqueline Krabbe as Trustees) 87. Krizman, James 88. Kwok, Don Chaen & Nguyen, Christine 89. Lair, Kelly 90. Lair, Peggy 91. Langhurst, Kathleen 92. Langhurst, Paula 93. Lilli, II, Joseph A. 94. Love, James 95. Love, James & Denise 96. Lunsford, Joanna 97. Lunsford, Ray & Joanna 98. Lutz, Carolyn 99. Lutz, Douglas C. 100. Lutz, Jr., Richard Paul 10 I. Marsters, Dorothy 102. Marsters, Judson 103. Marti, Thomas 104. Mathis, Charles 105. McClain, Todd 106. McClain, William Troy 107. McDermott, Helen Z. 108. McKinley, Albert 109. McKinley, Albert & Geneva 110. McKinley, Geneva 111. June McLaren Living Trust (William & June McLaren as Trustees) 112. William McLaren Living Trust (William & June McLaren as Trustees) 113. Ed E. McWilliams Revocable Trust (Ed & Nancy McWilliams as Trustees) 114. Mellado, Eduardo & Agueda 115. Mondeau, Adrienne 116. Morrow, Arthur 117. Morrow, Jennie 118. Morse, Terrance L. 119. Mucker, Matthew 120. Mulligan, Ashley 121. Mullins, Gary 122. Munger, Ann 123. Munger, Ann & Robert 124. Munger, Robert 125. Neal, Donna 126. Neal, Earl 127. Nelson, Jerry & Joan 128. Ninich, James Henry

Page 50 of 52

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129. Nix & Nix Family, LP 130. Nolin, Wendy 131. O'Keefe, Mary 132. Ormsby, Jo 133. Parrott, Robyn 134. Patty, Kevin 135. Patty, Therese 136. Patty, Dayna 137. Patty, Melissa 138. Patty, Kevin & Therese 139. Pennel, Brock & Diana 140. Phillips, Hazel 141. Pippi, Augustine & Susan 142. Pirie, Glenda 143. Plumlee, Hubert 144. Polk, Charles & Marilyn 145. Polk, Marilyn 146. Path, Konrad E. 147. Charles G. & Marjorie E. Quarnstrom Revoc. Living Trust (Faye Bagby as Trustee) 148. Quarnstrom, Charles & Marjorie 149. Raisinghani, Mahesh 150. Reader, Jamieson & Misti 151. Recker, Janet 152. Recker, Steven 153. Redden, Jr., Jim 154. Reynolds, Charles 155. Rice, Dennis 156. Richardson, II, Louis D. 157. Rivard, William 158. Roddy, Joe 159. Rose-McDaniel, Deborah 160. Sachanko, Susan B. 161. Sanders, Brandon 162. Sanderson, Michael 163. Sandoval, Ana 164. Sandoval, Will 165. Sandoval, Will & Ana 166. Sauceda, Linda 167. Schwab, III, Carl F. 168. Schwab, John 169. See, BudS. 170. Sekely, Erick 171. Sherriff Family, LLC 172. Shiring, Robert

Page 51 of 52

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173. Simms, Leigh B. 174. Smith, Charles E. 175. Smith-Conner, Sandra 176. Somerset Partners Strategic Asset (Whitmire, David) 177. Stagner, Cathy M. 178. Stark, Michael P. 179. The Stelmak Family Trust (Robert & Judith Stelmak as Trustees) 180. Stelmak, Robert 181. Stephan, David A 182. Steuben, Marilyn 183. Storey, Debbie T. 184. Tallhammer, Bela 185. Tucker, Alan 186. Vorheis, Jerry 187. Richard & Judy Walker Family Trust (Richard & Judy Walker as Trustees) 188. Walker, Van 189. Warner, Wanda 190. Weddel, Elmer 191. White, Howard 192. Whitehurst, Robert 193. Whitmire, David 194. Williams, Thomas G. 195. Willingham, John 196. Wilson, Darlene 197. Woelfel, John 198. Wohleb, Clifford 199. Wohleb, Clifford & Jennes 200. Wood, Daniel 201. Wood, Sharon 202. Zagar, Amy 203. Zagar, Keith 204. Zanoni, Muriel M.

Page 52 of 52

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 20 of 52 PageID 1927

John C. Leininger State Bar No. 24007544 Bieging Shapiro & Barber LLP 5400 LBJ Freeway, Suite 930 Dallas, Texas 75240 (214) 377-0146 (Telephone) [email protected]

Keith L. Langston State Bar No. 24015196 Langston Law Firm 109 W. Tyler Street Longview, Texas 75601 (903) 212-3922 (Telephone) (903) 212-3892 (Facsimile)

Attorneys for Plaintiffs IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION

In re: § § Life Partners Holdings, Inc. et aL § Jointly Administered Under § Case No. 15-40289-RFN § Debtors. § Chapter 11

Philip M. Garner, et aL § § Plaintiffs, § § v. § Adversary No. 15-4061 § Life Partners, Inc. § § Defendant. §

DECLARATION OF THE HONORABLE RICHARDS. SCHMIDT (RET.) IN CONNECTION WITH MOTION FOR APPROVAL OF SETTLEMENT AGREEMENT PURSUANT TO FEDERAL RULE OF BANKRUPTCY PROCEDURE 9019

I, RichardS. Schmidt, hereby state and declare:

1. I am a senior advisor with the Claro Group a privately-owned financial advisory

and management consulting company located in Houston, Texas. Prior to working for the Claro

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Group I was the United States Bankruptcy Judge for the Southern District of Texas, Corpus

Christi Division for twenty-eight (28) years. During my tenure as a judge I presided over

thousands of disputes and was involved in some of the largest most complex bankruptcy cases in

the United States. I have particular experience with complex litigation, including class action

litigation. As relevant to the settlement here, I assisted the Parties (as defined below) involved in

reaching the settlement as an unpaid mediator. I make this statement in connection with the Joint

Motion to Compromise Controversies, to Approve Plan Support Agreement, and tor Related

Relief, which seeks the Court's approval of a settlement entered into by an among, H. Thomas

Moran II, as chapter II trustee for Life Partners Holdings, Inc., Life Partners, Inc., and LPI

Financial Services, Inc.; Plaintiffs Philip M. Gamer, Steve South, as Trustee for, and on behalf

the South Living Trust, Christine Duncan, Michael Arnold, Janet Arnold, and John S. Ferris,

M.D., on behalf of themselves and all those similarly situated, and the Official Committee of

Unsecured Creditors (collectively the "Parties").

2. The Parties approached me for assistance in late 2015 and I agreed to help. On

various dates in November 2015 and December 2015, the Parties engaged in mediation sessions

in Austin, Texas and Dallas, Texas. All sides were well represented by experienced and

competent counsel. Prior to the mediation, all Parties submitted mediation statements, each

setting forth its view of the factual, legal and procedural issues in this case.

3. In addition to the mediation sessions, I had telephonic communications with the

Parties regarding the settlement agreement.

4. As a result of the mediation process, the Parties agreed to the settle the above-

captioned adversary proceedings as reflected in the Settlement Agreement executed on March _1!Lzot6.

2

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5. The settlement resulted from fully informed, arms-length negotiations. Based on

my experience as a judge, my observation of the mediation sessions, my discussions with

counsel for the Parties, and my review of the information provided for the parties, I believe the

settlement was negotiated in good fuith and is in the best interests of the Debtors, their creditors

and their estates.

I declare under penalty of peJjury of the laws of the United States that the foregoing is

3

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 24 of 52 PageID 1931

IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION

In re: § § LIFE PARTNERS HOLDINGS, § Jointly Administered Under INC. ET AL., § Case No. 15-40289-RFN § Debtors. § Chapter 11

PHILIP M. GARNER § STEVER SOUTH, AS TRUSTEE § FOR AND ON BEHALF OF § THE SOUTH LIVING TRUST § CHRISTINE DUNCAN, AND ALL § OTHERS SIMILARLY SITUATED, § Plaintiffs, § § v. § Adversary No. 15-4061 § LIFE PARTNERS, INC. § Defendant. §

MICHAEL ARNOLD, JANET ARNOLD § STEVE SOUTH, AS TRUSTEE FOR, § AND ON BEHALF OF § THE SOUTH LIVING TRUST § JOl-IN S. FERRIS, M.D. § CHRISTINE DUNCAN, AND ALL § OTHERS SIMILARLY SITUATED § Adversary No. 15-4062 P laintijfs, § § v. § § LIFE PARTNERS, INC. § Defendant. §

1 App. 121

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DECLARATION OF GEOFFREY P. MILLER

Pursuant to 28 U.S.C. § 1746, Geoffrey P. Miller declares as follows:

1. T am the Stuyvesant P. Comfort Professor of Law at New York University

located in New York, New York. I have been retained to provide an expert opinion as to

the reasonableness of the attorneys' fee award requested in this matter. In that capacity, I

make the following representations on the basis of my own personal knowledge. If called

as a witness, I could and would competently testify to the matters stated herein.

Background and Qualifications

2. For more than thirty years I have been involved in the area of class action

litigation as a teacher, scholar, attorney, consultant, or expert witness.

3. I am presently teaching or have taught classes covering class action

litigation, including Civil Procedure, Complex Litigation, and other courses. I regularly

lecture on class actions at academic conferences and continuing legal education seminars.

I was a member of the Board of Advisors for the American Law Institute's project on

"Principles of the Law of Aggregate Litigation."

4. I have acted as counsel in class actions and shareholder derivative cases,

have written more than a dozen research articles dealing with class action law and

practice, have frequently consulted with attorneys to assist with issues pertaining to class

certification, class settlement, and awards of class counsel fees, and have offered

testimony in class action cases in state and federal courts across the United States,

including cases in the Fifth Circuit.

2

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5. One of my major areas of research has been the subject of class action

attorneys' fees and expenses. With Professor Theodore Eisenberg of Cornell University,

T am the author of leading empirical analyses of attorneys' fees and expenses in class

action cases, Attorneys Fees in Class Action Settlements: An Empirical Study, I Journal

of Empirical Legal Studies 27 (2004); Attorneys' Fees and Expenses in Class Action

Settlements: 1993-2008, 7 Journal of Empirical Legal Studies 248 (2010). My empirical

studies of class action issues are cited as authority by courts around the country. 1

1 See Gehrich v. Chase Bank USA, N.A., 2016 WL 806549 (N.D. Ill. 2016); In re TRS Recovery Services, Inc. and Telecheck Services, Inc., Fair Debt Collection Practices Act (FDCPA) Litigation, 2016 WL 543137 (D. Maine. 2016); In re Polyurethane Foam Antitrust Litigation,-- F.Supp.3d ---- 2015 WL 7348208 (N.D. Ohio, 2015); In re: Cathode Ray Tube (Crt) Antitrust Litigation, 2016 WL 721680 (N.D. Ca. 2016); In re High-Tech Employee Antitrust Litigation, 2015 WL 5158730 (N.D. Ca. 2015); In re Pool Products Distribution Market Antitrust Litigation, 2015 WL 4528880 (E.D. La. 2015); Abbott v. Lockheed Martin Corp., 2015 WL 4398475 (S.D. Ill. 2015); Crajlwood Lumber Company v. Interline Brand•, Inc., 2015 WL 2147679 (N.D. IlL 2015); In re IndyMac Mortgage-Backed Securities Litigation, 94 F.Supp.3d 517 (S.D.N.Y. 2015); Wilkins v. HSBC Bank Nevada, NA., 2015 WL 890566 (N.D. Ill. 2015); In re Capital One Telephone Consumer Protection Act Litigation, 80 F.Supp.3d 781 (N.D. IlL 2015); In re Dairy Farmers of America, Inc., 80 F.Supp.3d 838 (N.D. Ill. 2015); In re Colgate­ Palmolive Co. ERISA Litigation, 36 F.Supp.3d 344 (S.D.N.Y. 2014); Haggart v. United States, 116 Fed. Cl. 131 (Ct. Fed. Claims 2014); Richardwn v. L'Oreal USA, Inc.,--- F.Supp.2d ----, 2013 WL 5941486 (D.D.C.,2013); Swijl v. Direct Buy, Inc., 2013 WL 5770633 (N.D. Ind. 2013); Singleton v. Domino's Pizza, LLC, --- F.Supp.2d ----, 2013 WL 5506027 (D.Md. 2013); In re Schering-Piough Corp. Enhance Securities Litigation, 2013 WL 5505744 (D.N.J. 2013); In re Vioxx Products Liability Litigation, 2013 WL 5295707 (E.D. La. 2013); Evans v. TIN, Inc., 2013 WL 4501061 (E.D.La. 2013) ("The data sets in the empirical study conducted by Professors Eisenberg and Miller are commonly used by disttict courts in this circuit"); Silverman v. Motorola Solutions, Inc.,--- Fed.Appx. ----, 2013 WL 4082893 (7th Cir. 2013); City of Pontiac General Employees' Retirement System v. Lockheed Martin Corp .. --­ F.Supp.2d ---, 2013 WL 3796658 (S.D.N.Y. 2013); Gortat v. Capo/a Bros.,--- F.Supp.2d ----, 2013 WL 2566622 (E.D.N.Y. 2013); In re Southeastern Milk Antitrust Litigation, 2013 WL 2155387 (E.D. Tenn. 2013); Strawn v. Farmers Ins. Co. of Oregon, 353 Or. 210, 297 P.3d 439 (Or. 2013);Heekin v. Anthem, Inc., 2012 WL 5878032 (S.D. 1 Ind. 2012); Espenscheid v. DirectSat USA, LLC, 688 F.3d 872, 877 (7 h Cir. 2012); In re Trans Union Corp. Privacy Litig., 629 F.3d 741,744 (7tb Cir. 2011); AllapattahServs., Inc. v. Exxon Corp., 362 F.3d 739,760 (lltb Cir. 2004) (Judges 'Ijoflat and Birch, dissenting from denial of en bane review); Strawn v. Farmers Ins. Co. of Oregon, 353 Or. 210, 297 P.3d 439 (2013); In re Amaranth Natural Gas Commodities Litig., No. 07-6377, 2012 U.S. Dist. LEXIS 82599, at *7 n.l2 (S.D.N.Y. June 11, 2012); Board of Trustees ofAFTRA Ret. Fund v. JPMorgan Chase Bank, N.A., No. 09-686, 2012 U.S. Dist. LEXIS 79418, at *5 n.l2 (S.D.N.Y. June 7, 2012); Lane v. Page, No. 06-1071, 2012 U.S. Dist. LEXIS 74273, at *161 (D.N.M. May 22, 2012); Silverman v. Motorola, Inc., No. 07-4507, 2012 U.S. Dist. LEXIS 63477, at *15 (N.D. Ill. May 7, 2012); In re Heartland Payment Sys., Inc. Customer Data Sec. Breach Litig., MDL No. 09-2046, 2012 U.S. Dist. LEXlS 37326, at *94, *116 (S.D. Tex. Mar. 20, 2012) ("Tbe tables included in the [Eisenberg and Miller] study are good indicators of what the market would pay for class counsel's services because the tables show what attorneys have been paid in similar cases, and thus what class counsel could have expected when they decided to invest their resources in this case."); Walsh v. Popular, Inc., No. 09-1552, 2012 U.S. Dist. LEXIS 32991, at *24 (D.P.R. Mar. 12, 2012); Am. Int'l Group, Inc. v. Ace Ina Holdings, Inc., No. 07- 2898, 2012 U.S. Dist. LIDCIS 25265, at *59 (N.D. Ill. Feb. 28, 2012); Ebbert v. Nassau County, 05-5445, 2011 U.S. Dist. LEXIS 150080, at *41 (E.D.N.Y. Dec. 22, 2011); In reChecking Account Overdrafi Lit/g., 830 F. Supp. 2d 3

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6. Further infonnation on my background and qualifications is set forth in my

resume, attached hereto as Appendix I.

Materials Reviewed

7. In developing an opinion in this matter, I have consulted with counsel and

have reviewed the materials listed in Appendix 2.

Summary of Opinion

8. This is an exceptionally complicated case, but its essence is. simple.

Plaintiffs' counsel took on an extraordinary level of risk in taking on a case that few

attorneys would have dared to pursue. At numerous points counsel faced the very real

1330, 1336 n.4 (S.D. Fla. 2011); Latorraca v. Centennial Techs., inc., No. 97-10304, 2011 U.S. Dist. LEXIS 135435, at *11 (D. Mass. Nov. 22, 2011); in re Ky. Grilled Chicken Coupon Mktg. & Sales Litig., 2011 WL 5599129 (N.D. Ill. Nov. 16, 2011); Pavlikv. FDIC, No. 10-816,2011 U.S. Dist. LEXIS 126016, at *11 (N.D. Ill. Nov. 1, 2011); In re Puerto Rican Cabotage Antitrust Litig., 815 F. Supp. 2d 448, 461 (D.P.R. 2011); In re AT & 1' Mobility Wireless Data Servs. Sales Tax Litig., 792 F. Supp. 2d 1028, 1033 (N.D. Ill. 2011); In re Vioxx Prods. Liab. Litig., 760 F. Supp. 2d 640, 652 (B.D. La. 2010); Velez v. Novartis Pharms Corp., 04-09194, 2010 U.S. Dist. LEXIS 125945, al *60-61 (S.D.N.Y. Nov. 30, 2010); Braud v. Transport Serv. Co. of Illinois, No. 05-1898, 2010 U.S. DisL LEXIS 93433, al *27-30 (B.D. La. Aug. 17, 2010); In re Lawnmower Engine Horsepower Mktg. & Sales Prac. Litig., 733 F. Supp. 2d 997, 1013 (B.D. Wis. 2010); Klein v. O'Neal, Inc., 705 F. Supp. Zd 632, 675 (N.D. Tex. 2010); Fiala v. Metro. Life Ins. Co., 899 N.Y.S.2d 531, 541 (N.Y. Sup. Ct. 2010); In re Metlife Demutualization Litig., 689 F. Supp. Zd 297, 359 (E.D.N.Y. 2010); In re Marsh Erisa Litig., 265 F.R.D. 128, 149 (S.D.N.Y. 2010); Strawn v. Farmers Ins. Co., 226 P.3d 86, 99 (Or. CLApp. 2010); Hall v. Children's Place Retail Stores, inc., 669 F. Supp. 2d 399, 403 n.35 (S.D.N.Y. 2009); In re Trans Union Corp. Privacy Litig., No. 00-4729, 2009 U.S. DisL LEXIS 116934, al *22-25, *39 (N.D. IlL Dec. 9, 2009); Loudermilk Serv., Inc. v. Marathon Petroleum Co. LLC, 623 F. Supp. 2d 713, 724 (S.D. W.Va. 2009) ("Because the Eisenberg and Miller sludy was a far more comprehensive analysis of similar cases than this Court could hope to achieve in a reasonable time, the Court accepts their results as a benchmark on which to judge a reasonable fee in this case."); Rodriguez v. West Puhl 'g Co., 563 F.3d 948, 958 (9th Cir. 2009); In re OCA, Inc. Sec. and Deriv. Litig., No. 05-2165, 2009 U.S. Dist. LEXIS 19210, at *63-66 (E. D. La. Mar. 2, 2009); In re Enron Corp. Sees., Deriv. & ERISA Litig., 586 F. Supp. 2d 732, 800 (S.D. Tex. 2008); In re Cardinal Health Inc. Sec. Litig., 528 F. Supp. 2d 752, 755 n.2 (S.D. Ohio 2007); In re Tyco Tnt'/., Ud. Multidistrict Utig., 535 F. Supp. 2d 249, 269 (D.N.H. 2007); Acosta v. Trans Union, UC, 243 F.R.D. 377, 388 (C. D. Cal. 2007); Turner v. Murphy Oil USA, lnc., 472 F. Supp. 2d 830, 853, 862-64, 866, 870 (E. D. La. 2007) ("[T]he Court will look lo Eisenberg and Miller's data sets to determine an average percentage for cases of similar magnitude"); Silberblatt v. Morgan Stanley, 524 F. Supp. 2d 425,435 n.6 (S.D.N.Y. 2007); Fireside Bank v. Superior Court, 155 P.3d 268, 281 n.7 (Cal. 2007); In re Cahletron Sys., Inc. Sec. Litig., 239 F.R.D. 30, 38, 42 (D.N.H. 2006); Aliapattah Servs., Inc. v. Exxon Corp., 454 F. Supp. 2d 1185, 1209, 1211 (S.D. Fla. 2006); In re Educ. Testing Serv. Praxis Principles of Learning and Teaching Grades 7-12 Litig., 447 F. Supp. 2d 612, 629-32 (B.D. La. 2006); Hicks v. Morgan Stanley, No. 01-10071, 2005 U.S. Dist. LEXIS 24890, at *25 (S.D.N.Y. Oct. 24, 2005); In re Lupron Mktg. and Sales Prac. Litig., 01-10861, 2005 U.S. Dist. LEXIS 17456, at *18 (D. Mass. Aug. 17, 2005); In re HPL Techs., Inc. Sec. Litig., 366 F.Supp.Zd 912, 914 (N.D. Cal. 2005); In re Relajim Antitrust Litig., 231 F.R.D. 52, 80-81 (D. Mass. 2005); In re Relqfim Antitrust Litig., 221 F.R.D. 260, 286 (D. Mass. 2004).

4

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prospect of expending five years and thousands of hours of effort on a case that generated

no fee at all. Nevertheless, by dint of extraordinary perseverance, counsel has achieved a

settlement within a plan of reorganization that, in the view of the Trustee and the

subsidiary debtors, results in value and benefits for the class estimated at more than one

billion dollars ($1,078,582,000).

9. Considering the extraordinary results obtained, it is my opinion that class

counsel could seek a fee based on the fee percentages contained in the retainer

agreements signed with the representative plaintiffs. Commendably, counsel made

substantial concessions in the fee petition and seek a substantially lower fee of up to $33

million -- less than 5% of the estimated value achieved under the plan. This fee,

moreover, will be paid from the value of pre-petition abandoned positions that are assets

of the debtor, rather than out of recoveries for class members.

10. Based on my review of this case and on the results of empirical analyses of

attorneys' fee awards in other cases, it is my opinion that the fee being requested by

counsel is eminently reasonable and should be approved.

The Settlement

11. The proposed settlement agreement provides that the debtor will waive

claims to beneficial ownership of the fractional interests held in the name of class

members. Members of the Garner subclass will not be stripped of their ownership

interests in the life insurance backed securities and will instead give up 5% of the death

benefits. Members of the Arnold subclass will be allowed to assign to a creditors' trust all

their rights in claims that could have been asserted in the Arnold state court litigation or

5

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in the Arnold Class adversary proceeding. The proceeds of these assignments will inure

to the benefit of class members pursuant to the plan of reorganization.

12. The settlement allows class members to make certain elections with respect

to their ownership interests. In essence, qualifying class members can (a) maintain

continuing fractional interests in specific policies; (b) assign their interests to a trust in

exchange for interests in a pool of policies; or (c) rescind their purchases in exchange for

an opportunity to receive distributions from recoveries in litigation. A fourth option,

available to IRA investors, allows these individuals to convert their investments to

fractional positions held directly by the investor rather than through their IRA. Class

members who elect the first option will contribute 5% of their policy positions and

receive a corresponding beneficial interest in the position holders' trust. These 5%

contributions will provide new LPI with operating capital it needs to continue as an

ongoing concern. Class members making this election will receive 95% of the maturity

proceeds from their policy positions as well as distributions reflecting their beneficial

interest in the trust, and will be required to pay future policy premiums and other amounts

payable with respect to their positions.

13. The settlement contemplates that class counsel will request, and Defendant

will support, a fee of up to $33 million. This fee will not be paid in full at the time of

settlement, but rather will be distributed over time as policies mature - a period that could

6

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extend for as much as 30 years. 2 The trustee and subsidiary debtors estimate the present

value oftbe agreed fee to be $5,219,043.3

14. Notably, these counsel fees will not be paid out of the interests of class

members. Instead, these fees will be paid out of abandoned positions - that is, the value

of positions in life policies tbat LPI has acquired as a result of investors' failure to pay

required premiums.

Opinion

15. 1 recognize that it is the Court's responsibility to determine an appropriate

counsel fee and that the role of an expert is necessarily limited. I offer the following

opinions in the hope they may provide information that can assist the Court in carrying

out tbis task.

16. My review of counsel's fee request is informed by four overarching

considerations: the outcome achieved by counsel, the risk of tbe litigation, tbe creativity

and skill displayed by counsel, and the history of settlement negotiations.

Results obtained

17. Tn my experience, courts often - and appropriately - take the outcome of

the litigation into account when deciding on a fee award. Holding other factors constant,

lawyers who achieve results that exceed expectations are appropriately compensated for

their success.

2 This timeframe is based on the projections outlined in the Joint Plan of Reorganization at Exs. C & D. :>Class Action Settlement Agreement~ 46. 7 App. 127

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 31 of 52 PageID 1938

18. In the present litigation, the Trustee and the subsidiary debtors

acknowledge that the plan results in more than one billion dollars ofva1ue and benefits to

class members on account of the claims awarded through the Arnold state court action

and the settlement of the consolidated class adversary. I take this conspicuous success

into account as a factor influencing my overall evaluation of counsel's fee request.

Risk of tile litigation

19. I have also taken account of the risk of this litigation. This case presented

an exceptionally high degree of risk. In fact, in more than thirty years of involvement in

class action litigation - as a practicing attorney, a consultant, an expert witness, and an

academic researcher - I have rarely encountered a riskier case.

20. Counsel undertook this litigation on a contingent basis. They would

receive nothing for the thousands of honrs expended if the case failed to generate a

recovery.

21. During the entire course of this litigation, counsel faced dogged and

committed adversaries. Defendant's trial counsel, Baker & McKenzie, are capable,

resourceful, and aggressive attorneys who did not hesitate to use all legitimate means at

their disposal to persuade counsel to drop the litigation or settle on unfavorable terms.

After LPI's bankruptcy, counsel faced new challenges in the form of representatives of

the debtor, the trustee, and the committee of unsecured creditors - all of whom, to one

degree or another, had interests that substantially conflicted with the interests of the class.

22. Uulike many class action cases, which look promising at the beginning and

only later tum out to face legal and factual obstacles, this case was risky from the start.

8

App. 128

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 32 of 52 PageID 1939

When counsel filed this action in 2011, the fundamental issue bearing on the success or

failure of the litigation - whether instruments marketed by LPI were "securities" under

state or federal law -had already been decided adversely in both state and federal court.

See Griffitts v. Life Partners, Inc., No. 10-01-00271-CV, 2004 WL 1178418 (Tex. App.­

Waco, May 26, 2004) (Texas Securities Act); S.E.C. v. Life Partners, Inc., 87 F.3d 536

(D.C. Cir. 1996) (federal securities law). The Texas Legislature or the U.S. Congress

could have revised the laws in response to these decisions, but they did not do so. The

law in Texas appeared to be clear and unambiguous. Many attorneys, reviewing these

cases, would have concluded that the prospects of success were too low to warrant the

filing of a lawsuit.

23. Events after the filing of this action did not augur well. After. some

preliminary scuffles over the sufficiency of the pleadings and limited discovery,

Defendant filed its motion for summary judgment. Judge Moye granted defendant's

motion for summary judgment on September 26, 2011, when he dismissed all of

plaintiffs' causes of action with prejudice. Arnold v. Life Partners, Inc., 416 S. W.3d 577,

581 (Tex. App-Dallas 2013). At this point plaintiffs' only hope of success was that

Judge Moye' s decision would be reversed on appeal- a highly uncertain prospect.

24. In the meantime, Life Partners filed counterclaims against Plaintiffs'

counsel seeking monetary damages for filing a frivolous lawsuit. Judge Moye ruled in

favor of Life Partners' on a motion for partial summary judgment on their counter claims

for sanctions against Plaintiffs' counsel finding that the "pleadings as complained of were

9

App. 129

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 33 of 52 PageID 1940

frivolous and without basis in fact or law". LPI sought in excess of $360,000, the court

ordered the parties to mediate the amount ofthe penalty.

25. Plaintiffs' hopes dimmed even further in October 2012 when a district court

in Travis County rejected a renewed attempt by the Texas State Securities Board to

prosecute LPI and certain of its principals for violations of the Texas Securities Act.

Texas v. Life Partners Holdings, Inc., No. D-1-GV-12-001128, 2013 WL 5493597 (201st

Judicial District-- Travis County, January 8, 2013). The District Court in Travis County,

like Judge Moye, determined that the investment products being sold by Life Partners

were not securities under the Texas Securities Act.

26. Plaintiffs prospects did not brighten until the summer of 2013. In August

of that year, the Dallas Court of Appeals reversed the trial court and held that the

contracts at issue were securities for purposes of the Texas Securities Act. Arnold v. Life

Partners, Inc., 2013416 S.W.3d 577 (Tex. App. -Dallas, August 28, 2013). However,

this was a decision was not binding throughout the state. The decision, when coupled

with the Griffitts decision from the Waco Court of Appeals, created a conflict within the

Texas courts and posed a continuing threat to plaintiffs' chances.

27. On February 2014, the Austin Court of Appeals, in an opinion that largely

adopted that of the Dallas Court of Appeals, agreed with the appeals court in Dallas and

held that LPI's contracts were securities for purposes of the Texas Securities Law. State

v. Life Partners Holdings, Inc., 459 S.W.3d 619 (Tex. App.- Austin, February 6, 2014).

But plaintiffs still faced the risk of reversal in the Texas Supreme Court. That risk was

10

App. 130

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 34 of 52 PageID 1941

resolved only in May 2015 when the Supreme Court affinned the decisions of both courts

of appeals. Life Partners, Inc. v. Arnold, 464 S.W.3d 660 (Tex. 2015).

28. The Texas Supreme Court's decision in Life Partners Inc. v. Arnold

removed one obstacle to the success of this litigation, but plaintiffs faced additional

hurdles. Defendants were prepared to contest the motion for class certification; and

plaintiffs needed to prove liability and damages for all class members.

29. An even greater threat, however, was LPI's precarious financial condition­

a situation exacerbated by a $38.7 million judgment obtained against the company by the

U.S. Securities and Exchange Commission. That risk soon became a reality. Life Partners

Holdings, Inc. filed its Chapter 11 petition in January 2015 and Life Partners, Inc.

followed suit in May. As a result, state court litigation was stayed and Plaintiffs were

required to file adversary proceedings in the bankruptcy. Garner v. Life Partners Inc.,

Adversary No. 15-04061 (United States Bankruptcy Court for the Northern District of

Texas - Fort Worth Division); Arnold v. Life Partners Inc., Adversary No. 15-04064

(United States Bankruptcy Court for the Northern District of Texas - Fort Worth

Division).

30. A fundamental issue in this bankruptcy proceeding was the question of who

owned the insurance policies and related rights. Plaintiffs' contracts provided that LPI

held bare legal title to the policies. Even though LPI' s rights were merely nominal -

conferred in order to facilitate the administration of the contracts - the trustee argued that

the underlying assets belonged to the bankruptcy estate rather than to the plaintiffs. This

11

App. 131

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 35 of 52 PageID 1942

argument, if it prevailed, would have resulted class members losing claims to assets with

a value of approximately $1.4 billion.

31. The risks incurred by counsel in litigating this case have a bearing on the

fee request because courts can- and should- award higher fees for higher risk.

32. The need to provide compensation for risk is self-evident: otherwise

attorneys would not provide representation in risky but meritorious cases.

33. Empirical research bears out this commonsense observation: cases

presenting higher risk generate higher-than-average attorneys' fees. My 2010 study of

nearly 600 class action settlements, carried out with Professor Theodore Eisenberg of

Cornell Law School, found that courts systematically reward risk when determining fee

awards. For eight of the ten case categories studied, mean fee percentages were higher

for high-risk cases than for low or medium risk cases.4 Regression analysis revealed that

high-risk cases were significantly associated with higher fee awards as a percentage of

the recovery in every specification of the model.

34. Accordingly, it is my opinion that counsel's fee request should be evaluated

with reference to the exceptional de1,>ree of risk presented by this case.

Creativity and Skill

35. Any review of a request for counsel fees can appropriately take account of

the creativity and skill displayed by counsel in litigating the case to a successful

4 Theodore Eisenberg and Geoffrey P. Miller, Attorney Fees and Expenses in Class Action Settlements: 1993-2008, 7 Journal ofLega1 Studies 248,265 & table 8 (2010).

12

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 36 of 52 PageID 1943

conclusion. Here, counsel worked with other attorneys to devise a settlement with

unusual features that benefited all claimants including members of the class.

36. One unusual feature is the fact that this settlement allows class to select

among several possible forms of relief. The availability of options is especially valuable

in a case such as this where class members do not have tbe right to opt out of tbe

settlement.

37. Another creative feature of this settlement is decision to pay counsel fees

out of the value of pre-petition abandoned positions. This approach allowed the fees to

be paid out of the assets of the debtor, rather than out of the class recovery, and also

preserved the debtor's working capital by providing that the fees would be paid over time

as tbe abandoned positions matured. In tbis way .tbe debtor would be assured of a

continuing flow of working capital because the amount of fees paid at any given time will

be only a fraction of tbe value of the maturing abandoned positions.5

The Negotiation Process

38. My opinion regarding counsel's fee request is also informed by a review of

the negotiation process.

39. Negotiations that are desultory or that do not reflect vigorous advocacy

generate less reliable settlements. Conversely, when the parties engage in adversarial and

hard-fought bargaining, tbere is a greater likelihood tbat tbe results of the bargaining will

be fair to all concerned.

5 See Settlement Agreement~ 51 ("Class Counsel's acceptance of payment over time ... rather than in a lump sum in cash ... significantly increases the Debtors• liquidity and ability to perform the future obligations that benefit all creditors under the Plan and is a significant factor supporting the averment that the Plan is feasible.") 13

App. 133

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 37 of 52 PageID 1944

40. The settlement negotiations in the present case were protracted and

adversarial, lasting over a period of more than four months and including two day-long

mediation sessions facilitated by former U.S. Bankruptcy Judge Richard Schmidt. The

key roadblock to settlement was the trustee's assertion of ownership rights over the

underlying policies. It was only after the second day of mediation that the parties

achieved an agreement and memorialized it in a memorandum of understanding.

41. Another notable feature is the fact that several parties with conflicting

interests participated actively in the negotiations. ln addition to class counsel and

representatives of LPI, the negotiations included the Official Committee of Unsecured

Creditors, which although technically not a party to the adversary proceedings is a

signatory to the settlement agreement. The participation of multiple parties created a level

of transparency and visibility that worked to ensure the accuracy of the outcome.

42. The reliability of the fee negotiations is further enhanced, in my opinion, by

the fact that the parties deferred discussions about an appropriate fee until they had

reached consensus on the terms of a deal on the merits. Separating the negotiation of fees

and merits is a best practice for class action litigation because it prevents the parties from

"trading" a reduced recovery on the merits in exchange for a higher fee. When the

negotiations are separated, plaintiffs' attorneys have an unqualified incentive to seek the

highest recovery for the class, not only because doing so serves their clients, but also

because a better recovery for the class provides a basis for a more generous fee award.

The parties are to be commended for having followed this practice in the present case.

14

App. 134

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 38 of 52 PageID 1945

Assessment of Counsel's Fee Request

43. The overarching factors discussed above - the results obtained, the risk of

the litigation, the skill and creativity displayed by class counsel, and the negotiating

process - inform my assessment of counsel's fee request, the issue I now address.

44. Two methods are commonly employed in Fifth Circuit cases to assess the

reasonableness of class counsels' fee request: the percentage approach and the lodestar

analysis. I will discuss these in turn.

Percentage approach

45. The percentage approach calculates the fee as a percentage of the benefit

made available to the class as a result of the litigation.

46. The percentage method is an excellent approach for calculating a counsel

fee in cases where the benefit to class members can reasonably be quantified.

Advantages of the percentage method include the following:

(a) It mimics private market arrangements for contingent fee litigation, which

nearly always employ a percentage rather than a lodestar methodology.

(b) It is easy to calculate and does not require courts to don a "green visor" in

order to audit counsel's hours and hourly rate.

(c) It aligns counsel's incentives with those of the clients by giving attorneys a

pecuniary interest in the outcome of the case.

(d) It encourages counsel to engage in efficient litigation tactics and

discourages excessive expenditures of attorney time.

15

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 39 of 52 PageID 1946

47. In calculating the fee as a percentage of the recovery, I rely on the view of

the trustee and the subsidiary debtors. These parties acknowledge that the plan of

reorganization results in $1.078 billion of value and benefits to class members on account

of the claims awarded through the Arnold state court action and the settlement of the

consolidated class adversary.6 The requested fee of$33 million is 3% of$1,078 million.

48. Empirical research on fee awards in class action settlements demonstrates

that a 3% fee is substantially below the fees commonly awarded in similar cases.

49. Studies published in the late 1990s identified basic patterns in percentage

fee awards that remain valid today. A 1996 study by the National Economic Research

Associates examined average and median fee awards for settled securities fraud cases.

Average awards fell within a narrow range, with an overall average across the federal

circuits of 31.8%:

0 The trustee estimated on June 12, 2015 that the market value of class interests was about $500 milliOn. Hearing Tr. at 61, June 12, 2015. If this amount were tO be deducted fi:om the tt·ustee's and subsidiary debtors' esdinate of class benefits, the "delta" representing counsers contribution would still exceed $578 million. The agreed-on fee would ·represent slightly less than 6% of the class recovery, a percentage substantiallY below the average of fees observed in similar cases, 16

App. 136

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 40 of 52 PageID 1947

Table 1: Plaintiffs' Attorneys Fees by Federal Circuit

Circuit Number of Average Attorney Settlements Fee as a Percentage of Settlement D.C. 2 31.67 First 26 30.99 Second 69 31.48 Third 58 32.00 Fourth 12 32.78 Fifth 26 30.73 Sixth 13 31.00 Seventh 18 31.83 Eighth 12 32.47 Ninth 155 32.57 Tenth 13 32.13 Eleventh 29 29.92 Total 433 31.84

Source: Denise N. Martin, Vinita M . .Tuneja, Todd S. Foster, and Frederick C. Dunbar, Recent Trends N: What Explains Filings and Settlements in Shareholder Class Actions? Table 12b (1996).

50. Researchers affiliated with NERA updated the 1996 study in 1999. The

1999 NERA update shows that, exclusive of expenses, attorneys' fee awards in securities

class actions cluster at between 31-33% of the common fund recovery. Table 2 shows

this in the bottom row:

17

App. 137

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 41 of 52 PageID 1948

Table 2: Fee Awards in Settled Securities Class Actions 1991-1999

1991 1992 1993 1994 1995 1996 1997 1998 Jun-99

Number of 48 79 90 101 104 104 98 80 29 Settlements Average Fee as a 33% 27% 24% 34% 33% 31% 32% 31% 33% Percentage of Average Settlement

Source: Todd S. Foster, Denise N. Martin, Vinita M. Juneja, Frederick C. Dunbar, Trends in Securities Litigation and the Impact ofPSLRA, Figure 12 (June !999).

5 I. A 1996 Federal Judicial Center study examined all class actions terminated

in four federal district courts between July 1, 1992 and June 3 0, 1994. Thomas E.

Willging, et al., Empirical Study of Class Actions in Four Federal District Courts: Final

Report to the Advisory Committee on Civil Rules 4 (1996). Median fee awards ranged

from 27% to 30%, and most awards were between 20% and 40% of the monetary

settlement. Fee awards clustered at around 30 percent in all types of class action

litigation in the four federal district courts:

18

App. 138

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 42 of 52 PageID 1949

Table 3: Percentage Fees in Four Federal District Courts

Figure 7'1.: Mean and Median Fee-Recovery Rates in Certified Cases Using Percentage of Recovery Method and Providing Net Monetary Distribution to Class

100% II Mean 90% oMedian 80% ,~ 0 70% 0 ~ 60% 0 • F 50% ' 40% "-• 31% 30% 29% 30% .• 30%

~•' 20%

10%

0% E.D. p,. (n• 7) S.D. F1,. (n•7) N.D.I11. (n•10) N.D. Col. (n•18) District Court

Note: "Net monetary distribution" is net of attorneys' fees and administrative expenses.

Source: Thomas R. Willging, Laural L. Hooper & Robert J. Niemic, Empirical Study ofCJa~s Actions in Four Federal District Courts: Final Report to the Advisory Committee on Civil Rules 151 (1996).

52. During the 2000s, researchers expanded their investigations to include

substantially larger data sets. The basic findings were consistent with the studies

described above. One large-scale study covering a ten year period in courts around the

country is reported in the March-April2003 edition of Class Action Reports (CAR). The

following table reports the CAR data broken down by type of case:

19

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 43 of 52 PageID 1950

Table 4: Fee-Award Percent Summary by Case Category

Category Mean Median Number

Antitrust 26.8 28.4 31

Consumer 24.3 25.0 48

Civil rights 23.5 25.5 4

Derivative 33.3 33.3 I

Employment 25.5 25.7 17

Environmental 30.5 30.5 2 Government 29.7 29.7 1 regulation Labor/wage/ 22.9 26.4 30 pension Mass tort 17.6 17.0 8

Securities 27.9 30.0 483 Taxpayer 3.5 3.5 I

Utilities 20.3 20.3 2 Social welfare/ 16.9 16.9 2 entitlements Total 27.0% 30.0% 630

Sources: Theodore Eisenberg & Geoffrey P. Miller, Attomey Fees in Class Action Settlements: An Empirical Study, 1 Journal ofEmpirical Legal Studies 51(2004), analyzing data from Stuart J. Logan, Jack Moshman & Beverly C. Moore, Jr., Attorney Fee Awards in Common Fund Class Actions, 24 Class Action Rep. 169 (2003).

This table discloses that the mean fee across the range of cases in the study was 27.0%

and the median fee was 30.0%.

53. Eisenberg and Miller studied fees in all published class action settlements

between 1993 and 2008. They found that the mean percentage fee in federal was 24%

20

App. 140

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 44 of 52 PageID 1951

and the median fee was 25%. 7 The mean percentage fee in the Fifth Circuit was 24% and

the median fee was 23%.

54. Eisenberg and Miller's data were broad, in the sense that they covered all

reported cases over a fifteen-year period. Fitzpatrick, in contrast, examined all federal

class action settlements in 2006-2007, including non-reported as well as reported cases.

He found that the mean attorneys' fee was 25.7% and the median fee was 25.0%. 8

55. I recently updated the Eisenberg-Miller study of attorneys' fees in class

action settlements for the :rears 2009-2013, inclusive, analyzing 458 cases where the

percentage fee could be detennined. This study discloses that the mean fee award was

27% and the median was 29%. For courts in the Fifth Circuit, the mean fee award was

26% and the median was 28%:

7 Theodore Eisenberg and Geoffrey Miller, Attorneys' Fees and Expenses in Class Action Settlements: 1993-2008,7 Journal ofEmpitical Legal Studies 248, 259 table 4 (2010).

"Brian Fitzpatrick, An Empirical Study of Class Action Settlements and Their Fee Awards, 7 J. Empirical L. Stud. 811 (2010). 21

App. 141

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 45 of 52 PageID 1952

Table 5: Plaintiffs' Attorneys Fees by Federal Circuit: 2009-2013

Circuit Mean Median Number of Cases 1st .23 .23 8 2nd .28 .30 116 3rd .27 .29 46 4th .29 .32 22 5th .26 .28 12 6th .26 .26 23 7"' .29 .31 14 8th .25 .25 20 9th .27 .28 144 lOth .24 .25 18 lith .22 .22 14 D.C. .30 .33 6 Federal .27 .26 6 Total .27 .29 449

Source: Westlaw, LexisNexis, PACER

56. The fee percentages reported in these studies are obviously far in excess of

the 3% fee sought here. Part of the reason lies in the size of the class recovery. Although

results are mixed, most empirical studies find that fee percentages tend to drop as class

recoveries increase: a so-called "scaling effect". The reason for the scaling effect is that

counsel can often achieve economies of scale in larger cases: less effort is usually

required to generate a given dollar of class recovery in a "mega" case than in a run-of-

the-mill lawsuit.

57. The fee requested in the present case is reasonable even when the scaling

effect is taken into account. Eisenberg and Miller's study found that mean fees dropped

progressively with the size of the class recovery, from a mean of37.9% for recoveries of

22

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 46 of 52 PageID 1953

about a million dollars or less to a mean of 12.0% for recoveries in excess of $175.5

million:

Table 6: Fee Percent Controlling for Class Recovery: 1993-2008

Range of recovery, by Mean Median Number of Cases decile ($millions) <- 1.1 37.9 32.3 69 > 1.1,<=2.8 27.1 26.4 69 > 2.8, <= 5.3 26.4 25.0 69 > 5.3, <= 8.7 22.8 22.1 69 > 8.7, <= 14.3 23.8 25.0 69 > 14.3 <= 22.8 22.7 23.5 69 > 22.8, <= 38.3 22.1 24.9 68 > 38.3, <= 69.6 20.5 21.9 70 > 69.6, <= 175.5 19.4 19.9 69 > 175.5 12.0 10.2 68

Source: Theodore Eisenberg and Geoffrey Miller, Attorneys' Fees and Expenses in Class Action Settlements: 1993- 2008,7 Journal of Empirical Legal Studies 248,265 table 7 (20!0).

Most other studies find a similar pattern of decreasing percentage fees associated with

increasing awards.9

58. As demonstrated by this and other studies, even when the scaling effect is

taken into account, the requested fee of 3% of the class recovery is reasonable when

judged against cases of similar magnitude. It is my opinion, therefore, that the fee

request is entirely reasonable when evaluated under the percentage methodology.

9 The NERA study mentioned above found virtually no differences in percentage fees as betvveen large and small settlements. See Denise N. Martin, Vinita M. Juneja, Todd S. Foster, and Frederick C. Dunbar, Recent Trends IV: What Explains Filings and Settlements in Shareholder Class Actions? table 9 (1996). Other studies find that average percentage fee awards tend to fall as recoveries rise. In addition to the study reported in Table 6, see Brian Fitzpatrick, Au Empirical Study of Class Action Settlements and Their Fee Awards, 7 Journal of Empirical Legal Studies 811, table 10 (201 0). My update on fee awards through 2013 yields similar results. 23

App. 143

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 47 of 52 PageID 1954

Lodestar analysis

59. I now tum to a lodestar analysis. The lodestar approach multiplies counsel's

reasonable number of hours and reasonable hourly rate to arrive at a baseline fee which is

then adjusted by a multiplier factor to account for factors such as the risk of the litigation.

Often, courts calculate the appropriate fee based first on the percentage approach and

then "cross check" the fee so calculated against the lodestar analysis in order to ensure

that the percentage approach does not generate fees that are grossly disproportionate to

the hours worked.

60. The first step in the lodestar analysis is to calculate counsel's reasonable

hours. In my opinion, counsel should be compensated in full for the work undertaken in

the Arnold litigation, since it is only those efforts that established class members' rights

to sue under the Texas Securities Act. Those efforts were essential steps in the resolution

of the ownership issue that has been disputed in this court. Simply put, without the

victory in Arnold, this settlement would not have been possible.

61. Attorneys for the class have maintained detailed time records for their work

in this matter. Although I have not attempted to "audit" the hours or the detailed tasks

perfonned, I have reviewed the overall request.

62. Given the complexity and difficulty of this litigation, it is not surprising

that the litigation was highly demanding of the attorneys' time. Attorneys for the class

have already expended more than 5,600 hours; and the time demands they face are far

from completed. In addition to preparing for the fairness hearing on this settlement,

counsel will need to remain in communication with class members and have agreed to

24

App. 144

Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 48 of 52 PageID 1955

provide assistance, without compensation, to the trustee to the Creditors' Trust after the

effective date of the settlement.

63. T am confident, based on my rev1ew of this case and my extensive

experience with class action litigation, that the hours expended by counsel are reasonable

in relation to the tasks and challenges involved.

64. The next issue is the assessment of counsel's hourly rates. Plaintiffs'

counsel expended hours in two different forums - Texas state court and this federal

bankruptcy court. While hourly rates might differ as between these forums, it is my

opinion that the tasks involved and the demands of the work were similar in both. While

the bankruptcy added an additional level of complexity to the litigation, the facts of the

case did not change, nor did the essential legal theory under which counsel sought relief.

65. In evaluating counsel's hourly rates, I have examined the lodestar

statements of Keith Langston, Scott Skelton, Robert Cain, Jeffrey D. Sternklar and John

Leniniger. Each of these counsel report current hourly rates ranging from $375-$630 per

hour.

25

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 49 of 52 PageID 1956

TABLE 7. HOURLY RATES FOR CLASS COUNSEL

Provider Rank Hourly Hours Lodestar Calculation Rate Expended Keith Langston Partner $600 2934.75 $1,760,850.00 Erika Neill Associate $350 14.25 $4,987.50 Robert Alderman Partner $630 9.50 $5,985.00 Robert Cain Partner $630 525.00 $330,750.00 Scott Skelton Partner $600 772.45 $463,470.00 ToddKassaw Partner $600 852.70 $511,620.00 Jeffrey D. Sternklar Partner $400 257.00 $102,800.00 John Leninigcr Associate $400 275.00 $110,000.00 Total 5640.65 $3,290,462.00

66. A variety of sources of infonnation are available to evaluate the

reasonableness of these rates. In federal bankruptcy litigation rates for representation can

sometimes be obtained from a review of public case filings. The following table,

compiled from publicly available sources, illustrates typical billing rates of defense-side

firms as reported in bankruptcy cases:

26

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 50 of 52 PageID 1957

Table 8: Bankruptcy Fees

Case Name Defense Firm Citation Partners

In re Houghton Mifflin Harcourt Publishing Paul, Weiss, (Bkrtcy. S.D.N.Y.) Company, eta/., Rifkind, Wharton (May 2012) (Dkt. No. $895 - $1,120 Debtors, No. 12-12171 & Garrison LLP 55) (REG) In re Lightsquared Inc., Milbank, Tweed, (Bkrtcy. S.D.N.Y.) eta/., Debtors, No. 12- Hadley & (July 2012) (Dkt. No. $950- $1,140 12080 (SCC) McCloyLLP 206i In re Eastman Kodak Milbank, Tweed, (Bkrtcy. S.D.N.Y.) Company, eta/., Hadley & (June 2012) (Dkt. No. $825- $1,140 Debtors, No. 12-10202 McCloyLLP 1492) (ALG) In re 785 Partners (Bkrtcy. S.D.N.Y.) Proskauer Rose LLC, Debtor, No. 11- (May 2012) (Dkt. No. $779 - $1,050 LLP 13702 (SMB) 189) In re Dynegy Holdings, (Bkrtcy. S.D.N.Y.) Sidley Austin LLC, eta/., Debtors, (Apr. 2012) (Dkt. No. $625 - $1,050 LLP No. 11-38111 (CGM) 57Sl In re Ambac Financial (Bkrtcy. S.D.N.Y.) Wachtell, Lipton, Group, Inc., Debtor, (Nov. 2011) (Dkt. No. $975 Rosen &Katz No. 10-15973 (SCC) 701) In re The Great Atlantic & Pacific Tea (Bkrtcy. S.D.N.Y.) Kirkland & Ellis Company, Inc., eta/., (May 2011) (Dkt. No. $580- $995 LLP Debtors, No. 10-24549 1566) (RDD) In re CIT Group Inc. and CIT Group (Bkrtcy. S.D.N.Y.) Funding Co. of Sullivan & (Jan. 2010) (Dkt. No. $850- $965 Delaware LLC, Cromwell, LLP 229) Debtors, No. 09-16565 (ALG) Sources. Westlaw, Lex1sNexts

67. A similar pattern is observed in survey data. According to a December

2009 report, the rates for bankruptcy lawyers at firms that regularly represent defendants

27

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Case 4:16-cv-00212-A Document 56-2 Filed 07/06/16 Page 51 of 52 PageID 1958

in securities class actions and shareholder litigation had already topped $1,000 per hour

five years ago, as reflected in the following table:

Table 9: Bankruptcy Fee Snrvey Data

Firm Median partner rate :"'umber of partners filing Simpson Thacher $980 30 Cleary Gottlieb $960 47 Shearman & Sterling $950 17 Davis Polk $948 14 Skadden Arps $945 38 Paul Weiss $925 24 Cadwalader $900 29 Milbank $900 55 Wei! Gotshal $843 142 Gibson Dunn $840 29 Latham & Watkins $830 57 Wbite & Case $825 21 Paul Hastings $810 46

Source: Amy Kolz, "Bankruptcy Rates Top $1,000 Mark in 2008-09." Web log. The Am Law Daily, 12 Dec 2000, available at http://www.law.com/jsp/law/LawAlticleFriendly.jsp?id~ 120243 63 71636.

68. The Bankruptcy Court in this case has repeatedly approved fee requests for

the Trustee's and Debtor's counsel at rates that exceed $800/hour and for the

Committee's counsel at rates as high as $650/hour. In fact, the market rate for work in

this action is a known quantity. As part of its motion for sanctions in the district court,

LPI' s counsel, Baker McKenzie, filed an affidavit in support of the motion that detailed

the hourly rates for lawyers in this matter. Elizabeth Yingling, the lead lawyer for LPI,

charged $630/hour, an amount greater than or equal to class counsel's rates here.

28

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69. On the plaintiffs' side, comparable billing rates can be gleaned from a

review of awards in prior class action settlements in securities and shareholders

derivative litigation. The following table reports on hourly rates approved in cases in the

Southern District of New York. Although these data are not comprehensive or

systematically compiled, I believe they reflect reasonable market rates for qualified

plaintiffs' counsel in class action cases nationwide:

29

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Table 10: Plaintiffs' Class Action Attorney Billing Rates

Partners' Fee Case Name Plaintiff Firm Citation Range

In re Bear Stearns Companies, Inc. (S.D.N.Y.) (Aug. Securities, Derivative and Bcn11an DeValerio 20 12) (Dkt. No. $595- $780 ERISA Litig., No. 08-cv- 302-4) 2793 (RWS) In re Bear Stearns Companies, Inc. (S.D.N.Y.) (Aug. Labaton Sucharow Securities, Derivative and 2012) (Dkt. No. $725-$975 LLP ERISA Litig., No. 08-cv- 302-5) 2793 (RWS) Board of Trustees of the AFTRA Retirement Fund, Kessler Topaz (S.D.N.Y.) (May eta/., v. JPMorgan Chase Meltzer & Check 2012) (Dkt. No. $625- $735 Bank, N.A., No. 1:09-cv- LLP 187-1) 00686 (SAS)(DCF) (S.D.N.Y.) (Apr. In re Wachovia Equity Kirby Mcinerney 2012) (Dkt. No. $600-$800 Securities Litigation, No. LLP 08 Civ. 6171 (RJS) 106-5) In re Lehman Brothers (S.D.N.Y) (Mar. Securities and Erisa Bernstein Litowitz & 2012) (Dkt. No. $650- $975 Litigation, No. 1:08-cv- Grossman LLP 343-12) 05523 (LAK)(GWG) In re Lehman Brothers Kessler Topaz (S.D.N.Y) (Mar. Securities and Erisa Meltzer & Check 2012) (Dkt. No. $600-$725 Litigation, No. 1:08-cv- LLP 343-13) 05523 (LAK)(GWG) In re Lehman Brothers (S.D.N.Y) (Mar. Securities and Erisa Labaton Sucharow 2012) (Dkt. No. $750- $975 Litigation, No. 1:08-cv- 343-17) 05523 (LAK)(GWG) Rubin v. MF Global, Ltd., (S.D.N.Y.) (Nov. Barrack Rodos & et al., No. 08 Civ. 2233 2011) (Dkt. No. $560- $740 Bacine (VM) 198) Rubin v. MF Global, Ltd., (S.D.N.Y.) (Nov. Cohen Milstein et al~ No. 08 Civ. 2233 2011) (Dkt. No. $700-$795 Sellers & Toll PLLC (VM) 198)

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In re Wachovia Preferred Bernstein Litowitz (S.D.N.Y.) (Oct. Sec. and Bond/Notes Berger & Grossman 2011) (Dkt. No. $650- $975 Litigation, No. 09 Civ. LLP 148-7) 6351 (RJS) In re Wachovia Preferred Kessler Topaz (S.D.N.Y.) (Oct. Sec. and Bond/Notes Meltzer & Check, 201l)(Dkt. No. $600-$725 Litigation, No. 09 Civ. LLP 148-8) 6351 !RJS) In re Wachovia Preferred Robbins Geller (S.D.N.Y.) (Oct. Sec. and Bond/Notes Rudman & Dowd 20ll)(Dkt. No. $565- $775 Litigation, No. 09 Civ. LLP 148-9) 6351 (RJS) Cornwell eta!. v. Credit Robbins Geller (S.D.N.Y.) (July Suisse Group eta!., No. Rudman & Dowd 20 II) (Dkt. No. $565- $795 08 Civ. 03758 (VM) LLP 117) Lapin v. Goldman Sachs (S.D.N.Y.) (Nov. Kirby Mcinerney & Co., No. 04 Civ. 2236 2010) $600-$900 LLP (RJS) (Dkt No. 129) Lapin v. Goldman Sachs (S.D.N.Y.) (Nov. Glancy Binkow & & Co., No. 04 Civ. 2236 20 10) (Dkt. No. $625-$725 Goldberg LLP (RJS) 129 In re MBIA, Inc., Sec. Bernstein Litowitz (S.D.N.Y.) (Dec. Litigation, No. 08 Civ. Berger & Grossman 2011) (Dkt. No. $700- $975 0264 (KMK) LLP 92) In re Refco, Inc. Securities (S.D.N.Y.) (Sept. Grant & Eisenbofer Litigation, 2010) (Dkt. No. $650- $845 P.A. No. 05 Civ. 08626 (JSR) 738-5) In re Merrill Lynch & Co. Inc., Securities, (S.D.N.Y.) (Jun. Derivatives and k"RISA Kaplan Fox& 2009) (Dkt. No. $550- $775 Litigation, Kilsheimer LLP 246-4) No. 07-cv-09633 (LBS)(AJP)(DFE) In re Merrill Lynch & Co. Inc., Securities, (S.D.N.Y.) (Jun. Derivatives and ERISA Barrack, Rodos & 2009) (Dkt. No. $525- $695 Litigation, Bacine 246-5) No. 07-cv- 09633(LBS)(AJP)(DFE) In re Merrill Lynch & Co. Inc., Securities, (S.D.N.Y.) (Jun. Derivatives and ERISA Berger & Montagu.e, 2009) (Dkt. No. $460-$725 Litigation, P.C. 246-6) No. 07-cv- 09633(LBS)(AJP)(DFE)

31

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In re Merrill Lynch & Co. Inc., Securities, Pomerantz Haudek (S.D.N.Y.) (Jun. Derivatives and ERISA Grossman & Gross 2009) (Dkl. No. $525- $830 Litigation, LLP 246-7) No. 07-cv- 09633(LBS)(AJP)(DFE) In re Merrill Lynch & Co. Inc., Securities, (S.D.N.Y.) (Jun. Derivatives and ERISA Murray, Frank Sailer 2009) (Dkt. No. $675-$750 Litigation, LLP 246-8) No. 07-cv- 09633(LBS)(AJP)(DFE) In re Telik, Inc. Securities (S.D.N.Y.) (Aug. Bernstein Liebhard & 2008) (Dkt. No. $700-$750 Litigation, Lifshitz, LLP No. 07 Civ. 04819 (CM) 72) Sources: Westlaw, LextsNexts

70. Based on this analysis, it is my opinion that counsel's requested lodestar of

$3,290,462.50 is within the range of reason when judged in the light of lodestar fees

awarded in similar cases.

71. Having assessed counsel's hours and hourly rates, I turn to an analysis of

the appropriate lodestar "multiplier" - the adjustment factor applied to the base lodestar

fee to account for factors such as the risk of the litigation.

72. For purposes of calculating the lodestar multiplier, the counsel fee should

be assessed at its present value (estimated at $5,219,043). The reason is that the lodestar

analysis assumes that counsel will be paid for their hours on a current basis. Based on a

fee of$5,219,043, the lodestar multiplier associated with counsel's fee request is 1.59.

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73. Infonnation about class action multipliers is contained in Eisenberg and

Miller's study of attorneys' fees in all publicly reported class action cases from 1993 to

2008. As shown in the following table, the mean multiplier across all federal circuits was

1.81 and the mean for the Fifth Circuit was 2.07:

Table 11: Multipliers Awarded in Class Action Settlements, 1993-2008

Circuit Mean Multiplier Number of Cases 1st 2.10 15 2nd 1.58 97 3rd 2.01 87 4th 2.43 7 5th 2.07 15 6th 1.97 22 7th 1.85 16 8th 1.20 14 9th 1.54 50 lOth 1.91 14 lith 1.19 19 D.C. 2.23 11 Federal 1.54 I Total 1.81 368

Source: Theodore Eisenberg and Geoffrey Miller, Attorney Fees and Expenses in Class Action Settlements: 1993- 2008, 7 Journal of Empirical Legal Studies 248,272 Table 14 (2010).

74. My update on this study for the years 2009-2013, inclusive, found that the

mean lodestar for the data set as a whole was 1.51; for the Fifth Circuit, it was 1.75:

33

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Table 12: Multipliers Awarded in Class Action Settlements, 2009-2013

Circuit Mean Multiplier Number of Cases 1st 2.52 5 2nd 1.95 74 3rd 1.45 76 4th 1.40 11 5th 1.75 6 6th 1.23 14 7th 1.76 7 8th 1.56 16 9th 1.30 93 lOth 1.23 8 11th 0.57 4 D.C. 2.30 2 Federal 1.04 2 Total 1.51 318 Source: Westlaw, LextsNexts, PACER

75. Empirical research discloses a significant positive relationship between

multiplier and the class recovery: multipliers get larger as settlement size increases. The

relationship between multiplier and recovery is set forth in the following table, from

Eisenberg and Miller's study of all reported class action settlements between 1993 and

2008:

34

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Table 13: Multipliers Awarded in Class Action Settlements by Class Recovery, 1993-2008

Recovery($ Number of Mean Median millions) Cases <=1.1 0.88 0.74 33 > 1.1 <=2.8 0.95 0.77 40 >2.8 <=5.3 1.44 1.25 32 >5.3 <=8.7 1.59 1.25 34 >8.7<=14.3 1.49 1.45 37 > 14.3<=22.8 1.68 1.51 38 >22.8<=38.3 1.83 1.44 33 >38.3<=69.6 1.98 1.75 38 >69.6<=175.5 2.70 2.09 43 >175.5 3.18 2.60 40 Source: Theodore Etsenberg and Geoffrey Miller, Attomey Fees and Expenses 111 Class Actton Settlements: 1993- 2008,7 Journal ofEmpitical Legal Studies 248,274 Table 15 (2010).

For cases such as the present litigation with recoveries in excess of $175.5 million, the

mean multiplier was 3.18- well above the mean of 1.81 observed for cases generally in

this data set and twice the multiplier of 1.59 sought in the present action.

76. My follow-up study of all class action settlements in published cases from

2009 to 2013 confirms that multiplier awards rise with class recovery:

35

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Table 14: Multipliers Awarded in Class Action Settlements by Class Recovery, 2009-2013

Class recovery Number of cases Mean Median (millions) .03-.40 30 0.86 0.66 .40-.85 29 0.81 0.76 .85-1.9 29 1.38 1.21 1.9-3.0 29 1.22 1.05 3.0-5.0 29 1.34 1.00 5.0-8.5 29 1.52 1.13 8.5-16.5 29 1.78 1.66 16.5-27.5 29 1.39 1.18 27.5-88.9 29 2.29 1.79 > 88.9 29 2.51 1.50

Sources: LexisNexis, Westlaw, PACER

For cases such as the present litigation with recoveries in excess of $88.9 million, the

mean multiplier was 2.51 - .92 higher than the 1.59 multiplier sought in this action.

77. In evaluating a reasonable fee, the courts properly balance both the fee

percentage and the lodestar multiplier: if the multiplier in a given case is below the norm

for similar cases, it is appropriate that the percentage fee should be above, and vice versa.

This inference is confirmed in Eisenberg and Miller's 2008 study: they find a strong

negative correlation between the lodestar multiplier and the percentage fee. 10

10 Theodore Eisenberg and Geoffrey Miller, Attorneys' Fees and Expenses in Class Action Settlements: 1993~2008, 7 Journal of Empirical Legal Studies 248,273-74 & Table 7a (2010). 36

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78. ln the present case, the requested percentage is well below the mean for

class actions of similar size. Given that the requested percentage is below the no1m, it

would be appropriate for the multiplier to be above. The attorneys for the class, however,

have sought a multiplier that is below the norm. Based on a review of prior cases, a

significantly higher multiplier would have been expected.

79. lt is evident, accordingly, that the requested multiplier is eminently fair. The

fee request is well within the range of reason when analyzed under the lodestar method.

Conclusion

80. For the reasons set forth above, it is my opinion that the fee requested by

counsel is reasonable in light of awards in similar cases.

37

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Appendix 1: Resume

GEOFFREY P. MILLER

New York University Law School 40 Washington Square South Suite 411G New York, New York 10012 (212) 998-6329 (office) (212) 995-4659 (fax) [email protected]

Work Experience

New York University Law School (1995-present) Stuyvesant P. Comfort Professor of Law Co-Director, Program in Corporate Compliance and Enforcement (2014-present) Faculty Co-Director, Center on Civil Justice at NYU Law School (2015-present) Director, NYU Center for Financial Institutions (1994-present) Co-Director, NYU Center for Law, Economics and Organization (2006-2012) Chair, Academic Personnel Committee (1999-2000; 2004-2006) Chair, Promotions and Tenure Committee (2007-2009)

University of Chicago Law School (1983-1995) Kirkland & Ellis Professor (1989-1995) Editor, Journal of Legal Studies (1989-1995) Director, Program in Law and Economics (1994-1995) Director, Legal Theory Workshop (1989-1993) Associate Dean (1987 -1989) Professor of Law (1987-1989) Assistant Professor of Law (1983-1987)

Distinguished Visiting Professor, Vanderbilt Law School20 14 Visiting Professor, University of Frankfurt, Summer 2013 Faculty Member, Study Center Gerzensee, Switzerland, Spring 2012, Summer 2016 (invited) Visiting Lecturer, University of Genoa Department of Law, 2011 Visiting Lecturer, Collegia Carlo Alberto (Moncalieri Italy), 2011,2013 Visiting Scholar, European University Institute, Florence Italy, Fall/Winter 2010 Visiting Chair on Private Actors and Globalisation, Hague Institute for the Internationalisation of Law, Fall/Winter 2010 Robert B. and Candace J. Haas Visiting Professor of Law, Harvard Law School, Fall2009 Max Schmidheiny Guest Professor, University of St. Gallen, Switzerland Snmmer2009

38 App. 158

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Faculty Member, NYU-NUS in Singapore, 2009, 2011, 2013 Fresco Endowed Professor of Law, University of Genoa, Italy, Summer 2008, Spring 2009, Summer 20 I 0 Visiting Scholar, University ofMinncsota Law School, Spring 2008 Visiting Lecturer, University ofBolzano, Italy, Summer 2007 Commerzbank Visiting Professor, Institute for Law & Finance, University of Frankfurt, Germany, Summer 2004, Summer 2005, Summer 2010 Visiting Professor, Columbia Law School, Fall2001 Visiting Professor, University of Sydney, Australia, Summer 2002; Summer 2006; Spring 2009 Zaeslin Visiting Professor, University of Basel, Switzerland, Summer 2001, 2002, 2003, 2004,2005,2007,2008,2009,2010,2011, 2012,2013,2014,2015 (invited) Visiting Scholar, CentER for Economic Research, Tilburg, Holland, Summer 1996 John M. Olin Visiting Scholar, Cornell University Law School, Summer 1992, Spring 1996; Winter 1997, Summer 2005, Spring 2008, Spring 2009, Spring 2010 Visiting Scholar, Bank of Japan, Spring 1995 Visiting Professor, New York University Law School, Fall1994 Consultant, Federal Reserve Bank of Chicago, 1992-1994 Visiting Scholar, New York University Law School, Fall1993 Simpson Grierson Butler White Visiting Professor, University ofAukland, New Zealand, Summer 1993

Associate, Ennis, Friedman, Bersoff & Ewing Washington, D.C. (1982-83)

Attorney Adviser, Office of Legal Counsel U.S. Depattment of Justice (1980-82)

Clerk, Hon. Byron R. White Supreme Court of the United States (1979-80)

Clerk, Hon. Carl McGowan U.S. Court of Appeals, District of Columbia (1978-79)

Scholarly and Law Reform Activities

Member, American Law Institute (elected 20 15)

American Law Institute, Reporter, Principles of the Law, Compliance, Enforcement, and Risk Management for Corporations, Nonprofits, and Other Organizations (2014-present)

Fellow, American Academy of Arts and Sciences (elected 2011)

Society for Empirical Legal Studies Co-Founder and Co-President (2006-2007) Board Member (2006-2014)

39

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Corporate Service

Member of the Board of Directors, State Farm Bank (20 I 0-present) -board and conm1ittee service for nontraditional thrift institution with $17 billion in assets. Audit Committee Chair (2015-present)

Education

Columbia Law School, J.D. (1978) Editor-in-Chief, Columbia Law Review (1977-78) Princeton University, A.B. magna cum laude (1973)

Publications

The Economics of Securities Law I (editor) (Edward Elgar 2016)

The Economics of Securities Law II (editor) (Edward Elgar 20 16)

The Economics of Financial Law I (editor) (Edward Elgar, forthcoming)

The Economics of Financial Law lJ (editor) (Edward Elgar, forthcoming)

Banking Law and Regulation, Little, Brown & Co. 1992 (with Jonathan R. Macey); Second Edition, Aspen Law & Business 1997 (with Jonathan R. Macey), Third Edition, Aspen Law & Business 2001 (with Jonathan R. Macey and Richard Scott Carnell); Fourth Edition, Aspen Law & Business 2008 (with Richard Scott Carnell and Jonathan R. Macey), under title "The Law of Banking and Financial Institutions); Fifth Edition (with Richard Scott Carnell and Jonathan R. Macey), under title "The Law of Financial Institutions) Wolters Kluwer Law & Business (2013)

Banking Law and Regulation: Statutory and Case Supplement (Little, Brown & Co. 1992; Second Edition, Aspen Law & Business, 1997) (with Jonathan R. Macey), Third Edition, Aspen Law & Business, 2000) (with Jonathan R. Macey and Richard Scott Carnell); Fourth Edition, Aspen Law & Business 2008 (with Richard Scott Carnell and Jonathan Macey)

Banking Law and Regulation: Teacher's Manual (1992; Second Edition 1997; Third Edition 2001, Fourth Edition 2008) (with Jonathan R. Macey and Richard Scott Carnell)

The Law of Governance, Risk Management and Compliance (Wolters Kluwer Law and Business 2014)

The Law of Governance, Risk Management and Compliance Teachers Manual (Wolters Kluwer Law and Business (20 14)

40

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The Governance of!nternational Banking (co-authored with Fabrizio Cafaggi, witb Tiago Andreotti, Maciej Borowicz, Agnieszka Janczuk, Eugenia Macchiavello and Paolo Saguato) (Edward Elgar 2013)

Ways of a King: Legal and Political Ideas in the Bible (Vandenhoeck & Ruprecht 2011)

Trust, Risk, and Moral Hazard in Financial Markets (11 Mulino 2011)

The Origins of the Necessary and Proper Clause (with Gary Lawson, Robert Natelson, and Guy Seidman) (Cambridge University Press 2010)

The Economics of Ancient Law (editor) (Edward Elgar 2010)

Bank Mergers and Acquisitions (editor, with Y akov Amihud) (Kluwer Academic Publishers 1998)

La Banca Central en America Latina: Aspectos Econ6micos y Juridicos [Central Banks in Latin America and Their New Legal Structure] (in Spanish) (editor, with Ernesto Aguirre and Roberto Junguito Bonnet) (Tercer Mundo: Bogota 1997)

Costly Policies: State Regulation and Antitrust Exemption in Insurance Markets (AEI Press 1993) (withJonathanR. Macey)

Articles

Civil Procedure

A New Procedure for State Court Personal Jurisdiction (manuscript on file witb the author)

An Information-Forcing Approach to the Motion to Dismiss, 5 Journal of Legal Analysis 437- 465 (2014) (witb Samuel lssacharoff)

In Search of the Most Adequate Forum: State Court Personal Jurisdiction, 2 Stanford Journal of Complex Litigation 1 (2014)

Group Litigation in tbe Enforcement of Tort Law, in Jennifer Arlen, ed., The Economics of Torts (2013)

The Quasi-Class Action Method of Managing Multi-District Litigations: Problems and a Proposal, 63 Vanderbilt Law Review 107 (2010) (with Charles Silver)

Will Aggregate Litigation Come to Europe?, 62 Vanderbilt Law Review 177-210 (2009) (with Samuel Issacharofi)

Preliminary Judgments, 201 0 University of Illinois Law Review 165 (2009)

41

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A New Look at Judicial Impact: Attorneys' Fees in Securities Class Actions after Goldberger v. Integrated Resources, Inc., 29 Washington University Journal of Law & Policy 5-35 (2009) (with Theodore Eisenberg and Michael Perino)

Punti cardine in lema di class action negli Stati Uniti e in Italia (Cutting-Edge Issues in U.S. and Italian Class Action Litigation), 2008 Analisi Giuridica dell'Economia 211-230 (2008)

Compensation and Deterrence in Consumer Class Actions in the United States, in Fabrizio Cafaggi and Hans W. Micklitz, eds., New Frontiers in Consumer Protection: The Interplay Between Private and Public Enforcement 263-282 (2009)

Pleading after Tellabs, 2009 Wisconsin Law Review 507-534 (2009)

Mandatory Arbitration for Customers But Not For Peers, 92 Judicature 118-123 (2009) (with Theodore Eisenberg and Emily Sherwin)

Arbitration's Summer Soldiers: An Empirical Study of Arbitration Clauses in Consumer and Non-Consumer Contracts, 41 University of Michigan Journal of Law Reform 871-96 (2008) (with Theodore Eisenberg and Emily Sherwin); reprinted in 7 ICFAI University Journal of Alternative Dispute Resolution (Hyderabad, India)

Reversal, Dissent, and Variability in State Supreme Courts: The Centrality of Jurisdictional Source, 89 Boston University Law Review 2009 (2009) (with Theodore Eisenberg)

All-or-Nothing Versus Proportionate Damages, 38 Journal of Legal Studies 345-382 (2009) (with Shmuel Leshem)

.Judicial Review of Class Action Settlements, 1 Journal of Legal Analysis 167-205 (2008) (with Jonathan R. Macey)

Do Juries Add Value? Evidence From an Empirical Study of Jury Trial Waiver Clauses in Large Corporate Contracts, 4 Journal of Empirical Legal Studies 539 (2007) (with Theodore Eisenberg)

The Flight from Arbitration: An Empirical Study of Ex Ante Arbitration Clauses in Publicly­ Held Companies' Contracts, 56 DePaul Law Review 335 (2007) (with Theodore Eisenberg), reprinted in 49 Corporate Practice Commentator323 (2007)

Rethinking Certification and Notice in Opt-Out Class Actions, 74 University of Missouri Kansas City Law Review 637 (2006)

Incentive Awards to Class Action Plaintiffs: An Empirical Study, 53 UCLA Law Review 1303 (2006) (with Theodore Eisenberg)

Review of the Merits in Class Action Certification, 33 Hofstra Law Review 51 (2004)

42

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The Role of Opt-Outs and Objectors in Class Action Litigation: Theoretical and Empirical Issues, 57 Vanderbilt Law Review 1529 (2004) (with Theodore Eisenberg)

Competing Bids in Class Action Settlements, 31 Hofstra Law Review 633-650 (2003)

On the Costs of Civil Justice, 80 University of Texas Law Review 2115 (2002)

Class Actions in the Gulf States: Empirical Analysis of a Cultural Stereotype, 74 Tulane Law Review 681 (2000)

Full Faith and Credit to Settlements in Overlapping Class Actions: A Reply to Kahan and Silberman, 73 New York University Law Review 1167-1178 (1998)

Nonpecuniary Class Action Settlements, 60 Law and Contemporary Problems 97-155 (1997) (with Lori Singer)

Class Actions, in I New Palgrave Dictionary of Economics and the Law 257-262 (Peter Newman, ed., Macmillan Press 1998)

The Legal-Economic Analysis of Comparative Civil Procedure, 45 American Journal of Comparative Law 905-19 (1997)

Overlapping Class Actions, 71 New York University Law Review 514 (1996)

Settlement of Litigation: A Critical Retrospective, in Larry Kramer, ed., Reforming the Civil Justice System 13-37 (NYU Press 1996)

Expanding on the Fifty Percent Hypothesis: A Multimodal Approach to the Selection of Cases for Litigation, 25 Journal of Legal Studies 233 (1996) (with Daniel Kessler and Thomas Meites)

A Market Approach to Tort Reform Via Rule 23, 80 Cornell Law Review 909 (1995) (with Jonathan R. Macey)

Settlement Escrows, 24 Journal of Legal Studies 87 (1994) (with Robert Gertner)

Introduction: Economic Analysis of Civil Procedure, 23 Journal of Legal Studies 303 (1994)

Auctioning Class Action and Derivative Suits: A Rejoinder, 87 Northwestern Law Review 701 (1992) (with Jonathan R. Macey)

The Plaintiffs' Attorney's Role in Class Action and Derivative Litigation: Economic Analysis and Recommendations for Reform, 58 University of Chicago Law Review 1 (1991) (with Jonathan R. Macey), reprinted in Franklin A. Gevurtz, Corporate Law Anthology 186-194 (1997)

Some Thoughts on the Equilibrium Hypothesis, 69 Boston University Law Review 561 (1989)

43

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Some Agency Problems in Settlement, 16 Journal of Legal Studies 189 (1987)

An Economic Analysis of Rule 68, 15 Journal of Legal Studies 93 (1986)

The Public Interest in Attorneys' Fees Awards for Public Interest Litigation, 47 Law and Contemporary Problems 233 (1984) (with Robert V. Percival), reprinted in University of Chicago Law School Record (1989)

Note, Aldinger v. Howard and Pendent Jurisdiction, 77 Columbia Law Review 127 (1977)

Legal Ethics/Legal Profession

The English vs. the American Rule on Attorneys' Fees: An Empirical Study of Attorney Fee Clauses in Publicly-Held Companies' Contracts, 98 Cornell Law Review 327 (2013) (with Theodore Eisenberg)

Attorneys' Fees and Expenses in Class Action Settlements: 1993-2008, 7 Journal of Empirical Legal Studies 248 (20 10) (with Theodore Eisenberg)

Ethical Considerations in Class Action Practice, in Practising Law Institute, Class Action Litigation 2007: Prosecution & Defense Strategies (2007)

From Club to Market: The Evolving Role of Business Lawyers, 74 Fordham Law Review 1105 (2005)

Bad Judges, 83 Texas Law Review 431 (2004)

Attorneys' Fees in Class Action Settlements: An Empirical Study, 1 Journal of Empirical Legal Studies 27 (2004) (with Theodore Eisenberg)

Professional Independence and the Corporate Lawyer (with William T. Allen), in Jay W. Lersch, Leslie Berlowitz, and Andy Zelleke, Restoring Trust in American Business 113-126 (American Academy of Arts and Sciences 2005)

Conflicts of Interest in Class Action Litigation: An Inqui1y into the Appropriate Standard, 2003 University of Chicago Legal Forum 581-630 (2003)

Payment of Expenses in Securities Class Actions: Ethical Dilemmas, Class Counsel, and Congressional Intent, 22 Review of Litigation 557 (2003)

Ethical Considerations in Class Action Practice, in Practising Law Institute, Class Action Litigation: Prosecution & Defense Strategies (2003)

Conflicts oflnterest in Negotiation: An After-word and a Reply, 84 Iowa Law Review 1133- 1139 (1999) (with Jonathan R. Macey)

44

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Second Opinions in Litigation, 84 Virginia Law Review 1411-1437 (1998)(with Michael Klausner and Richard Painter)

Kaye, Scholer as Original Sin: The Lawyer's Duty of Candor and the Bar's Temptations of Evasions and Apology, 23 Law & Social Inquiry 305-313 (1998)

An Economic Analysis of Conflict ofinterest Regulation, 82 Iowa Law Review 965-1005 (1997) (with Jonathan R. Macey), republished in Foundations of the Law and Ethics of Lawyering, George Meredith Cohen and Susan P Koniak, editors. New York: Foundation Press (2004)

Reflections on Professional Responsibility in a Regulatory State, 63 Law Review II 05 (1995) (with Jonathan R. Macey)

Government Lawyers' Ethics in a System of Checks and Balances, 54 University of Chicago Law Review 1293 (1987)

Corporate, Contract and Securities Law

Introduction, in The Economics of Securities Law (Geoffrey Miller, editor) (Edward Elgar, forthcoming)

The Problem of Reliance in Securities Fraud Class Actions, 57 Arizona Law Review 61 (2015)

Damages versus Specific Performance: Lessons from Commercial Contracts, 12 Journal of Empirical Legal Studies 29 (2015) (with Theodore Eisenberg)

A Modest Proposal for Fixing Delaware's Broken Duty of Care, 2010 Columbia Business Law Review 319 (2010)

Un-manifested Harm in Business-to-Business Cases, 167 Journal of Theoretical and Institutional Economics 80-93 (20 II)

A Modest Proposal for Securities Fraud Pleading After Tellabs, 75 Law & Contemporary Problems 93 (2012)

Process as Cun-ency with the Courts: Judicial Scrutiny of Directors' Decisions, 1 International Journal of Corporate Governance 337-365 (2010) (with Jonathan R. Macey)

A Simple Theory of Takeover Regulation in the United States and Europe, 42 Cornell International Law Journal301 (2009) (with Guido Ferrarini), reprinted in 55 Rivista Delle Societa 680 (20 I 0)

Bargains Bicoastal: New Light on Contract Theory, 31 Cardozo Law Review 1475 (2010)

45

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Flight to New York: an Empirical Analysis of Choice of Law and Forum Selection Clauses in Large Commercial Contracts, 30 Cardozo Law Review 1475 (2009) (with Theodore Eisenberg)

The Market for Contracts, 30 Cardozo Law Review 2073 (2009) (with Theodore Eisenberg)

Ex Ante Choices of Law and Forum: An Empirical Analysis of Corporate Merger Agreements, 59 Vanderbilt Law Review 1975 (2006) (with Theodore Eisenberg)

Catastrophic Failures: Enron and Beyond, 89 Cornell Law Review 423-455 (2004)

Capital Markets on the Internet: An Introduction, 5 New York University Journal of Legislation and Public Policy 1 (2001-2002)

Das Kapital: Solvency Regulation of the American Business Enterprise, in Eric Posner, ed., Chicago Lectures in Law and Economics 65-81 (2000)

Takeovers: English and American, 6 European Financial Management 533-542 (2000)

Choice of Law as a Pre-Commitment Device, in F.H. Buckley, ed., The Fall and Rise of Freedom of Contract 357-69 (Duke University Press 1998)

On the Advantages of Defined Contribution Plans, in Samuel Estreicher, ed., Proceedings of the 50th Annual Conference on Labor (Kluwer Academic Press, forthcoming 1998)

Political Structure and Corporate Governance: Some Points of Contrast Between the U.S. and the U.K., 1998 Columbia Business Law Review 51-78 (1998), reprinted in Sloan Project on Corporate Governance at Columbia Law School, Corporate Governance Today 629-648 (1998)

Finance and the Firm, 152 Journal oflnstitutional and Theoretical Economics [Zeitschrift fur die Gcsamtc Staatswisscnschaft] 89-107 (1996)

Corporate Governance and Commercial Banking: A Comparative Examination of Germany, Japan and the United States, 48 Stanford Law Review 73 (1995) (with Jonathan R. Macey)

Comment on "Brokerage, Market Fragmentation, and Securities Market Regulation," in Andrew W. Lo, ed., The Industrial Organization and Regulation of the Securities Industry, University of Chicago Press (1996)

Corporate Stakeholders: A Contractual Perspective, 43 University of Toronto Law Review 401 (1993) (with Jonathan R. Macey)

The Culture of Capital: Comments on Conley and O'Barr, 71 North Carolina Law Review 201 (1992)

The Economic Efficiency of Close Corporation Law: A Comment, 70 Washington University Law Quarterly 399 (1992)

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Lessons from Financial Economics: Materiality, Reliance, and the Utility of Empirical Methodology in Extending the Reach of Basic v. Levinson, 77 Virginia Law Review 1015 (1991) (with Jonathan R. Macey, Jeffrey Netter, and Mark Mitchell)

The Fraud on the Market System Revisited, 77 Virginia Law Review 999 (1991) (with Jonathan R. Macey)

Politics, Bureaucracies, and Financial Markets: Bank Entry into Commercial Paper Underwriting in the United States and Japan, 139 University ofpennsylvania Law Review 369-453 (1990) (with David Litt, Jonathan R. Macey, and Edward L. Rubin)

Good Finance, Bad Economics: An Analysis of the Fraud on the Market Theory, 42 Stanford Law Review 1059 (1990) (with Jonathan R. Macey)

Trans-Union Reconsidered, 98 Yale Law Journal127 (1988)(with Jonathan R. Macey)

Toward an Interest Group Theory of Delaware Corporate Law, 65 Texas Law Review 469 (1987) (with Jonathan R. Macey)

Constitutional Law

Confederacy, in The Encyclopedia of Political Thought 661-62 (Wiley-Blackwell: 2014)

The President's Power oflnterpretation: Implications of a Unified Theory of Constitutional Law, 56 Law and Contemporary Problems 35 (1993)

The Unitary Executive in a Unified Theory of Constitutional Law: The Problem of Interpretation, 15 Cardozo Law Review 201 (1993)

Liberty and Constitutional Architecture: The Rights-Structure Paradigm, 16 Harvard Journal of Law & Public Policy 87 (1993)

Rights and Structure in Constitutional Theory, 8 Social Philosophy & Policy 196 (1991), reprinted in E. Frankel Paul, ed., Reassessing Civil Rights (1991)

The Appropriations Power and the Necessary and Proper Clause, 68 Washington University Law Quarterly 640 (1990) (panel)

From Compromise to Confrontation: Separation of Powers in the Reagan Era, 57 George Washington Law Review 401 (1989)

Rediscovering Economic Liberties, 41 Rutgers Law Review 773 (1989) (panel)

War Powers and the Constitution: A Middle Ground, 43 University of Miami Law Review 35 (1988) (panel)

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The Debate Over Independent Agencies in Light of the Empirical Evidence, 1988 Duke Law Jonrnal215 (1988)

Independent Agencies, 1986 Supreme Court Review 41 (1986)

ComJili;!nce and Risk Management

Financial Private Regulation and Enforcement, in Fabrizio Cafaggi, ed., Enforcement of Transnational Regulation: Ensuring Compliance in a Global World, pp. 263-278 (Edward Elgar 2012)

Risk Management and Compliance in Bauks: The United States and Europe, in Danny Busch and Guido Ferrarini, eds., The European Banking Union (Oxford University Press, forthcoming)

Compliance in Corporate Law, in Jeffrey N Gordon and Georg Ringe, eds., Oxford Handbook of Corporate Law and Governance (Oxford University Press, forthcoming 2015)

The Rise of Risk Management: An Essay in Honor of Peter Nobel, in Peter Sester, ed., Liber Amicorum Peter Nobel (forthcoming 20 15)

An Economic Analysis of Effective Compliance Programs, in Jennifer Arlen, ed., Research Handbook on Corporate Crime and Financial Misdealing (Edward Elgar, forthcoming 2015)

Financial Institutions

Introduction, in The Economics of Financial Law (Geoffrey Miller, editor) (Edward Elgar, forthcoming)

lntcllcctnal Hazard and the Design of Financial Stability Regulation, in University of St. Gallen Series in Law and Economics, Peter Nobel, ed. (Zurich: Schulthess, 2010) (with Gerald Rosenfeld)

Jntellectnal Hazard: How Conceptual Biases in Complex Organizations Contributed to the Crisis of2008, 33 Harvard Journal of Law & Public Policy 807 (2010) (with Gerald Rosenfeld)

Helping Law Catch Up to Markets: Applying Broker-Dealer Law to Subprime Mortgages, 34 Journal of Corporation Law 789 (2009) (with Jonathan Macey, Maureen O'Hara and Gabriel D. Rosenberg)

The Basel Committee, Global Administrative Law, and the Developing World, in Benedict Kingsbury and Richard Stewart, eds, India, the South and the Shaping of Global Administrative Law (forthcoming, Oxford University Press India 2008) (with Michael Barr)

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Comment: Credit Risk Transfer, Hedge Funds, and the Supply of Liquidity, in Peter Nobel and Marina Gets, eds., Law and Economics of Risk in Finance, University of St. Gallen Series in Law and Economics 73 (2008)

Global Administrative Law- The View from Basel, 17 European Joumal oflnternational Law 15 (2006) (with Michael Barr)

Three Myths about Central Banks, Federal Reserve Bank of Cleveland Economic Commentary (November 2002)

Central Bank Independence in Ordinary and Extraordinary Times, in Jan Kleiniman, ed., Central Bank Independence: the Economic Foundations, the Constitutional Implications, and Democratic Accountability (Kluwer Academic Press 2000) 31-51 (with Rosa Lastra)

External Review of Central Bank Decisions, in 1 International Monetary Fund, Current Developments in Monetary and Financial Law 535-51 (1999)

Bank Mergers and American Bank Competitiveness, in Y akov Amihud & Geoffrey Miller, eds., Bank Mergers and Acquisitions 175-190 (Kluwer Academic Publishers, 1998) (with Jonathan R. Macey)

Introduction: Bank Mergers and Acquisitions, in Y akov Arnihud & Geoffrey Miller, eds., Bank Mergers and Acquisitions vii-xiii (Kluwer Academic Publishers, 1998)

Deposit Insurance for Economies in Transition, in Kluwers Yearbook of International and Financial Law 103-138 (1997) and R. Lastra and H. Schiffman, eds., Bank Failures and Bank Insolvency Law in Economies in Transition 37-70 (Klnwers Academic Press 1998)

Central Bank Independence, Liberalization and Inflation in Transition Economies: An International Perspective, 49 Journal of Monetary Economics 237 (2002) (with Alex Cukicrman and Bilin Neyapti)

An Interest-Group Theory of Central Bank Independence, 27 Journal of Legal Studies 433-453 (June 1998)

On the Obsolescence of Commercial Banking, 154 Journal oflnstitutional and Theoretical Economics [Zeitschrift fur die gesamte Staatswissenschaft] 61-73 (1998)

Banking Crises in Perspective: Two Causes and One Cure, in Gerard Caprio, Jr, William C. Hunter, George G. Kaufman, and DannyM. Leipziger, eds., Preventing Banking Crises: Lessons from Recent Global Bank Failures 279-287 (Federal Reserve Bank of Chicago, 1998)

Universal Banks are Not the Answer to America's Corporate Governance "Problem": A Look at Gem1any, Japan, and the U.S., 9 Journal of Applied Corporate Finance 57-73 (1997)(with Jonathan R. Macey), republished in The Revolution in Corporate Finance, Joel M Stem and David H. Chew, editors, Madden, MA: Blackwell (2003)

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Cooperation, Conflict, and Convergence in Japanese Finance: Evidence from the "Jusen" Problem, 29 Law and Policy in International Business 1-78 (1998)(pre-published as Washington University School of Law, Working Paper No. 97-3-1) (with Curtis Milhaupt)

Nihon no kin'yu ni okeru jusenmondai hoteki bunsekito keizaiteki bunseki [The Jusen Problem in Japanese Finance: A Legal and Economic Analysis], I 132 Jurisuto 140-49; I 134 Jurisuto 86- 92; I 136 Jurisuto 83-89 (1998) (with Curtis Milhaupt) (in Japanese)

A Regulatory Cartel Model of Decisionmaking in Japanese Finance, 4 Zeitschrift fur Japanisches Recht 18-29 (!997)(with Curtis Milhaupt)

Banco de Fondos Mutuos Para America Latina? [Mutnal Fund Banking for Latin America?], in La Banca Central en America Latina: Aspectos Econ6micos y Juridicos [Central Banks in Latin America and Their New Legal Structnre], Ernesto Aguirre, Roberto Junguito Bonnet, and Geoffrey Miller, eds. 272-280 (1997) (in Spanish)

The Role of a Central Bank in A Bubble Economy, 18 Cardozo Law Review I 053 (I 996)

Decisionmaking at the BanJ< of Japan, 28 Law and Policy in International Business I (1996)

Is Deposit Insurance Inevitable? Lessons From Argentina, 16 International Review of Law and Economics 21 I (1996), reprinted in Jagdeep Bandhari and Alan Sykes, eds., Economic Dimensions in International Law: Comparative and Empirical Perspectives 392-404 (Cambridge University Press, I 998)

El Papel del Banco Central en una Economia Especulativa [The Role of a Central Bank in a Speculative Economy], in Miguel Mancera Aguayo, ed., El Banco de Mexico en Ia Reconstrucci6n Econ6mica Nacional 137 (Centro Cultural Manuel Gomez Morin, A. C., 1996)

Comments on Raj an and James, in A. Saunders & I. Walter, eds., Universal Banking: Financial System Design Reconsidered 330-333 (Irwin & Co. I 996)

Deposit Insurance, the Regulatory Contract, and the Mismatch in the Term Structure of Banks' Assets and Liabilities, 12 Yale Journal on Regulation 1-50 (1995)(with Jonathan R. Macey), reprinted as L 'Assurance Des Depots, Le Contra! Reglementaire Implicite, et Ia Destruction des Eschances des Actifs et Passifs Bancaires, 6 Journal des Economistes et des Etudes Humaines 531 (1995)

Double Liability of Bank Shareholders: A Look at the New Data, 28 Wake Forest Law Review 933 (1993) (with Jonathan R. Macey)

Politics of Deposit Insurance Reform: The Case of Argentina, Federal Reserve Bank of Chicago, Proceedings of a Conference on Bank Structure and Competition 473 (1993) and I University of Chicago Law School Roundtable 129 (1994), republished as "Politicas de Refom1a de Segnro de

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Deposito. El Caso de Ia Argentina," in Revista de Derecho Bancario y de Ia Actividad Financiera, Afto 4, Enero-diciembre 1994, No. 19/24, at 221-239 (1995) (Argentine journal)

Comment on Universal Banks and Financial Stability, 19 Brooklyn International Law Journal 197 (1993)

Kaye, Scholar, FIRREA and the Desirability of Early Closure: A View of the Kaye, Scholar Case from the Perspective of Bank Regulatory Policy, 66 University of Southern California Law Review 1115 (1993) (with Jonathan R. Macey)

Constitutional Moments, Pre-commitment, and Fundamental Reform: The Case of Argentina, 71 Washington University Law Quarterly 1061 (1993)

Legal Restrictions on Bank Consolidation: An Economic Analysis, 77 Iowa Law Review 1083 (1992)

The Community Reinvestment Act: An Economic Analysis, 79 Virginia Law Review 291 (1993) (with Jonathan R. Macey)

Drunken Sailors on a Sinking Ship? The Rehnquist Court and the Bank Failure Problem, 1993 Public Interest Law Review 83 (1993)

Conm1ents on Calomiris, in M. Klausner & L. White, eds., Structural Change in Banking 212 (1993)

The McCarran-Ferguson Act A Case Study of Regulatory Federalism, 68 New York University Law Review 13 (1993), republished in 7 National Insurance Law Review 521 (1995)(with Jonathan R. Macey)(study prepared originally under the auspices of the American Enterprise Institute's Project on Federalism)

Bank Failure: The Politicization of a Social Problem, 45 Stanford Law Review 289 (1992) (with Jonathan R. Macey)

Toward Enhanced Consumer Choice in Banking: Uninsured Depository Facilities as Financial Intermediaries for the 1990s, 1991 N.Y.U. Annual Survey of American Law 865 (1992) (with Jonathan R. Macey)

Nondeposit Deposits and the Future of Bank Regulation, 91 Michigan Law Review 237- 273(1992) (with Jonathan R. Macey)

America's Banking System: The Origins and Future of the Current Crisis, 69 Washington University Law Quarterly 769 (1991) (with Jonathan R. Macey)

Bank Failures, Risk Monitoring, and the Market for Corporate Control (with Jonathan R. Macey), 88 Columbia Law Review 1153 (1988) (study conducted under the auspices of the Administrative Conference of the United States)

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The Future of the Dual Banking System, 53 Brooklyn Law Review 1 ( 1987)

Public Policy Implications of Legislation Limiting the Growth oflnterstate Banks, Federal Reserve Bank of Chicago, Proceedings of a Conference on Bank Structure and Competition 602 (1986)

Interstate Branching and the Constitution, 41 Business Lawyer 337 (1986)

Interstate Banking in the Cour~ 1985 Supreme Court Review 179 (1985)

Legal History

The Corporate Law Origins of the Necessary and Proper Clause, 79 George Washington University Law Review 1 (20 10)

Meinhard v. Salmon, in Jonathan R. Macey, ed., Corporate Law Stories (2008)

The Industrial Organization of Political Production: A Case Study, 149 Journal oflnstitutional and Theoretical Economics [Zeitschrift fur die gesamte Staatswissenschaft]769 (1993)

Comments on Priest, 36 Journal of Law and Economics 325 (1993)

Toward "Neutral Principles" in the Law: Selections from the Oral History of Herbert Wechsler, 93 Columbia Law Review 854 (1993) (with Norman Silber)

Double Liability of Bank Shareholders: History and Implications, 27 Wake Forest Law Review 31 (1992) (with Jonathan R. Macey)

Origin of the Blue Sky Laws, 70 Texas Law Review 347 (!991) (with Jonathan R. Macey), reprinted in 34 Corporate Practice Commentator 223 (1992)

Public Choice at the Dawn of the Special Interest State: The Story of Butter and Margarine, 77 California Law Review 83 (1989)

The True Story of Carolene Products, 1987 Supreme Court Review 397 (1987), reprinted in Michael J. Glennon, eta!., eds., Constitutional Law Anthology (Anderson Publishing 1997), pp. 94-103; reprinted in J. Ely, Property Rights in American History: Reform and Regulation of Property Rights (Garland Publishing 1997), pp. 165-197.

Interviewer, Columbia University Oral History Collection, Life of Herbert Wechsler (1980- 1982) (with Norman Silber)

Jurisprudence

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Empirical Analysis of Legal Theory: In Honor of Theodore Eisenberg, 171 Journal of Institutional and Theoretical Economics 6-18 (20 15)

Law and Economics versus Economic Analysis of Law, 19 American Bankruptcy Institute Law Review 459 (201 I)

The Case of the Speluncean Explorers: Contemporary Proceedings, 61 George Washington Law Review 1798 (1993)

The End of History and the New World Order: The Triumph ofCapita1ism and the Competition Between Liberalism and Democracy, 25 Cornell International Law Journal 277 (1992) (with Jonathan R. Macey)

The Canons of Statutory Construction and Judicial Preferences, 45 Vanderbilt Law Review 64 7 (1992) (with Jonathan R. Macey)

Pragmatics and the Maxims of Interpretation, 1990 Wisconsin Law Review 1179 (1990)

Economic Efficiency and the Lockean Proviso, 10 Harvard Journal of Law and Public Policy 401 (1987)

Ancient Law

The Kingdom of God in Samuel, forthcoming in Diana Edelman and Ehud Ben Zvi, Leadership, Social Memory, and Judean Discourse in the 5th-2nd Centuries BCE (Worlds of the Ancient Near East and Mediterranean Series: Equinox Press (forthcoming)

Propetty Law, in II Oxford Encyclopedia of the Bible and Law, pp. 175-182 (Oxford University Press: 2015)

Taxation, in II Oxford Encyclopedia of the Bible and Law, pp. 356-360 (Oxford University Press: 2015)

The Political Function of Revelation: Lessons from the Hebrew Bible, 30 Touro Law Review 77 (2014)

Logos and Narrative, NYU School of Law, Public Law Research Paper No. 10-78 (2010)

Monarchy in the Hebrew Bible, NYU School of Law, Public Law Research Paper No. 10-76 (2010)

Nationhood and Law in the Hebrew Bible, NYU School of Law, Public Law Research Paper No. 10-57 (20 10)

Revelation and Legitimacy in the Hebrew Bible, NYU School of Law, Public Law Research Paper No. 10-52 (2010)

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The Book of Judges: The Hebrew Bible's Federalist Papers, NYU School of Law, Public Law Research Paper No. 10-66 (2010)

Consent of the Governed in the Hebrew Bible, NYU School of Law, Public Law Research Paper No. 10-56 (2010)

Nomadism, Dependency, Slavery and Nationhood: Comparative Politics in the Book of Exodus, NYU School of Law, Public Law Research Paper No. 10-49 (2010)

Economics of Ancient Law, in Geoffrey P. Miller, ed., The Economics of Ancient Law (Edward Elgar, forthcoming 201 0)

Patriarchy: The Political Theory of Family Authority in the Book of Genesis (manuscript 2010)

The Dark Age: How the Biblical Narratives Demonstrate the Necessity for Law and Government (NYU School of Law, Public Law Research Paper No. 10-18)

Origin of Obligation: Genesis 2:4b-3:24 (NYU School of Law, Public Law Research Paper No. 09-60)

Sovereignty and Conquest in the Hebrew Bible, NYU School of Law, Public Law Research PaperNo. 10-61 (2010)

Golden Calves, Stone Tablets, and Fundamental Law: A Political Interpretation of Exodus 32 (NYU School of Law, Public Law Research Paper No. 10-02)

A Riposte Form in the Song of Deborah, in Tikva Frymer-Kensky, Bernard Levinson and Victor Matthews, eds., Gender and Law in the Hebrew Bible and the Ancient Near East 113-27 (1998)

Foreword: The Development of Ancient Near Eastern Law, 70 Chicago-Kent Law Review 1623 (1996)

Why Ancient Law?, 70 Chicago-Kent Law Review 1465 ( 1995)(with James Lindgrin and Laurent Mayali)

Foreword: Land Law in Ancient Times, 71 Chicago-Kent Law Review 233 (1996)

The Song of Deborah: A Legal-Economic Analysis, 144 University of Pennsylvania Law Review 2293 (1996)

The Legal-Economic Approach to Biblical Interpretation, !50 Journal oflnstitutional and Theoretical Economics [Zeitschrift fur die gesamte Staatswissenschaft] 755 (1994)

J as Constitutionalist: A Legal-Economic Interpretation ofExodus 17:8-16 and Related Texts, 70 Chicago-Kent Law Review 1829 ( 1995)

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Verbal Feud in the Hebrew Bible: Judges 3:12-30 and 19-21,55 Journal ofNear Eastern Studies 105 (!995)

Contracts of Genesis, 22 Journal of Legal Studies 15-45 (1993), reprinted in Beth Kissileff, ed., Reading Genesis Beginnings (Bloomsbury T&T Clark 2016).

Ritual and Regulation: A Legal-Economic Analysis of Selected Biblical Texts, 22 Journal of Legal Studies 477 (1993)

Law and Society

Parental Bonding and the Design of Child Support Obligations, in WilliamS. Co manor, ed., The Law and Economics of Child Support Payments 210-240 (Edward Elgar 2004)

The Legal Function of Ritual, 80 Chicago-Kent Law Review 1181 (2005)

Handicapped Parking, 29 Hofstra Law Review 81 (2000) (with LoriS. Singer)

Custody and Couvade: The Importance of Paternal Bonding in the Law of Family Relations, 33 Indiana Law Review 691 (2000)

Norm Enforcement in the Public Sphere: The Case of Handicapped Parking, 71 George Washington Law Review 895-933 (2004)

Norms and Interests, 32 Hofstra Law Review 637 (2003)

Female Genital Mutilation: A Cultural-Legal Analysis (manuscript)

Circumcision: A Legal-Cultural Analysis, 9 Virginia Journal of Social Policy and the Law 498- 585 (2002), pre-published as New York University Public Law and Legal Theory Working Paper Series, Working Paper 5 (2000)

Law, Pollution, and the Management of Social Anxiety, 7 Michigan Women's Law Journal 221- 289 (2001)

Richard Posner, 61 N.Y. U. Annual Survey of American Law l3 (2004)

Introduction: The Law and Economics of Risk, 19 Journal of Legal Studies 531 (1990) (with Richard A. Epstein)

Law School Curriculum: A Reply to Kennedy, 14 Seton Hall Law Review 1077 (1984) (under pen name of Chris Langdell)

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Book Reviews

Defusing the Banks' Financial Time Bomb, BusinessWeek (Mar. 11, 2010) (review of Robert Pozen, Too Big to Save? How to Fix the U.S. Financial System

Love & Joy: Law, Language and Religion in Ancient Israel, by Yochanan Muffs, 58 Joumal0f Near Eastern Studies 144-45 (1999)

Jesus and the Jews: The Pharisaic Tradition in John; The Trial Of Jesus; Jesus And The Law, by Alan Watson, 1 Edinburgh Law Review 273 (1997)

No Contest: Corporate Lawyers and the Perversion of Justice in America, by Ralph Nader and Wesley J. Smith, Washington Post (October 13, 1996)

The Rise and Fall of the Classical Corporation: Hovenkamp's Enterprise and American Law: 1836-1937,59 University of Chicago Law Review 1677 (1993)

Property Rights and the Constitution: A Review of James W. Ely, Jr.'s The Guardian of Every Other Right, 37 American Journal of Legal History 378 (1993)

Anatomy of A Disaster: Why Bank Regulation Failed, 86 Northwestern University Law Review 742 (1992)

The Glittering Eye of Law, 84 Michigan Law Review 1901 (1986)

A Rhetoric of Law, 52 University of Chicago Law Review 247 (1985)

Major Lectures

Revelation as a Source of Legal Authority (Keynote Address, Conference on Religious Liberty, Touro Law School2013)

Trust, Risk, and Moral Hazard in Financial Markets (University of Genoa, Fresco Chair Lectures in Law and Finance, June 20 10)

A Simple Theory of Takeover Regulation in the United States and Europe; Intellectual Hazard (Commerzebank Lectures, University of Frankfurt, May 2010)

The European Union's Takeover Directive and Its Implementation in Italy (University of Rome Ill, 2008)

Catastrophic Financial Failures: Enron, HIH and More (Ross Parsons Lecture, Sydney, Australia, 2002)

Das Kapital: Solvency Regulation of the American Business Enterprise (Coase Lecture, University of Chicago Law School, 1993)

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Banking in the Theory of Finance; The Simple Economics of Litigation and Settlement; The Economic Structure of Corporation Law (University of Auckland, New Zealand, 1993)

Journal Referee Reports

American Law and Economics Review Journal of Legal Studies Journal of Law, Economics and Organization Review of Law and Economics

Conferences Organized

ETH-NYU Law and Banking Conference 2015 (Zurich, Switzerland)

Achieving and Responsible Enterprise: Principles of Effective Compliance and Enforcement (May 8, 2015)

ETH-NYU Law and Banking Conference 2014 (New York, New York)

Global Economic Policy Forum (New York 2013) (keynote speakers included Federal Reserve Bank of New York President William Dudley and former Governor of the Banlc of England Baron King of Lothbury).

The Good Bank Debate (New York 2013) (co-sponsored with Mazars)

ETH-NYU Law and Banking Conference 2013 (Zurich, Switzerland)

ETH-NYU Law and Banking Conference 2012 (New York, New York)

ETH-NYU Law and Banking Conference 2011 (Florence, Italy)

NYU Global Economic Policy Forum 2012

NYU Global Economic Policy Forum 2010

Judicial Dialogue on Mass Litigation, Florence Italy, October 15-16,2010 (co-organizer of conference co-sponsored by NYU Law School, the American Law Institute, and the European University Institute)

Finlawmetrics 2010: Central Banking, Regulation & Supervision after the Financial Crisis (co­ sponsor and member of steering committee)

Finlawmetrics 2009: After The Big Bang: Reshaping Central Banking, Regulation and Supervision (Milan, Italy, Spring 2009) (co-sponsor and member of steering committee)

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NYU Global Economic Policy Forum 2009: The Future of Regulation and Capital Markets (November 5, 2009) (co-organized with Professor Alan Rechtschaffen and with the NYU Law School Alumni Association)

Third Annual Conference on Empirical Legal Studies (Cornell University, Ithaca, New York, Fall2008) (co-organizer)

NYU Global Economic Policy Forum (Aprill4, 2009). Major conference on economic policy. Keynote address by Jean Claude Triche!, President of the European Central Bank; presentations by Tevi Troy, Deputy Secretary of the Department of Health and Human Services; Kevin Warsh, Member of the Board of Governors of the Federal Reserve System; and Donald B. Marron, Jr., Senior Economic Advisor, President's Council of Economic Advisors. Co-organized with Professor Alan Rechtschaffen.

Second Annual Conference on Empirical Legal Studies (New York, New York, November lO­ ll, 2007). Major conference (425 participants) exploring all aspects of the empirical study of law. Co-organized with Jennifer Arlen, Bernard Black, Theodore Eisenberg and Michael Heise.

NYU Global Economic Policy Forum (April!!, 2007). Major conference on economic policy. Keynote address by Ben S. Bernanke, Chaim1an ofthe Board of Governors of the Federal Reserve System; presentations by Stanley Druckenmiller, Founder ofDusquesne Capital, Tevi Troy, Domestic Policy Advisor for President George W. Bush, and Jeffrey Rosen, Vice Chair of Lazard. Co-organized with Professor Alan Rechtschalfen.

First Annual Conference on Empirical Legal Studies (Austin, Texas, October 2006). Major conference exploring all aspects of the empirical study of law. Co-organized with Jennifer Arlen, Bernard Black, Theodore Eisenberg and Michael Heise.

Conference on Legal Aspects of the International Activities of Central Banks, Lima Peru, October 1997. This conference, co-sponsored by the central bank of Peru, brought together leaders in the legal and economic issues facing central banks in the management of their external reserves.

Conference on the Governance ofinstitutional Investors (New York, New York, February 14, 1997). This conference, sponsored by the NYU Stern School of Business Salomon Center in association with the New York University Law School Center for the Study of Central Banks, brought together top executives, attorneys, scholars and others interested in the management and organization, both economic and legal, of the nation's large institutional investors, including its mutual fund industry.

Conference on Bank Mergers and Acquisitions (New York, New York, October 11, 1996). This conference, sponsored by the NYU Stern School of Business Salomon Center in association with the New York University Law School's Center for the Study of Central Banks, brought together leading academics, lawyers, and investment bankers to discuss some of the broader implications of bank mergers and acquisitions. Co-organizer of this conference was Professor Yakov Amihud of the Stern School's Finance Department.

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Conference in Central Banks in Latin America (Bogota, Colombia, February, 1996). This conference, co-sponsored by the central bank of Colombia with technical assistance from the Legal Affairs Department of the International Monetary Fund, brought together leaders of Latin American central banks, the international financial community, and scholars from a variety of disciplines, to discuss issues related to the independence of central banks and economic development.

Conference on Central Banks in Asia (Shanghai, China, October, 1995). This conference, co­ sponsored with KPMG-Peat Marwick, brought together leaders from commercial banks, investment banks, and industrial firms, as well as central bankers, to discuss Asian central banks to address issues such as the proposed law granting a degree of independence to the central bank of China.

Conference on Ancient Law (Berkeley, California, March 1995). This conference, organized with Professors James Lindgren of Chicago-Kent Law School and Laurent May ali of the University of California at Berkeley Law School, brought together important figures from a variety of disciplines interested in Ancient Law.

Conference on Central Banks in Eastern Europe and the Newly Independent States (Chicago, Illinois, April1994). This conference brought together the Prime Minister of Estonia, three present or former Ministers of Finance of Eastern European states (including Boris Fyoderov, former Finance Minister of the Russian Republic), the heads of the central banks of eleven nations in Eastern Europe and the Newly Independent States, together with a wide variety of highly-placed officials from these countries and from the west, to discuss issues related to the independence of central banks and economic development.

Professional Memberships and Positions

New York State Bar District of Columbia Bar American Bar Association American Law Institute (1988-1996) Member, Paolo Baffi Centre Scientific Advisory Board, Milan, Italy (2008- present) Member, International Academic Council, University of St. Gallen, Switzerland (2004-present) Chairman, Section on Business Associations, American Association of Law Schools (1995) Member of the Board of Directors, American Law and Economics Association (1995-1998) Member of the Foreign Advisory Conunittee, Latin American Law and Economics Association (1995-2000) Member of the Foreign Advisory Board, Universitad Tocurato Di Tella School of Law, Buenos Aires, Argentina (1992-1999) Member of the Editorial Board, Supreme Court Economic Review Member of the Editorial Board, The Independent Review

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Member of the Advisory Board, Yearbook of International Financial and Economic Law Member of the Advis01y Board, University of Hong Kong Faculty of Law Asian Institute oflnternational Financial Law (2001-present) Member of the Advisory Board, LSN Comparative Law Abstracts

_Courses

Governance, Risk and Compliance (Study Center Gerzensee, Switzerland 20 16) Law and Business ofBitcoin (2015) (with David Yermack) Compliance and Risk Management for Attorneys (2014, 2015,2017 (scheduled)) Legal Profession (1985-93; 1996-98; 2003-2007; 2013) The Crisis of 2008 (2009, 201 0) Reading Class: Restructuring Finance (2009); Cutting Issues in Finance (2014-2015); Law and Politics in Shakespeare (2015-2016) Property (1986-87) C01porations (1985-88; 1991-93; 1997-2000; 2005; 2008; 2012; 2014; 2016) Seminar on Separation of Powers (1985, 1987) Civil Procedure (1983-84; 2004-2005; 2011; 2013; 2016 (scheduled) Federal Regulation of Banking (1983, 1989-93; 1995-97; 2003, 2006-2010; 2012; 2015) Law and Business of Banking (20 12; with Gerald Rosenfeld) Land Development (1984-85) Securities Law (1990-91) Workshop in Legal Theory (I 989-9 I) Seminar on Financial Institutions (1992-93 (with Merton Miller); 1996-97) Ethics in Class Action Practice (Continuing Legal Education Seminar 2002-2005) Law and Economics (University of Basel, Switzerland 2005, 2007-2014) Advanced Seminar on Law and Economics (University of Genoa, Italy 2008) Banking and the Financial Crisis (University of Genoa, Italy 2009) Trust, Risk, and Moral Hazard in Financial Markets (University of Genoa, Italy, 2010) Intemational Banking (University of Sydney, Australia, 2002, 2006) Introduction to Banking Law (University of Basel, Switzerland 2001,2002,2003,2004,2009, 2010;2011;2012;2013;2014) Banking in the Theory of Finance (University of Frankfurt, Germany 2004, 2005) Banking Regulation in Crisis (University of Frankfurt, Germany, 2010) Banking: Law and Economics Issues after the Financial Crisis (Stndy Center Gerzensee, 20 12)

Expert Witness Testimony (Rast five years)

The Board of Trustees of the Southern Califomia IBEW-NECA Defined Contribution Plan v. Bank of New York Mellon, Civil Action No. 09-Cv-06273, Southem District of New York (2011) (declaration on certification)

Iorio v. Asset Marketing Systems, Inc., Case No.: 05-CV-0633-JLS (CAB), Southem District of Califomia (20 11) (declaration in fees)

60

App. 180

-~----......

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 32 of 49 PageID 1991

Villaflorv. Equifax Information Services, LLC, Case No.: 3:09-cv-00329-MMC, Northern District of California (2011) (declaration on fees)

Feely v. Allstate Insurance Company, Case No. CV-2004-294-3A, Circuit Court of Miller County, Arkansas (2011) (affidavit on settlement and fees)

Keegan v. American Honda Motor Co., Inc., Case Number: 2:10-cv-09508-MMM-AJW, United States District Court for the Central District of California (20 II) (declaration on certification)

Compusource Oklahoma v. BNY Mellon, N.A., Case No: CIV 08-469-KEW, United States District Court for the Eastern District of Oklahoma (20 II) (declaration on certification)

ABN Amro Bank v. Dinallo, Index No.: 601846/09 (New York State Supreme Court) (declaration and deposition on corporate restructuring/administrative law issue)

In reChecking Account Overdraft Litigation, Case No.: I :09-MD-02036-JLK, United States District Court for the Southern District of Florida (2012) (Bank of America case; declaration and supplemental declaration on fees)

In reChecking Account Overdraft Litigation, Case No.: I :09-MD-02036-JLK, United States District Court for the Southern District of Florida (20 12) (Bank of Oklahoma case; declaration on fairness of settlement and fees)

In re Cell Therapeutics Inc. Securities Litigation, Master Docket No. C10-414 MJP, United States District Court for the Western District of Washington (20 12) (declaration on fees)

In Re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April20, 2010, MDL NO. 2179, Eastern District of Louisiana (2012) (declarations on economic and medical benefits class settlements)

Freudenberg v. eTrade Financial Corporation, Case No.: 07-CV -8538, United States District Court for the Southern District ofNew York (2012) (declaration on fees)

LaCourv. Whitney Bank, Case No. 8:11-cv-1896-VMC-MAP (United States District Court for the Middle District of Florida (2012) (declaration on settlement and fees)

In reChecking Account Overdraft Litigation, Case No.: 1:09-MD-02036-JLK, United States District Court for the Southern District of Florida (2012) (Union Bank case; declaration on fees)

Smith v. American Bankers Insurance Company of Florida, Case No.: 2:11-cv-02113- PKH, Western District of Arkansas (2012) (declaration on class certification)

61

App. 181

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 33 of 49 PageID 1992

Blankenship v. RBS Citizens, N.A., Case No. 1:10-cv-22942-JLK, Southern District of Florida (2012) (declaration on fees)

Mazzadra, eta\. v. TD Bank, N.A., Case No. 1:10-cv-21870-JLK, Southern District of Florida (2012) (declaration on fees)

fure Ciligmyp Inc. Securities Litigation, Case No. 07-civ-9901-SHS, Southern District of New York (2013) (declaration on fees)

Rubery v. ~.*Trade Financial Coq;>oralion, Case No. 07-CV-8612 (JPO), Southern District of New York (2013) (declaration and supplemental declaration on fees)

Chieftain Royalty Co. v. QEP Energy Co., Case No. 11-cv-00212-R (Western District of Oklahoma 2013) (declaration on fairness of settlement and fees)

Drummond v. Range Resources Com., Case No. CJ-2010-510, District Court of Grady County, Oklahoma (2013) (declaration on fairness of settlement and fees)

Landman Partners Inc. v. Blackstone Group LP, Case No. 08 Civ. 3601 (HB)(FM), Southern District of New York (2013) (declaration on fees)

Wbite v. Experian Information Solutions, Inc., Case No. 05-cv-1070 DOC, Central District of California (20 13) (declaration on fees)

Berry v. LexisNexis Risk & Information Analvtics Group, Inc., Case No. 3:11cv754, Eastern District of Virginia (2013) (declaration on fees)

Dyer v. Wells Fargo Bank, N.A., Case No. C-13 2858, Northern District of California (2014) (declaration on fees)

US. Foodservice Inc. Pricing Litigation, Case No. 3:07-md-1894, District of Connecticut (2014) (declaration on fees)

Kacsuta v. Lenovo (United States) Inc., Case No. SACV 13-00316-CJC, Central District of California (20 14) (declaration on fees)

De Leon v. Bank of America, Case No. 6:09-cv-1251-0rl-JA KRS, Middle District of Florida (20 14) (declaration on fees)

Chieftain Royalty Co. v. SM Energy Co., Case No. DIV-011-177-D (Western District of Oklahoma 2015) (declaration on settlement and fees)

In re General Motors LLC Ignition Switch Litigation, No. 14-MD-2543 (S.D.N.Y. 2016) (declaration on motion to dismiss lead counsel)

62

App. 182

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 34 of 49 PageID 1993

In re General Motors LLC Ignition Switch Litigation, No. 14-MD-2543 (S.D.N.Y. 2016) (declaration on confidentiality of case files)

Other Activities

Fellow, Society for Empirical Legal Studies (2015-present)

Member, Board of Directors, American Law and Economics Association (1996-1999)

Member, Board of Advisors, The Independent Review (1996-present)

Member, Board of Advisors, Asian Institute oflnternational Financial Law (2001-present)

Member, Editorial Advisory Board, Supreme Court Economic Review (1995-2001)

Member, Editorial Advisory Board, The Brookings-Wharton Papers on Financial Policy (1997- present)

President, Section on Financial Institutions and Consumer Financial Services, American Association of Law Schools (1999)

President, Section on Business Associations, American Association of Law Schools (1995)

Member, Board of Contributors, American Bar Association Preview of Supreme Court Cases (1985-1993)

Consultant, Administrative Conference of the United States (1988-89; 1991-1992)

Board of Directors and Volunteer Listener, D.C. Hotline (1980-83)

Awards

1992 Paul M. Bator Award for Excellence in Teaching, Scholarship and Public Service, from the Federalist Society for Law and Public Policy Studies

Podell Distinguished Teaching Award (NYU Law School2016)

Languaw

Reading knowledge of Spanish, French, and Italian.

Blog Posts

Compliance and Risk Management: Area for Legal Teaching and Scholarship?, Harvard Law School Forum on Corporate Governance and Financial Regulation (May 22, 2014)

63

App. 183

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 35 of 49 PageID 1994

FSOC Socked, Compliance and Enforcement (Apri128 2016)

CFPB Issues Proposed Consumer Arbitration Rule, Compliance and Enforcement (May 5, 2016)

Compliance Goes to School, Compliance and Enforcement (forthcoming)

C E ( G + R) (forthcoming)

Shorter Works

Defusing The Banks' Financial Time Bomb: Without Tough Reforms, Writes Robert Pozen, We'll Probably Face An Ugly Repeat of Recent History (Business Week, March II, 2010)

Why Interstate Banking is in the National Interest, Testimony Before the Subcommittee on Financial Institutions Supervision, Regulation and Deposit Insurance of the House Committee on Banking, Housing and Urban Affairs (September 29, 1993)

Challenging the Concept of the Common Law as a Closed System, Columbia Law School Report, Autumn, 1993 (with Nmman Silber)

The Insurance Industry's Antitrust Exemption: A Longstanding Tradition Faces its Greatest Challenge, 1992-93 ABA Preview of Supreme Court Cases 198 (1993)

Shootout at the Escheat Corral, 1992-93 ABA Preview of Supreme Court Cases (1993)

Choices and Chances for Consumers, Legal Times, Oct. 12, 1992, at 29-30.

Impeachment Procedures: An Unexplored Territory in the Separation of Powers, 1992-93 ABA Preview of Supreme Court Cases 39 (1992)

An (Ex)changing of the Guard, 21 Journal of Legal Studies iii (1992)

Revisiting the Contingency Factor in Fee-Shifting Awards, 1991-92 ABA Preview of Supreme Court Cases 327 (1992)

The Foreign Sovereign Immunities Act and the Market for Public International Debt, 1991-92 ABA Preview of Supreme Court Cases 307 (1992)

Return of the Tenth Amendment?: Federal Control and State Autonomy over Low Level Radioactive Wastes, 1991-92 ABA Preview of Supreme Court Cases 284 (1992)

What are the Limits on Congressional Power to Influence Pending Cases?, 1991-92 ABA Preview of Supreme Court Cases 158 (1991)

RICO Standing for Securities Fraud: Does the Purchaser-Seller Rule ofRu1e lOb-5 Apply?, 1991-92 ABA Preview of Supreme Court Cases 155 (1991)

64

App. 184

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 36 of 49 PageID 1995

Banking and Investment: Introduction to UP A Index and Microfiche Collection (University Publications of America 1991)

Source of Strength in the Court: Can Bank Holding Companies be Required to Support Failing Subsidiary Banks?, 1991-92 ABA Preview of Supreme Court Cases 42 (1991)

Source of Strength: A Source of Trouble, Legal Times, September 30, 1991 (Special Supplement, pp. 22-25)

The Once and Future American Banking Industry, The American Enterprise (with Jonathan R. Macey)(l991)

The Former Stockholder as Plaintiff in Short-Swing Trading Cases, 1990-91 ABA Preview of Supreme Court Cases (1991)

Disposing of Demand Excuse in Derivative Litigation, 1990-91 ABA Preview of Supreme Court Cases (1991)

Up in the Air: Can Congress Require States to Appoint Members of Congress to State Agencies?, 1990-91 ABA Preview of Supreme Court Cases 294 (1991)

The Statute of Limitations under Rule 1Ob-5, 1990-91 ABA Preview of Supreme Court Cases (1991)

Tort Claims Against Federal Banking Agencies: New Hope For Shareholders and Officers of Failed Depository Institutions?, 1990-91 ABA Preview of Supreme Court Cases 94 (1991)

Punitive Damages Redux: If the Eighth Amendment Doesn't Apply, What About the Due Process Clause?, 1990-91 ABA Preview of Supreme Court Cases 47 (1990)

Quandaries of Causation: Proxy Solicitation in Freeze-Out Mergers, 1990-91 ABA Preview of Supreme Court Cases 57 (1990)

Racial Statesmanship, Legal Times S31 (July 23, 1990)

Eurodollars, Sovereign Risk, and the Liability of U.S. Banks for Deposits in Foreign Branches, 1989-90 ABA Preview of Supreme Court Cases 281 (1990)

When is a Note a Note?, 1989-90 ABA Preview of Supreme Court Cases 18 (1990)

Interstate Banking and the Commerce Clause, 1989-90 ABA Preview of Supreme Court Cases 168 (1990)

Federal Courts, Municipalities, and the Contempt Power, 1989-90 ABA Preview of Supreme Court Cases 3 7 (1989)

65

App. 185

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 37 of 49 PageID 1996

Shoe Could Still Drop on Issue of Punitive Damages, National Law Journal (August 21, 1989)

Punitive Damages and the Constitution, 1988-89 ABA Preview of Supreme Court Cases 391 (1989)

States, Bankruptcy and the Eleventh Amendment, 1988-89 ABA Preview of Supreme Court Cases 412 (1989)

Stockholders, Arbitration, and the Securities Act of 1933, 1988-89 ABA Preview of Supreme Court Cases 383 (1989)

Appropriations Riders, Nondisclosure Agreements, and the Separation of Powers, 1988-89 ABA Preview of Supreme Court Cases 375 (1989)

Judicial Appointments and the ABA: Business as Usual or Brand New World?, 1988-89 ABA Preview of Supreme Court Cases 379 (1989)

S & L Receiverships, State Law, and the Federal Courts, 1988-89 ABA Preview of Supreme Court Cases 255 (1989)

The Non-delegation Doctrine in Taxation: A Different Constitutional Calculus?, 1988-89 ABA Preview of Supreme Court Cases 261 (1989)

Bankruptcy, Tax Liens, and Post-Petition Interest, 1988-89 ABA Preview of Supreme Court Cases (1989)

Federal Courts, State Taxes: A Vexing Dilemma For the Enforcement of Civil Rights in a Federal System, 1989-90 ABA Preview of Supreme Court Cases 95 (1988)

Separation of Powers and the Sentencing Commission, 1988-89 ABA Preview of Supreme Court Cases 23 ( 1988)

Administering the Savings and Loan Crisis: New Problems for the FSLIC, 1988-89 ABA Preview of Supreme Court Cases (1988)

Federal Procurement and the Separation of Powers, 1988-89 ABA Preview of Supreme Court Cases 26 (1988)

Thinking About a Career in Law, 1988-89 Talbot's Student Planning Book 32 (1988)

Carl McGowan: A Great Judge Remembered, 56 George Washington Law Review 697 (1988)

Separation of Powers: The Independent Counsel Case Tests the Limits, 1987-88 ABA Preview of Supreme Court Cases 390 (1988)

66

App. 186

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 38 of 49 PageID 1997

Decisionmaking in Collegial Bodies, Judicature, ApriVMay 1988

The FDIC, Bank Officers and the Due Process Clause, 1987-88 ABA Preview of Supreme Court Cases 326 (1988)

Farm Foreclosures in Bankruptcy, 1987-88 ABA Preview of Supreme Court Cases 199 (1988)

Equal Access to Justice and Government Litigation, 1987-88 ABA Preview of Supreme Court Cases 160 (1988)

The Time Value of Money in Bankruptcy Cases, 1987-88 ABA Preview of Supreme Court Cases 116(1987)

Getting the Fee First?: Attorneys and the SSI Program 1987-88 ABA Preview of Supreme Court Cases 118 (1987)

The Farmer and the FDIC, 1987-88 ABA Preview of Supreme Court Cases 48 (1987)

Testing the Limits of Securities Fraud: Financial Gossip in the Court, 1987-88 ABA Preview of Supreme Court Cases 26 (1987)

Checks and Balances in the Twenty-First Century, 33 University of Chicago Law School Record 7 (1987)

Separation of Powers May Become Focus Over NSC, Legal Times, Dec. 15, 1986, at 15

If a Bank is a Broker, is a Brokerage a Branch? 1986-87 ABA Preview of Supreme Court Cases 65 (1986)

Attorney's Fees in the Supreme Court, American Bar Association Journal40 (November, 1986)

The Contingency Factor in Attorney's Fees Reconsidered, 1986-87 ABA Preview of Supreme Court Cases 20 (1986)

Restitution and Bankruptcy in a Federal System, 1986-87 ABA Preview of Supreme Court Cases (1986)

Don't Limit Contingent Fees, Chicago Tribune, June 11, 1986

The Budget and the Separation of Powers: Gramm-Rudman in the Court, 1985-86 ABA Previews of Supreme Court Cases 359 (1986)

Keeping Attorneys Fees in Proportion, 1985-86 ABA Preview of Supreme Court Cases 325 (1986)

67 App. 187

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 39 of 49 PageID 1998

Must the Federal Government Pay Interest on Attorneys Fees Awards?, 1985-86 ABA Preview of Supreme Court Cases 241 (1986)

The Contingency Factor in Attorneys Fees Awards, 1985-86 ABA Preview of Supreme Court Cases 243 (1986)

The FCC as Cop: Forcing State Public Service Commissions to Obey Federal Agency Orders, 1985-86 ABA Preview of Supreme Court Cases 191 (1986)

Preemption, Public Utilities, and Power Over Telephone Rate-Setting, 1985-86 ABA Preview of Supreme Court Cases 187 ( 1986)

A Bank is a Bank is a Bank -- or is it?, 1985-86 ABA Preview of Supreme Court Cases 67 (1985)

Settlement Offers Conditioned on Waiver of Attorneys' Fees: A Legal and Ethical Di1enmla Confronts the Court, 1985-86 ABA Preview of Supreme Court Cases 55 (1985)

Bankruptcy and the Environment: The Case of Hazardous Wastes, 1985-86 ABA Preview of Supreme Court Cases 25 (1985)

A Different Approach to Interstate Banking, American Banker (August 8, 1985)

The SEC as Censor: Is Bam1ing an Investment Advice Newsletter a Prior Restraint of the Press?, 1984-85 ABA Preview of Supreme Court Cases 243 (1985)

Enforcing Federal Rights in State Courts, 1984-85 ABA Preview of Supreme Court Cases 277 (1985)

Interstate Banking and the Constitution, 1984-85 ABA Preview of Supreme Court Cases 364 (1985)

The "Sale of Business" Doctrine in the Supreme Court, 1984-85 ABA Preview of Supreme Court Cases 344 (1985)

Sale of Business Revisited: Does the Doctrine Apply to Partial Sales of Corporate Control, 1984- 85 ABA Preview of Supreme Court Cases 347 (1985)

Six Cases Shape Business Law, American Bar Association Journal 124 (Jan. 1985)

Offers of Settlement in Civil Rights Cases Pose Attorneys' Fees Question, 1984-85 ABA Preview of Supreme Court Cases I 05 (1984)

Using Bankruptcy to Avoid Liability for Cleaning up Toxic Wastes, 1984-85 ABA Preview of Supreme Court Cases 36 (1984)

68

App. 188

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 40 of 49 PageID 1999

A Judicial Footnote Cemented the New Deal, Wall Street Journal, September 13, 1984

May Bank Holding Companies Provide Discount Brokerage Savings?, 1984-85 ABA Preview of Supreme Court Cases 575 (1984)

Blum v. Stenson: Fundamental Questions About Attorneys' Fees Awards to Public Interest Lawyers, 1984-85 ABA Preview of Supreme Court Cases 301 (1984)

Myths on the Midway, 30 Chicago Law School Record 13 (1984)

Smith v. Robinson: Another Step Towards Solving the Attorneys' Fees Puzzle? 1983-84 ABA Preview of Supreme Court Cases 437 (1984)

Securities Industry Association v. Board of Governors: Can Banks Distribute Commercial Paper? 1983-84 ABA Preview of Supreme Court Cases 425 (1984)

The "7-Eleven" Case: Arbitration v. Litigation in a Federal System, 1983-84 ABA Preview of Supreme Court Cases 161 (1983)

The Bildisco Case: Reconciling Federal Bankruptcy and Labor Policies, 1983-84 ABA Preview of Supreme Court Cases 169 (1983)

The "Daily Income Fund" Case: What Role Should a Mutual Fund's Board of Directors Play in Disputes over Investment Advisor Fees, 1983-84 ABA Preview of Supreme Court Cases 107 (1983)

Pulliam v. Allen: Should State Judges who Act Unconstitutionally Pay the Plaintiff's Attorneys' Fees?, 1983-84 ABA Preview of Supreme Court Cases 115 (1983)

"Shortsighted" Bill Proposes D.C. Court Divestiture, Legal Time of Washington, August 16, 1982

The Tax Bill May Be Unconstitutional, Baltimore Sun, August 16, 1982 (with Donald N. Bersoff)

69

App. 189

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 41 of 49 PageID 2000

Appendix 2: Materials Reviewed

1. Class Action Settlement Agreement

2. Tenn Sheet for Compromise to a Plan of Reorganization ofLPHT, LPT, and

LPIFS

3. Debtors' Expedited Motion for Interim and Final Orders

4. Order Staying Proceedings

5. Declaration of Hon. Richard Schmidt (Ret.)

6. Declaration of Keith L. Langston In Support of: Plaintiffs' Motion for Final

Approval of Class Action Settlement and Plaintiffs Motion For Award of

Attorneys' Fee

7. Theodore Eisenberg and Geoffrey P. Miller, Attorneys Fees in Class Action

Settlements: An Empirical Study, 1 Journal of Empirical Legal Studies 27

(2004)

8. Theodore Eisenberg and Geoffrey P. Miller, Attorneys' Fees and Expenses in

Class Action Settlements: 1993-2008, 7 Journal of Empirical Legal Studies 248

(201 0)

9. Brian Fitzpatrick, An Empirical Study of Class Action Settlements and

Their Fee Awards, 7 J. Empirical L. Stud. 811 (2010)

10. Griffitts v. Life Partners, Inc., No. 10-01-00271-CV, 2004 WL 1178418

(Tex. App.- Waco, May 26, 2004)

11. S.E.C v. Life Partners, Inc., 87 F.3d 536 (D.C. Cir. 1996)

70

App. 190

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 42 of 49 PageID 2001

12. Arnoldv. Life Partners. Inc., No. 11-02995,2011 WL 7144985 (14th

Judicial District- Dallas County March 29, 20 II)

13. Arnoldv. Life Partners, Inc., No. 11-02995,2011 WL 9374221 (14th

Judicial District- Dallas County, May 29, 2011)

14. Arnoldv. Life Partners, Inc., No. 11-02995,2011 WL 9374216 (14th

Judicial District - Dallas County, September 26, 2011)

15. Texas v. Life Partners Holdings, Inc., No. D-1-GV-12-001128, 2013 WL

5493597 (20lst Judicial District-- Travis County, January 8, 2013)

16. Arnoldv. Life Partners, Inc., 2013416 S.W.3d 577 (Tex. App.- Dallas,

August 28, 2013)

17. Texas v. Life Partners Holdings, Inc., No. D-1-GV-12-001128, 2013 WL

5493596 (20lst Judicial District-- Travis County, September 26, 2013)

18. State v. Life Partners Holdings, Inc., 459 S.W.3d 619 (Tex. App.- Austin,

February 6, 2014)

19. Garner v. Life Partners Inc., Adversary No. 15-04061 (United States

Bankruptcy Court for the Northern District of Texas- Fort Worth Division)

20. Arnoldv. Life Partners Inc., Adversary No. 15-04064 (United States

Bankruptcy Court for the Northern District of Texas- Fort Worth Division)

21. Declaration of Robert Cain in Support of Motion for an Award of Attorneys'

Fees

22. Alderman & Cain, Invoice # 722, June 27, 2015

71

App. 191

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 43 of 49 PageID 2002

23. Declaration Of Scott Skelton In Support of Lead Counsel's Motion for An

Award of Attorneys' Fees

24. Langston Law Finn, Life Partners Detail by Attorney, Date Range:

9/1/2010 - 2/28/2015

25. Zelesky Law Firm, PLLC, Work in Progress billing statement through June

29,2015

72

App. 192

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Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 45 of 49 PageID 2004

IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION

In re: § § LIFE PARTNERS HOLDINGS, § Jointly Administered Under INC. ETAL., § Case No. 15-40289-RFN § Debtors. § Chapter 11

PHILIP M. GARNER § STEVER SOUTH, AS TRUSTEE § FOR AND ON BEHALF OF § THE SOUTH LIVING TRUST § CHRISTINE DUNCAN, AND ALL § OTHERS SIMILARLY SITUATED, § Plaintifft, § Adversary No. 15-4061 § v. § § LIFE PARTNERS, INC. § Defendant §

MICHAEL ARNOLD, JANET ARNOLD § STEVE SOUTH, AS TRUSTEE FOR, § AND ON BEHALF OF § THE SOUTH LIVING TRUST § JOHNS. FERRIS, M.D. § CHRISTINE DUNCAN, AND ALL § OTHERS SIMILARLY SITUATED § Adversary No. 15-4062 Plaintifft, § § v. § § LIFE PARTNERS, INC. § Defendant. §

DECLARATION OF CHARLES SILVER ON THE REASONABLENESS OF CLASS COUNSEL'S REQUEST FOR AN AWARD OF ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES

1 App. 193

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 46 of 49 PageID 2005

I. SUMMARY OF OPINIONS

1. When both the pending settlement and the complicated litigation it attempts to

resolve are properly understood, several things become clear.

• Class Counsel incurred sizeable risks and costs .

• Class Counsel achieved remarkable success .

• Class Counsel would have received a fee larger than they are requesting, had their

fee been set in an arm's length transaction with a sophisticated business client.

• Class Counsel have eliminated any concerns about the value of the proposed

settlement by agreeing to receive their own compensation on the same terms that

are proposed for the class.

II. CREDENTIALS

2. The ultimate decision as to the appropriate fee to award belongs to the Court. In

this report, I offer my perspective as an expert on class actions, attorneys' fees, and legal ethics,

subjects I have studied and written about for years. In this section, I briefly describe my

credentials. My resume appears below in Appendix A.

3. I have testified as an expert on attorneys' fees many times. Judges have cited or

relied upon my opinions when awarding fees in the following major cases, as well as many

smaller ones: In rePayment Card Interchange Fee and Merchant Discount Antitrust Litigation,

991 F.Supp.2d 437 (E. D. N.Y. 2014) (awarding $544.8 million fee on recovery of $5.7 billion);

Silverman v. Motorola, inc., No. 07 C 4507, 2012 WL 1597388 (N.D. Ill. May 7, 2012)

(unpublished) (fee award of 27.5 percent on recovery of $200 million); In re Checking Account

Overdraft Litigation, 830 F.Supp.2d 1330 (S.D. Fla. 2011) (fee award of30 percent on recovery

of $410 million); In re Enron Corp. Securities, Derivative & "ERISA" Litig., 586 F. Supp. 2d

App. 194

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 47 of 49 PageID 2006

732 (S.D. Tex. 2008) ($688 million fee award on a $7.2 billion recovery); A/lapattah Services,

Inc. v. Exxon Co1p., 454 F. Supp. 2d 1185 (S.D. Fla. 2006) (31.33 percent fee award on recovery

exceeding $1 billion).

4. Professionally, l hold the Roy W. and Eugenia C. McDonald Endowed Chair in

Civil Procedure at the University of Texas School of Law, where I also serve as Co-Director of

the Center on Lawyers, Civil Justice, and the Media. I joined the Texas faculty in 1987, after

receiving an M.A. in political science at the University of Chicago and a J.D. at the Yale Law

School. I received tenure in 1991. Since then I have been a Visiting Professor at the University

of Michigan School of Law, the Vanderbilt University Law School, and the Harvard Law

School.

5. From 2003 through 2010, I served as an Associate Reporter on the American Law

Institute's PRJNC!PLES OF THE LAW OF AGGREGATE LITIGATION (2010). Many courts have cited

the PRINCIPLES with approval, including the U.S. Supreme Court.

6. I have taught, researched, written, consulted with lawyers, and testified about

class actions, other large lawsuits, attorneys' fees, professional responsibility, and related

subjects for 30 years. I have published over 80 major writings, many of which appeared in peer­

reviewed publications and many of which focus on subjects relevant to this Report. In 2015, two

coauthors and I published a major study of fee awards in securities class actions in the

COLUMBIA LAW REVIEW. Lynn A. Baker, Michael A. Perino, and Charles Silver, Is the Price

Right? An Empirical Study of Fee-Setting in Securities Class Actions, 115 COLUMBIA L. REV.

1371 (2015). My writings are cited and discussed in leading treatises and other authorities,

including the MANUAL FOR COMPLEX LITIGATION, THIRD (1996) and the MANUAL FOR COMPLEX

LITIGATION, FOURTH (2004). In 2009, the Tort Trial and Insurance Practice Section of the

3

App. 195

Case 4:16-cv-00212-A Document 56-3 Filed 07/06/16 Page 48 of 49 PageID 2007

American Bar Association gave me the Robert B. McKay Award m recognition of my

scholarship in the areas of tort and insurance law.

7. Finally, because awards of attorneys' fees may be thought to raise issues relating

to the professional responsibilities of attorneys, 1 note that 1 have an extensive background,

publication record, and experience as an expert witness testifying on matters relating to this field.

For example, 1 am a coauthor of William T. Barker and Charles Silver, PROFESSIONAL

RESPONSIBILITIES OF INSURANCE DEFENSE COUNSEL (LexisNexis Mathew Bender, Updated

2014). I also served as the Invited Academic Member of the Task Foree on the Contingent Fee

created by the Tort Trial and Insurance Practice Section of the American Bar Association.

III. DOCUMENTS REVIEWED

8. When preparing this Report, I reviewed the items listed below which, unless

noted otherwise, were generated in connection with this case. 1 may also have reviewed other

items including, without limitation, cases, treatises, news reports, correspondence, and published

scholarly works.

• Declaration of Keith L. Langston in Support of Plaintiffs' Motion for Final Approval of Class Action Settlement and Plaintiffs' Motion for Award of Attorneys' Fees

• Joint Motion to Compromise Class Action Controversies, to Approve Plan Support Agreement, and for Related Relief

• Joint Motion to (1) Preliminarily Approve the Settlement Agreement; (II) Grant Class Certification for Settlement Purposes Ordy; (III) Appoint Class Counsel and Class Representatives for Settlement Purposes Only; (IV) Approve the Form and Manner of Notice to Class Members; (V) Set a Deadline for Objections to the Settlement; (VI) Schedule a Hearing for the Final Consideration and Approval of the Settlement; and (VII) Finally Approve the Settlement after the Final Hearing

• Griffitts v. Life Partners, Inc., 2004 WL I 178418

• Arnoldv. Life Partners, Inc., 2011 WL 9374216

• Arnold v. Life Partners, Inc., 2011 WL 7144985

4

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• Plaintiffs' Second Amended Class Action Petition

• Life Partners, Inc. v. Arnold, 464 S.W.3d 660 (Tex. 2015), reh'g denied (Sept. 11, 2015)

• Declaration of Robert Cain in Support of Motion for an Award of Attorneys' Fees

• Declaration of Scott Skelton in Support of Lead Counsel's Motion for an Award of Attorneys' Fees

• Affidavit of Elizabeth L. Yingling

IV. FACTUAL BACKGROUND

9. When approved and final, the proposed settlement will resolve class-based

litigation arising out of sales by Life Partners, Inc. and affiliated entities (collectively "LPI") of

interests in viatica! settlements. Because the Court knows the history of the litigation and the

terms of the settlement, I will describe only the aspects of both that are relevant to the subject of

this Report: the reasonableness of Class Counsel's requested award of attorneys' fees.

10. Private lawsuits were commenced against LPI on behalf of investors who bought

interests in viatica! settlements. Arnold eta!. v. Life Partners Inc., Case No. DC-11-02995 (Tex.

Dist. Ct. 14th Dist.), filed in March 2011, was one of these cases. It charged LPI with selling

unregistered securities and sought relief for a class of investors under Texas law. A parallel

action by the State of Texas was also initiated. After both the Arnold plaintiffs and the State lost

in their respective trial courts, the appellate courts reversed and the Texas Supreme Court finally

determined that the agreements LPI used to obtain money from investors were indeed securities,

as the Arnold class and the State alleged. Life Partners, Inc. v. Arnold, 464 S.W.3d 660 (Tex.

May 8, 2015). By this time, the litigation was already 4 years old.

II. Prior to the Texas Supreme Court's decision, one LPI affiliate, Life Partners

Holdings, Inc., filed a voluntary petition for bankruptcy. The remaining affiliates did the same

5

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shortly thereafter. The separate bankruptcy proceedings were administered collectively, and the

Arnold class action was stayed.

12. In bankruptcy, ownership of the underlying life insurance policies was disputed.

LPI claimed to own them, while in a class action titled Garner et al. v. Life Partners, Inc.,

Adversary No. 15-CV-04061-RFN (Bankr. N.D. Tex.) (the "Garner Class Adversaty"), the

investors asserted that they did. Had LPl prevailed, the policies and the proceeds generated by

their sale would have belonged to the bankruptcy estate and been available to satisfy other

creditors, leaving less money available to pay the investors. The Arnold class action was also

refiled in the bankruptcy court, to continue the adjudication of the securities claim. Arnold eta!.

v. Life Partners, Inc., Adversary No. 15-CV -04064-RFN (Bankr. N.D. Tex.) (the "Arnold Class

Adversary"). The Arnold Class Adversary sought relief in the form of rescission pursuant to the

Texas Securities Act § 33, along with attorneys' fees, costs and interest. The Arnold Class

Adversary and Garner Class Adversary litigations were later consolidated.

13. The proposed settlement, the negotiations concerning which lasted from August

2015 through March 2016, would resolve the securities law claims asserted by the Arnold Class

Adversary and the ownership claims asserted by the Garner Class Adversary. The value of the

relief garnered for the investors, which depends on the choices that class members make among

the options that will be offered to them, has been estimated at approximately $1.28 billion (by

Class Counsel) and at $1.078 billion (by the Estate Professionals). The amount that investors

would have received ±rom LPI without the securities litigation is unknown, but is assumed to be

less than $500 million, per Class Counsel's report that the Trustee could have sold the entire

portfolio early in the bankruptcy for about this amount. Langston Declaration, -,r 133.

6

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14. One component of the proposed settlement merits special mention. While LPI

was in business, many investors failed to pay the premiums that were due on the policies in

which they owned interests, presumably because they did not want to throw good money after

bad, and their ownership interests in those policies lapsed. (The lapsed interests are referred to

as the Pre-Petition Abandoned Positions in the settlement documents.) LPI then stepped in, paid

the premiums that were due, and acquired the right to the proceeds on the policies. Over time,

the pool of Pre-Petition Abandoned Positions became very large. Its current face value is

approximately $180 million. The proposed settlement transfers ownership of the Pre-Petition

Abandoned Positions to the Class, and makes this pool of assets the source of Class Counsel's

fees, which are to be paid when and as the policies generate funds.

V. ANALYSIS

15. Class Counsel asked Professor Geoffrey P. Miller and me to submit reports on the

reasonableness of their fee request. Because Professor Miller and I are coauthors, it will not

surprise the Court to learn that our views are similar. To avoid duplication, we will focus on

different things. Professor Miller will discuss empirical studies of fee awards, while I cover

other evidence bearing on the reasonableness of fee requests in class actions, including evidence

from the private market for legal services and Texas practices.

A. Class Counsel Incurred Substantial rusks and Costs

16. When awarding fees in class actions that generate common funds, Fifth Circuit

precedent requires the Court to consider the factors enumerated in Johnson v. Georgia Highway

Express, Inc., 488 F.2d 714 (5th Cir. 1974). See Union Asset Mgmt. Holding A. G. v. Dell, Inc.,

669 F.3d 632, 644 (5th Cir. 2012) ("endors[ing] the district courts' continued use of the

percentage method cross-checked with the Johnson factors" and affirming the trial judge's

percentage-based fee award). Here, as in all class actions, Class Counsel could establish a right

7

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to a fee only by securing a recovery. In other words, the fee was contingent, not guaranteed.

Consequently, under Johnson it is appropriate to consider the risks Class Counsel incurred when

agreeing to become involved in the case.

17. To establish the LPI was liable to the plaintiff class, Class Counsel had to

surmount two significant hurdles: they had to win on the law by establishing that the interests

LPI sold qualified as securities under Texas law; and they had to prevail in the bankruptcy

adversary proceedings. Both hurdles saddled Class Counsel with sizeable risks.

18. The prospects for establishing that the interests in viatica! settlements were

regulated securities were poor because LPI had previously succeeded in showing that they were

not. In the mid-1990s, the SEC accused LPI of violating the federal securities laws by selling

unlicensed securities. After winning in the district court, however, the SEC lost in the federal

court of appeals, which held that interests in viatica! settlements were not securities because

profits from their purchase did not derive predominantly from efforts of persons other than

investors. S.E.C. v. Life Partners, Inc., 87 F.3d 536 (D.C. Cir. 1996).

19. Almost a decade later, LPI prevailed on the same issue in the Texas state courts.

In Griffitts v. Life Partners, Inc., 2004 WL 1178418 (Tex. App.-Waco, May 26, 2004, no pet.)

(mem. op.), a disgruntled investor sought to obtain rescission of her purchase by arguing that the

investments were securities under Texas law. With one judge dissenting, the Waco court of

appeals held that the investments were not securities and denied relief.

20. Perhaps because of the history just recounted, LPI convinced the trial judge who

presided over the Arnold class action to dismiss the Plaintiffs' claims on summary judgment and

to impose sanctions for filing a baseless lawsuit. See Arnold v. Life Partners, Inc., 2011 WL

9374216 (14th Judicial District-Dallas) (granting partial summary judgment); Arnold v. Life

8

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Case 4:16-cv-00212-A Document 56-4 Filed 07/06/16 Page 4 of 42 PageID 2012

Partners, Inc., 2011 WL 7144985 (14th Judicial District-Dallas) (finding that sanctions were

warranted). In the motion that led to the sanctions order, LPI sought more than $355,000 in

penalties.

21. At a subsequent mediation ordered by the trial judge, LPI reportedly offered to

withdraw its request for sanctions if the class plaintiffs waived their right to appeal the summary

judgment loss. Langston Declaration 'II 84 . Displaying great courage and putting the interests of

the class ahead of their own, the Plaintiffs and Class Counsel declined the offer. Then they beat

the odds by convincing the court of appeals and the Texas Supreme Court that the interests LPI

sold were in fact securities.

22. Class action lawyers are often said to care more about themselves than about the

people they represent. There is some truth to this allegation, too. Many sell-out settlements have

paid lawyers rich fees while providing class members with little relief. But the history of the

class action also contains many noteworthy instances of bravery, and this case adds one more to

the pantheon. LPI put temptation directly in front of Class Counsel by offering to drop its

sanction motion, which the trial judge had already granted, in return. for an agreement to let the

trial judge's summary dismissal stand. Class Counsel could readily have justified a decision to

make that trade. The odds were against beating LPI in court. But instead of protecting

themselves from the prospect of having to pay LPI hundreds of thousands of dollars in penalties,

Class Counsel fought for the result they believed to be right. The result was a big win in the

Texas Supreme Court and a billion-dollar settlement lor the class. All class members should be

grateful to these attorneys, and all lawyers should be proud ofthem.

23. Class Counsel also took a big gamble by attempting to litigate on a class-wide

basis in the Texas courts. Although the dsta needed to make a definitive comparison are not

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available, one can safely say that it is at least as hard to get a class action certified in Texas as in

any otber state. The combination of adverse decisions by the Texas Supreme Court and

restrictions on fcc awards that were enacted legislatively "has slowed new class-action filings in

Texas state courts to a trickle." Alistair B. Dawson and Geoff A. Gannaway, In Memoriam:

Texas Class Actions, 44 THE ADVOC. (TEXAS) 78, 82 (2008). Yet, Class Counsel chose to

litigate in this hostile environment, presumably because the only path to success ran through the

Texas appellate courts, which had the power to establish that prior decisions in LPI's favor were

erroneous.

24. Class Counsel also faced the risks that attended LPI's bankruptcy. Not being a

bankruptcy expert, I cannot characterize these risks in detail. But I can emphasize the most

obvious one, which was that LPI would either sell the portfolio of insurance policies at a fire-sale

price or fail to cover the premiums going forward, in which event the policies would lapse.

Class Counsel's legal victory under the Texas Securities Act would have been a pyrrhic one, had

either outcome occurred.

25. By comparison to other securities class actions, this one took unusually long to

resolve. In 2014, the average federal securities fraud class action lasted 3 years. Laarni T.

Bulan, Ellen M. Ryan, and Laura E. Simmons, SECURITIES CLASS ACTION SEITLEMENTS-2014

REVIEW AND ANALYSIS 19 (Cornerstone Research, 2015). About 70% of the cases settled

between 2 and 4 years after commencement. At 5 years of age and counting, the duration of this

lawsuit implies that Class Counsel have had to bear litigation costs and lend their services-more

than 5,000 hours of lawyer-time-without compensation much longer than average. The fee

award must recognize this if lawyers are to be encouraged to bear the costs and risks that are

needed to vindicate class members' claims.

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26. Finally, the fee award should also recognize that Class Counsel won't be fully

compensated for years or even decades. When the case settles, the lawyers who won the

recovery for the class will receive no cash in hand. They will only receive the same interests in

the Pre-Petition Abandoned Positions that the selllement entitles class members to receive. Over

time, as the persons covered by the life insurance policies die, the policies will generate funds in

which both Class Counsel and class members will share. But the time it will take to receive the

entire payment stream can only be guessed. The delay is truly exceptional. In the course of

studying class actions for 30 years, I have read about a few cases in which class counsels' fees

were paid out over a few years, as class members' claims were processed. But I have not seen

one in which a fee award was paid out over a period nearly as long as this settlement

contemplates.

B. Class Counsel Achieved Remarkable Success

27. By obtaining a favorable settlement, Class Counsel did something that rarely

occurs in class suits. Even successful securities fraud cases usually recover pennies on the dollar

of investors' estimated losses. By winning on summary judgment, Class Counsel also bucked

the trend. The vast majority of securities fraud class actions, over 90%, end before the summary

judgment stage is reached. By winning on the law and securing an enormous recovery, Class

Counsel did something truly remarkable. Only 109 of the 1456 (7.5%) securities fraud class

actions that were filed in federal courts 1996-2015 settled after a ruling on summary judgment,

and the median recovery in those that did represented only 2.4% of investors' estimated

damages. Laarni T. Bulan, Ellen M. Ryan, and Laura E. Simmons, SECURTTIES CLASS ACTION

SETTLEMENTS-2015 REVIEW AND ANALYSIS 20 (Cornerstone Research, 2016). Here, the

proposed settlement will compensate some investors in full, while everyone will recoup a

sizeable fraction of their losses. 11

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Case 4:16-cv-00212-A Document 56-4 Filed 07/06/16 Page 7 of 42 PageID 2015

C. Fees Paid by Sophisticated Clients

28. Class counsel have requested a fee that, as shown below, comes to slightly more

than 4% of the recovery. In this section, I show that sophisticated business clients typically pay

lar higher percentage lees when engaging lawyers on contingency to handle commercial cases.

Before doing so, however, I must point out that Class Counsel have not requested separate

reimbursement for their out-of-pocket litigation costs. Their only compensation will be the

court-awarded fee. Judging from my experience and my empirical study of securities fraud class

actions, I know this to be rare. Private clients typically reimburse litigation costs !rom their

recoveries,. and judges typically award cost reimbursements in addition to fees from commort

funds. Here, then, the requested fee award is a gross figure while in most other cases it is not.

This makes Class Counsel's fee award especially easy to justify.

29. Starting with the first article I published ailer becoming a law professor, I have

argued that judges should "mimic the market" when awarding fees in class actions. See Charles

Silver, A Restitutionary Theory of Attorneys' Fees in Class Actions, 76 CORNELL L. REv. 656

(1991). Although the position had few adherents at the time, today many judges agree.

30. In 1992, the year ailer Restitutionary Theory appeared, Judge Richard A. Posner

wrote that "[t]he object in awarding a reasonable attorney's fee [from a class action settlement] .

. . is to give the lawyer what he would have gotten in the way of a fee in arm's length

negotiation, had one been feasible." In re Continental Illinois Securities Litigation, 962 F.2d 566,

572 (7th Cir. 1992); see also id at 568 ("[I]t is not the function of judges ... to determine the

equivalent of the medieval just price. Tt is to determine what the lawyer would receive if he were

selling his services in the market rather than being paid by court order.").' In Standard Iron

1 Many other Seventh Circuit cases support this rule. See, e.g., Williams v. Rohm & Haas Pension Plan~ 658 F.3d 629, 635 (7th Cir. 2011) ("When attorney's fees are deducted from class damages, the district court must try to 12

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Work~ v. Arcelormittal eta/. which produced a $164 million recovery, the district court followed

the Seventh Circuit's lead and found "that a 33% fee comport[ed] with the prevailing market rate

for legal services of similar quality in similar cases." No. 08-C-5214, 2014 U. S. Dist. LEXIS

162557 at *8 (N.D. Ill. Oct. 22, 2014)

31. The Second Circuit reached the same conclusion in 2000. It agreed that "lawyers

who successfully prosecute [class actions] deserve reasonable compensation, and that market

rates, where available, arc the ideal proxy for their compensation." Goldberger v. Integrated

Resources, Inc., 209 F.3d 43, 52 (2d Cir. 2000).

32. District court judges sitting in other circuits often take guidance from market rates

too. In Allapattah Services, Inc. v. Exxon Corp., 454 F. Supp. 2d 1185, 1211 (S.D. Fla. 2006),

which produced a billion-dollar settlement, the court agreed that "the more appropriate measure

of a reasonable percentage is the market rate for a contingent fee in commercial cases" and

awarded a fee of 31.33 percent. In the First Circuit, District Court Judge D. Brock Hornby has

applied the mimic-the-market approach repeatedly. See, e.g., Nilsen v. York County, 400 F.Supp.

2d 266, 277-278 (D. Maine 2005) (endorsing market-based approach).2 At least one other First

Circuit judge has followed Judge Hornby's lead. In re Cabletron Systems, Inc. Securities

Litigation, 239 F.R.D. 30 (D. N.H. 2006) (following Nilsen).

assign tees that mimic a hypothetical ex ante bargain between the class and its attorneys."); In re Synthroid Mktg. Litig.. 264 F.3d 712, 718-19 (7th Cir. 2001) ("We have held repeatedly that, when deciding on appropriate fee levels in common~fund cases, courts must do their best to award counsel the market price fOr legal services, in light oftbe 1isk of nonpayment and the nom1al rate of compensation in the market at the time."). District Court decisions in the Seventh Circuit applying the rnimic~the~market approach include, see e.g .• Beesley v. Inti. Paper Co., 2014 WL 375432 *2 (S.D. Ill. 2014) ("In common fund cases, 'the measure of what is reasonable [as an attorney fee] is what an attorney would receive from a paying client in a similar case.'"); and Stumpfv. Pyod, LLC, 12 C 4688,2013 WL 6123156 *1 (N.D. IlL 2013) (In a certified clas~ action, "counsel is entitled to the fee that counsel would have received 'from a paying client in a similar case."'). 2 In addition to Nilsen v. York County, 400 F.Supp. 2d 266, 277-278 (D. Maine 2005), discussed in the text, Judge Hornby applied the min1ic~the-market approach in Scovil v. FedEx Ground Package System, Inc., 2014 WL 1057079

13 App.205

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33. Here in Texas, Judge Melissa Harmon repeatedly took guidance from practices

prevailing in the market for legal services when awarding fees in the massive Enron settlement.

In re Enron Corp. Sec., Derivative & ERISA Litig, 586 F. Supp. 2d 732, 752 (S.D. Tex. 2008).

Judge Harmon considered market rates relevant evidence that the Fifth Circuit's decision in

Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974), permitted her to

consider. She did so even though, at the time, a belief existed that the Fifth Circuit required

judges to use the lodestar method when awarding fees from common funds. In fact, this belief

was mistaken and we formally dispelled in Union Asset Mgmt. Holding A. G. v. Dell, Inc., 669

F.3d 632, 644 (5th Cir. 2012), which, as mentioned, "endors[ed] the district courts' continued

use of the percentage method cross-checked with the Johnson factors" and affirmed a

percentage-based fee award. When deciding how large a percentage fee should be, a judge can

do no better than look to the market for information.

34. Judges have many reasons for agreeing that fees paid by sophisticated clients in

large conm1erciallawsuits provide a reliable guide for fee awards in class actions. First, because

sophisticated clients have good information and ready access to the market for legal services, the

ethical propriety of the fees they agree to pay is beyond cavil. No claim of exploitation is

plausible in this situation. Second, sophisticated business clients have no reason to pay more

than they must to obtain legal services. Business clients are not charitably inclined.

Consequently, the fees they agree to pay indicate the fewest dollars they can part with and still

obtain the value they expect lawyers to contribute. Third, sophisticated business clients use fee

formulas that are designed to incentivize lawyers to maximize their expected net recoveries, i.e.,

the amounts the clients expect to retain after paying legal fees and reimbursing expenses.

Because class members would rationally desire the same result-maximization of net expected

14

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recoveries-fee arrangements employed by sophisticated business clients can properly serve as

models for fee awards in class suits.

35. The desirability of mimicking the market being clear, it remains to establish

prevailing market rates. The evidence presented below shows that in large commercial lawsuits

of many types, sophisticated business clients typically pay fees in the range of25% to 33% of the

recove1y, or more. They often agree to pay fees in this range when recoveries are large, although

in the very largest cases they sometimes contract for lesser amounts. Many of the examples

involve Texas clients or law finns, showing that fees in the identified range are common in local

business representations.

1. Contingent Fees in Patent Representations

36. There are many anecdotal reports of high fee percentages being paid in patent

cases. The most famous one related to the dispute between NTP Inc. and Research In Motion

Ltd., the company that manufactures the Blackberry. NTP, the plaintiff, promised its law finn,

Wiley Rein & Fielding (WRF), a one-third contingent fee. When the case settled for $612.5

million, WRF received more than $200 million in fees. Yuki Noguchi, D.C. Law Firm's Big

BlackBerry Payday: Case Fees ofMore Than $200 Million Are Said to Exceed Its 2004 Revenue,

WASHINGTON POST, March 18, 2006, at D03. Another famous case involved the law fim1 of

Dickstein Shapiro, which was reported to be entitled to a fee of $90 million under a partial

contingent tee agreement,3 after securing a $501 million jury award against Boston Scientific.

3 In a partial contingent fee agreement, the contingent bonus, usually a percentage of the recovery, applies on top of other guaranteed compensation, such as a fixed payment upfront or a discounted hourly rate. Because guaranteed compensation is unavailable in class actions, partial contingent fee agreements provide limited guidance for fee percentages in these cases. At most, they suggest lower bounds that fee awards from common funds should greatly exceed.

15

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Martha Neil, Dick~tein Contingent-Fee Payout Could Be $600K Per Partner, ABA JoURNAL

(May 20, 2008)_4

37. The Texas law firm of MeKool Smith has a booming contingency practice,

mostly involving high tech companies. It reportedly collected over $100 million in fees over a

four-year period. The firm's business model includes both straight contingent fee

representations in which it charges 40 percent of the recovery and hybrid representations "in

which it charges half of its $250 to $950 standard hourly rate and then gets half of its usual 40

percent contingency." Cheryl Hall, Patents and patience pay qfffor Dallas law finn McKool

Smith, THE DALLAS MORNING NEWS, March 27, 2010, (updated November 26, 2010),

http://www.dallasnews.com/business/columnists/cheryl-ha!V20100327-Patents-and-patience-

pay-off-for-4939.ece. In 2009, McKool Smith won a $200 million jury verdict against Microsoft

for Toronto-based i4i Inc. Penalties and interest added $90 million to the total. The firm's share,

under a partial contingent fee agreement, was reported to be $60 million, assuming the verdict

held up. Id.

38. The reports just mentioned are typical, not aberrations. Professor David L.

Schwartz confirmed this when he interviewed 44 experienced patent lawyers and reviewed 42

contingent fee agreements that were used in patent cases. Professor Schwartz reported that,

across the board, fee percentages were comparable to the fee requested here.

On the whole, the contingent rates are similar to the "one-third" that a stereotypical contingent personal injury lawyer charges. There are two main ways of setting the fees for the contingent lee lawyer: a graduated rate and a l1at rate. Of the agreements using a flat fcc reviewed for this Article, the mean rate was 38.6% of the recovery. The graduated rates typically set milestones such as

4 The parties later settled the case for $50 million. AMERICAJ."'l' LAWYER, Interest Award Brings Doctor's Judgment Against Johnson & Johnson to $593 Million In Patent Fight Over Stents, April 01~ 2011, http://www.dicksteinshapiro.com/sites/defhultltiles/Interest_Award_Bdngs_Doctors_Judgment_Against_Johnson_a nd_Johnson_Apdl_1_2011.pdf. As the title of this article indicates, Dickstein Shapiro also secured a second enonnous judgment against Johnson & Johnson. The tetu1s of that contingent fee representation are unknown.

16

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"through close of fact discovery," "through trial," and "through appeal," and tied rates to recovery dates. As the case continued, the lawyer's percentage increased. Of the agreements reviewed for this Article that used graduated rates, the average percentage upon filing was 28% and the average through appeal was 40.2%.

David L. Schwartz, The Rise of Contingent Fee Representation in Patent Litigation, 64

ALABAMA LAW REVIEW 335, 360 (2012). In a case like this one that lasted over a 5 years, the

highest graduated rate would apply.

39. Professor Schwartz did not have a random sample of engagement contracts used

in patent cases to consider. But his conclusions are consistent with both the examples discussed

above and with reports found in patent blogs, case reports, and other publications. For example,

the following passage appeared in Matt Cutler, Contingent Fee Patent Litigation, and Other

Options, PATENT LITIGATION, http://intellectualproperty-rights.cornJ?page_id=30 (reviewed

March 13, 2012), also available at http://patentlitigationstrategy.cornJ?page_id=30.

Contingent Fee Arrangements: In a contingent fee arrangement, the client does not pay any legal fees for the representation. Instead, the law firm only gets paid from damages obtained in a verdict or settlement. Typically, the law firm will receive between 33-50% of the recovered damages, depending on several factors-a strictly results-based system.

40. In Tanox, Inc. v. Akin, Gump, Strauss, Hauer & Feld, LLP, eta/., 105 S.W.3d 244

(Tex. Appls.-Houston, 2003), which arose out of a patent case, the law firm's fee percentage

varied with the amount recovered. "Under the fee agreement, Tanox agreed to pay the Lawyers

a contingency fee pursuant to a sliding scale: 25% of the first $32 million recovered by Tanox,

33 1/3 %of recovery from $32 million to $60 million, 40% of recovery from $60 million to $200

million, and 25% of recovery over $200 million." !d. at 248-49. The agreement also contained

other provisions tiworable to the lawyers, including a promise of "$1 00 million if they obtained a

permanent injunction." "The total fees Tanox agreed to pay the Lawyers were capped at $500

million and the total fees derived from royalties were capped at $300 million." !d. at 249. Like

17

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NTP in the Blackberry litigation, Tanox agreed to pay both a high percentage and a potentially

enormous amount.

2. Contingent Fees In Other Commercial Litigations

41. Turning from patent lawsuits to matters of other types, many examples show that

compensation as a significant percentage of recovery is common. A famous case from the 1980s

involved the Texas law fim1 of Vinson & Elkins (V &E). ETSI Pipeline Project (EPP) hired

V &E to sue Burlington Northern Railroad and other defendants, alleging a conspiracy on their

patt to prevent EPP from constructing a $3 billion coal slurry pipeline. Iu a sworn affidavit,

Harry Reasoner, then V &E's managing partner, described the fmancial relationship between EPP

and V&E.

The terms of our retention were that our client would pay all out-of-pocket expenses as they were incurred, but all legal fees were contingent upon a successful outcome. We were paid 1/3 of all amounts received by way of settlement or judgment. We litigated the matter for 5 years. At the conclusion, we had settled with all defendants for a total of $634,900,000.00. As a result, a total of $211,633,333.00 was paid as contingent legal fees.

Declaration of Harry Reasoner, filed in In re Washington Public Power Supply System

Securities Litigation, MDL No. 551 (D. Arizona, Nov. 30, 1990).

42. Several things about this example are noteworthy. First, the contingency fraction

was one-third of the recovery in a massive case. Second, V &E bore no liability tor out-of~pocket

expenses, whereas in this case Class Counsel advanced hundreds of thousands of dollars to cover

costs and bore the risk associated with the loan until the end of litigation. Third, the case was

enormous, ultimately generating a recovery greater than $600 million and a fee north of $200

million. Fourth, the client was a sophisticated business with access to the best lawyers in the

country. No claim of pressure or undue influence by V &E could possibly be made.

18

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43. Based on what lawyers who write about fee arrangements in business cases have

said, contingent percentages of one-third or more remain common today. In 2011, THE

ADVOCATE, a journal produced by the Litigation Section of the State Bar of Texas, published a

symposium entitled "Commercial Law Developments and Doctrine." It included an article on

alternative fee arrangements, according to which:

A pure contingency fee arrangement is the most traditional alternative fee arrangement. In this scenario, a firn1 receives a fixed or scaled percentage of any recoveries in a lawsuit brought on behalf of the client as a plaintiff. Typically, the contingency is approximately 33%, with the client covering litigation expenses; however, firms can also share part or all of the expense risk with clients. Pure contingency fees, which are usually negotiated at approximately 40%, can be useful structures in cases where the plaintiff is seeking monetary or monetizable damages. They are also often appropriate when the client is an individual, start up, or corporation with limited resources to finance its litigation. Even large clients, however, appreciate the budget certainty and risk-sharing inherent in a contingent fee arrangement.

Trey Cox, Alternative Fee Arrangements: Partnering with Clients through Legal Risk Sharing,

66 THEADVOCATE(TEXAS) 20 (2011).

44. A recent case shows, in monetary terms, that lawyers who handle business

disputes on contingency can earn enormous premiums over their hourly rates. In 2012, the U.S.

Court of Appeals for the Tenth Circuit decided a case involving a dispute over the fee a business

client owed the law firm of Susman & Godfrey (S&G). S&G had handled an oil and gas matter

for the client on the following terms. "Under the Fee Agreement, [the client] agreed to pay

[S&G] 30% 'of the sum recovered by settlement or judgment,"' subject to caps based on when

the lawsuit was resolved. Grynberg Production Corp. v. Susman Godfrey, L.L.P., No. 10-1248,

2012 U.S. App. LEXIS 3316, at *2 (lOth Cir. Colo., February 16, 2012). "[T}he Fee Agreement

capped fees at $50 million if the case settled within one year after the action was filed." I d. The

fee agreement thus entitled S&G to be paid $50 million for a year's worth of work-and that is

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what an arbitrator decided S&G should receive, subject to an offset of less than $2 million that,

for present purposes, is irrelevant. The Tenth Circuit ultimately affirmed the attorneys' fee

award.

45. In Anglo-Dutch Petroleum v. Greenberg Peden, 352 S.W.3d 445 (Tex. 2011},

another oil and gas matter, the plaintiff initially agreed to pay the law firm of McConn &

Williams the bargain rate of 20 percent. The firm's mission was apparently to attempt to settle

the case, however. When it became clear that the case would be tried, McConn & Williams

reduced its fee to 16.66 percent and the client brought in John M. O'Quinn & Associates.

O'Quinn charged another 20 percent, bringing the total contingent fee to 36.66 percent. After

the trial, which the plaintiff won, the case settled for $51 million. The plainti!rs fees came to

about $20 million.

3. Fees Promised by Named Plaintiffs and Other Class Members

46. I recently learned about the fees a number of sophisticated business clients agreed

to pay when serving as named plaintiffs in four unrelated class actions. The first case was King

Drug Company of Florence, Inc. v. Cephalon, Inc., No. 2:06-cv-1797-MSG (E.D. Pa.). There,

the named plaintiffs were wholesalers who had participated in a series of class action lawsuits

involving antitrust challenges to prices charged by drug manufacturers. Collectively, the

lawsuits prior to Cephalon had generated more than $1 billion in recoveries, and the Cephalon

lawsuit itself recovered more than $500 million. In the prior cases, the drug wholesalers

supported fee awards equal to one-third of their recoveries, and in Cephalon they supported an

award of27.5%.

47. The second litigation was In re Payment Card Interchange Fee and Merchant

Discount Antitrust Litigation, 991 F.Supp. 2d 437 (E.D.N.Y. 2014), where I reviewed retainer

agreements entered into by 12 class merchants. Although the agreements varied in important 20

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respects-indicating that they were negotiated agreements-they generally provided that class

counsel would receive one-third of the Class-wide recovery as fees. Some of the clients agreed to

make up from their own recoveries any shortfall between the promised one-third fee and the

actual fee awarded by the court. Others promised to pay a one-third fee from their own

recoveries if they settled outside the class action. These promises sent a strong signal that a one­

third fee was reasonable in the eyes of sophisticated business clients who were involved in

lawsuits in which billions of dollars in damages were sought.

48. The third case was In re International Textile Group Merger Litigation, C.A. No.

2009-CP-23-3346 (Court of Common Pleas, Greenville County, South Carolina), which settled

in 2013 for relief valued at about $81 million. Five sophisticated investors served as named

plaintiffs in the case. Two of these, FURSA Alternative Strategies LLC and RAMIUS LLC,

were, respectively, a hedge fund manager and a global investment manager. All five clients

agreed to pay 35 percent of the gross class-wide recovery as fees, with expenses to be separately

reimbursed. The 35 percent fee was bargained down after initially being set at over 40 percent.

49. The fourth case was In re U.S Foodservice, Inc. Pricing Litigation, Case No.

3:07-md-1894 (AWT) (D. Ct.), which produced a $297 million settlement that is currently up for

approval. One of the named plaintiffs, Thomas & King Inc., was formerly one of the largest

operators of Applebee's franchises in the United States and the nation's eighth-largest restaurant

franchise company overall, with approximately 7,500 employees. The other named plaintiff,

Catholic Healthcare West/Dignity Health, was the fifth largest health system in the nation and

the largest provider of non-profit hospital services in California. Both clients were represented

by counsel in their fee negotiations with class counsel, and both agreed that the fee award might

be as high as 40 percent.

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50. In all the cases just discussed, the named plaintiffs were sophisticated businesses

with significant resources and ready access to the market for legal services. Their willingness to

promise fees ranging from one-third to 40 percent in large commercial class actions shows

clearly that, in their judgment, fees in this range were reasonable.

51. Examples of sizeable contingent fees can also be found in cases involving

business clients who retained lawyers to participate on their behalf in class actions. Several

appear in an opinion written by Seventh Circuit Judge Frank Easterbrook. He reported that, after

a settlement was already on the table, "a group of more than 100 [third party payers J ...

contracted with two law firms to represent them.... [T]he contracts provided for a 25%

contingent fee at maximum." In re Synthroid Marketing Litig., 264 F.3d 712, 727 (7th Cir.

2001). In Synthroid, the lawyers' job was merely to gamer as large a portion of the settlement

fund as possible for the third party payers. They bore minimal risk of non-payment. Even so,

their sophisticated clients promised them large percentage fees.

52. In re High Fructose Corn Syrnp Antitrust Litigation provides additional

examples. According to Professor John C. Coffee, Jr., a nationally renowned authority on class

actions who served as an expert witness in the case, the two named plaintiffs-Zarda Enterprises

and Publix Supermarkets Inc.-agreed to pay fees of 30 percent and "more than 25%,"

respectively. Gray & Co., an opt-out claimant, promised its lawyers 33-40 percent of the

recovery in parallel litigation, depending on the time of settlement. Declaration of John C.

Coffee, Jr., submitted in In re High Fructose Corn Syrup Antitrust Litigation, M.D.L. 1087 (C.D.

Ill. Oct. 7, 2004), pp. 1-2.

53. I could add examples to those already discussed, but the point has been made.

When seeking to recover money in risky commercial lawsuits involving large stakes,

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sophisticated business clients often pay contingent fees equal to or greater than one-third of the

recovery plus expenses. They pay such percentage fees when the risks and costs of litigation

warrant the expenditure, because they are better off hiring lawyers at market rates than giving up

on their claims. To be clear, I am not saying that sophisticated business clients always pay fees

in this range; they will pay less when they can hire competent lawyers on more attractive terms.

The point is just that they know how the market for legal services works: risks require offsetting

rewards.

54. Fees agreed to by sophisticated clients are ethically proper, too. The best

evidence of an ethically acceptable reasonable price for a legal service is the amount that a client

agrees to pay and a lawyer agrees to accept when both are sophisticated, well informed, and

interact in a deep market. When set this way, lawyers' fees are ethically proper.

4. Fees Freely Agreed to by Sophisticated Clients are Ethically Proper

55. All states' bar rules prohibit lawyers from charging excessive fees. In class

actions, it is all but impossible for lawyers to violate this rule. Judges decide how much class

action lawyers are paid, and in the course of doing so they must find that the fees they award are

reasonable. In most federal circuits, the factors that judges consider when setting fee awards

closely resemble those that appear in state bar associations' disciplinary rules. This is true in the

Fifth Circuit, where the Johnson factors and the reasonableness factors set out in Rule 1.04 of the

Texas Disciplinary Rules of Professional Conduct greatly overlap. There is essentially no risk

that a lawyer would violate the ethical prohibition on excessive fees by accepting a class action

fee award that was approved by a judge.

56. When judges awarding fees from class action recoveries take guidance from the

rates that sophisticated clients freely agree to pay, again there is little or no risk of an excessive

fee award. As the RESTATEMENT (THIRD) OF THE LAW GOVERNING LAWYERS observes, "[flees

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agreed to by clients sophisticated in entering into such arrangements (such as a fee contract made

by inside legal counsel in behalf of a corporation) should almost invariably be found

reasonable." RESTATEMENT (THIRD) OF LAW GOVERNING LAWYERS § 34, Comment c (2000).5

John Leubsdorf, one of the Reporters, was even more emphatic. He wrote that "when a client is

sophisticated, as in the case of a corporation with house counsel, it should be free to consent to

almost any fee or financing arrangement." John Leubsdorf, Against Lawyer Retaining Liens, 72

FORDHAM L. REV. 849, 872 (2004)

D. The Requested Fee and the Recovery of Pre-Petition Abandoned Positions

57. l begin with the proposal that Class Counsel's fees be paid entirely from funds

created by life insurance policies that are tied to the Pre-Petition Abandoned Positions. This

arrangement has three salutary effects. First, it demonstrates the credibility of Class Counsel's

assertion that the Pre-Petition Abandoned Positions have value that is real and discernible. Were

this not true, Class Counsel's fees would go up in smoke. Unlike settlements that involve

coupons, injunctive reforms, and other components that may or may not have value, the Court

can be confident that recovery ofthe Pre-Petition Abandoned Positions is a real gain for the

Class.

58. Second, because Class Counsel will be paid in the same currency that the

proposed settlement entitles the class to receive, any danger of exploitation is eliminated. In

some class actions, lawyers have been accused of using their control of settlement negotiations to

benefit themselves at class members' expense. Often, they do this by breaking the connection

5 See also Ankur Parekh & Jay R. Pelkofer, Lawyers, Ethics, and Fees: Getting Paid Under Model Rule 1.5, 16 GEO. J. LEGAL ETHICS 767, 782 (2003) ("[M]ore sophisticated clients will have a better understanding of what constitutes a reasonable fee, particularly [] corporate clients that have been involved in similar litigation in the past. In filet, the Committee on Lawyer Business Ethics of the ABNs Business Law Section urged that written tee agreements between tUlly infOrmed clients and lawyers should be presumptively reasonable.") (citing ABA Comm. On Lawyer Bus. Ethics, Report, Business and Ethics Implications of Alternative Billing Practices: Report on Alternative Billing Arrangements, 54 Bus. LAW. 175,200 (1998)).

24

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between recovery and fees that normally exists when lawyers are paid on contingency. Here, the

linkage is preserved. The proposed settlement provides that class members and Class Counsel

will be paid in the same way. Both will receive interests in the policies that make up the Pre­

Petition Abandoned Positions, and both will be paid as those policies generate funds for the

Class. This provides considerable assurance that Class Counsel used their control of settlement

negotiations to benefit the Class. Better terms for the Class meant bigger fees for Class Counsel,

and Class Counsel could increase their fees only by recovering more for the Class.

59. Third, because Class Counsel will be paid over time, the net present value of the

requested fee award is small. Class Counsel has asked to be paid $33 million in nominal dollars.

Given the rate at which the Pre-Petition Abandoned Positions are expected to pay out, the

discounted present value of the fee request is only $5.2 million.

E. The Requested Fee as a Percentage of the Total Recovery

60. Of course, when other benefits conferred by the settlement are taken into account,

the fee percentage declines. A ballpark estimate is that the settlement confers $780 million in

nominal value on the Class above the value that investors would have realized on their

purchases without the Arnold Class Adversary. This is calculated by subtracting the estimated

fire-sale value ofLPI's policy portfolio ($500 million (if not less)) from the estimated total value

of the settlement ($1.28 billion). Applying the (undiscounted) value of the fee award ($33

million) to the (undiscounted) value of the additional relief ($780 million) yields a fee award of

4.2%.

61. A fee percentage of 4.2% is almost unprecedentedly low, even in a mega-fund

case where fee percentages are said to be small. In Em·on and other cases with billion-dollar

settlements, larger percentages were awarded. Fee percentages tend to be much larger when

settlements are in the hundred-million dollar range t0o. Awards of 20% or more are common 25 App. 217

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even in mega-fund cases with recoveries exceeding $100 million. Exhibit 2 to this Report

contains a list of 80 such cases, and. the list is likely incomplete.

62. The reasonableness of the requested fcc becomes obvious when the ratio of the

possible recovery to the actual recovery is considered. According to Class Counsel, the proposed

settlement returns "approximately 100% of the compensatory damages Plaintiffs reasonably

might have recpvered if they had prevailed at trial and also upon appeal." By comparison to

typical securities fraud class actions, which recover a small fraction of investors' fraud-related

losses, this is a terrific accomplishment. In 2015, the average settlement in securities fraud class

actions with positive recoveries returned a mere 1.6% of investors' estimated losses. Svetlana

Starykh and Stefan Boettrich, RECENT TRENDS IN SECURITIES CLASS ACTION LITIGATION: 2015

FULL-YEAR REVIEW, Fig. 30 (National Economics Research Associates, 2016), available at

http://www .nera.com/content/dam/nera/publications/20 16/2015 _Securities_Trends_ Report_ NER

A.pdf. On the usual view that a "[h]igher fees can result from superior services," In re Enron

Corp. Securities Litigation, 206 F.R.D. 427, 458 (S.D. Texas 2002), Class Counsel deserve an

above-average fee. Instead, they have requested one that is unusually small.

F. Class Counsel's Requested Hourly Rates are Reasonable

63. Table 1 shows the hourly rates for the lawyers and staff members who delivered

services for the benefit of the plaintiff class.

Table 1. Hourly Rates for CLASS COUNSEL Provider Rank Hourly Rate Keith Langston Partner $600 Erika Neill Associate $350 Robert Alderman Partner $630 Robert Cain Partner $630 Scott Skelton Partner $600 ToddKassaw Partner $600 Jeffrey Sternklar Partner $400 John Neininger Associate $400

26

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64. Both my general Huniliarity with the market for legal services and particular

examples lead me to conclude that the listed rates are comparable to those charged by other

lawyers with similar experience and qualifications. For example, Elizabeth Yingling, the Baker

& McKenzie lawyer who serves as lead counsel for LPI, charges $630/hour, nearly the same

amount that the partners who represent the plaintilT class propose to charge. Cain Declaration, 11

5. Nor are Ms. Yingling's rates exceptionally high.

65. In her own affidavit, Ms. Yingling reports being "familiar with the reasonable and

necessary hourly rates for the type of litigation involved in this matter." Yingling Affidavit, 11 7.

She then reports the following charges lor timekeepers at Baker & McKenzie in 2011, the year

litigation began.6 The sanctions motion to which her affidavit was attached asked the trial court

to use these rates when punishing Class Counsel for filing a meritless case.

TABLE 2. HOURLY RATES FOR BAKER & MCKENZIE Provider Rank in 2011 * HonrlyRate Elizabeth Yingling Partner $630 Kimberly F. Rich $580 Laura J. O'Rourke Associate $495 Willian1 R. Daugherty Associate $450 Mcghan E. George $320 Brynn D. Long $230 *Could not be deterrnmed for some tlmekeepers.

66. Over the past three decades, 1 have worked with dozens of lawyers and have

reviewed many fee applications. I recall few instances in which partner-level attorneys charged

less than $400 per hour and many in which they charged more. For example, one law firm that I

worked with on a prior matter served as counsel in the Flat Panel Antitrust Litigation, which

produced a billion-dollar settlement. The firm's charges, which were granted by the court, ran

6 Timekeepers• hourly rates varied from month to month. The table reports the highest rate for each person that was billed in 2011.

27

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from about $765 per hour for senior partners to $175 per hour for paralegals. Sec Amended

Order Granting Direct Purchaser Class Plaintiffi' Motion for Attorneys' Fees, Reimbursement

of Expenses, and Incentive Awards, In Re: TFT-LCD (Flat Panel) Antitrust Litigation, 2011 WL

7575003 (N.D. Cal. Dec. 27, 2011). Many courts have approved rates similar to those requested

by Class Counsel when awarding fees pursuant to fee-shifting statutes or from common funds.

67. I also gained perspective on Class Counsel's requested rates by consulting

surveys of law firms' billing rates taken by the National Law Journal (NLJ) in various years.

The surveys contain information regarding the high, low, average, and median billing rates for

partners and associates at large law firms that handle business matters and that typically have

offices in metropolitan areas. The number of firms participating in the NLJ surveys varies from

year to year but always exceeds 100. The NLJ surveys are often cited to courts as evidence

supporting hourly rates in fee applications. See, e.g., Parkinson v. Hyundai Motor Am., 796 F.

Supp. 2d 1160, 1172-73 (C.D. Cal. 2010) (admitting into evidence and relying upon expert

report by Professor William Rubenstein which was based in part on NLJ surveys).

68. Because the law firms included in the NLJ surveys are of the type that normally

represent defendants in lawsuits like this one, the rates they charge provide an especially helpful

basis on which to assess the reasonableness of plaintiffs' attorneys' requested rates. Class

members deserve representation of the same caliber that large corporate defendants receive.

Class Counsel provided just such high-quality services here. They grappled some of Texas' best

lawyers and won.

69. The 2010 NLJ survey reported that the range for "Partner Bill Rate High"-the

category that includes senior partners-ran from $1,120 to $385 and averaged $700. The rates

28

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Case 4:16-cv-00212-A Document 56-4 Filed 07/06/16 Page 24 of 42 PageID 2032

requested for the lawyers listed as "partners" in Table X fall slightly below this middle of this

range.

70. More recent NLJ surveys show that hourly rates have risen to the point where all

three partner's charges seem low. Today, top-flight lawyers often charge $1000 per hour or

more. The sub-title to a report on the National Law Journal's 2014 billing survey communicated

this point plainly: "$1,000 Per Hour Isn't Rare Anymore." Karen Sloan, NLJ Billing Survey:

$1,000 Per Hour Isn't Rare Anymore, THE NATIONAL LAW JOURNAL (January 13, 2014).

Reading the text of the article, one learns that "[n ]early 20 percent of the firms included in THE

NATIONAL LAW JOURNAL's annual survey oflarge law firm billing rates [in 2014] had at least one

partner charging more than $1,000 an hour." No partner-level lawyer involved in this case

requests an hourly rate anywhere close to that amount.

71. The 2014 NLJ survey, which contained information for 159 of the largest law

firms in the U.S., found a median rate (halfabove/halfbelow) for the highest partner billing rate

category of $775, a median low partner rate of $405. Again, by comparison to these rates, those

charged by the partners who serves as Class Counsel are obviously reasonable.

72. Turning from partners to associates, the only associate for whom compensation is

sought asked to be billed at the rate of $350 per hour. This too is in the middle of the range

reported in the 2014 NJL survey. The median high hourly rate for associates was $510 and the

median low rate was $235. The average associate rate was found to be $370.

73. Finally, turning brie11y irom hourly rates to time expended, I note that, although I

have not conducted a detailed audit of Class Counsel's time records, the hours invested in this

matter appear to have been reasonably necessary to secure a successful result for the class. I

reach this conclusion because of the challenges that were overcome, because the matter was

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leanly staffed (additional counsel was naturally needed when LPT filed for bankruptcy

protection), and because the lawyers had no incentive to rack up hours needlessly. As I have

explained in many reports and as federal judges have recognized in published opinions, when

working on contingency plaintifft' attorneys have incentives to expend too little time, not too

much. This is so for two reasons. First, the risk of nonpayment encourages plaintiffs' attorneys

to be frugal. When paid a guaranteed hourly rate, a lawyer can expect every hour to be profitable

and has an incentive. to overwork. When hired on contingency, the risk of non-payment

discourages a lawyer from expending time that confers no benefit on the client because the

lawyer gets paid only when and to the extent that the client recovers. Second, a lawyer working

on contingency earns only a fraction of the amount by which each additional hour expended

increases the client's recovery. Because the marginal return on effort is split between the client

and the lawyer according to the fee percentage, the lawyer has an incentive to stop working

prematurely. As the court observed in Parkinson v. Hyundai Motor Am., 796 F. Supp. 2d 1160,

1172-73 (C.D. Cal. 2010), '"lawyers are not likely to spend unnecessary time on contingency fee

cases in the hope of inflating their fees. The payoff is too uncertain, as to both the result and the

amount of fee"' (quoting Moreno v. City ofSacramento, 534 F.3d 1106, 1112 (9th Cir.2008)).

1 declare under penalty of perjury of the laws of the United States that the foregoing is true and correct.

DATED: 6/1/2016

CHARLES SILVER

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EXHIBIT A: RESUME OF PROFESSOR CHARLES SILVER

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CHARLES SILVER

School of Law University of Texas 727 East Dean Keeton Street Austin, Texas 78705 (512) 232-1337 (voice) [email protected] (preferred contact method) Papers on SSRN at: http://ssm.com/author=l64490

ACADEMIC EMPLOYMENTS

UNIVERSITY OF TEXAS SCHOOL OF LAW

Roy W. and Eugenia C. McDonald Endowed Chair in Civil Procedure 2004-present Co-Director, Center on Lawyers, Civil Justice, and the Media 2001-present Robert W. Calvert Faculty Fellow 2000-2004 Cecil D. Redford Professor 1994-2004 W. James Kronzer Chair in Trial & Appellate Advocacy Summer 1994 Graves, Dougherty, Hearon & Moody Centennial Faculty Fellow 1991-1992 Assistant Professor 1987-1991

HARVARD LAW SCHOOL

Visiting Professor Fall2011

VANDERBILT UNIVERSITY LAW SCHOOL

Visiting Professor 2003

UNIVERSITY OF MICHIGAN LAW SCHOOL

Visiting Professor 1994

UNIVERSITY OF CHICAGO

Managing Editor, Ethics: A Journal of Social, Political and 1983-1984 Legal Philosophy

EDUCATION

JD 1987, Yale Law School MA 1981, University of Chicago (Political Science) BA 1979, University of Florida (Political Science)

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SPECIAL PROJECTS

Associate Reporter, Principles of the Law of Aggregate Litigation, American Law Institute (2010) (with Samuel lssacharoff (Reporter), Robert Klonoff and Richard Nagareda (Associate Reporters)). Co-Reporter, Practical Guide for Insurance Defense Lawyers, International Association of Defense Counsel (2002) (with Ellen S. Pryor and Kent D. Syverud) (published on the IADC website in 2003 and revised and distributed to all!ADC members as a supplement to the Defense Counsel J. in January 2004).

BOOKS IN PROGRESS

Expensive By Design: Why American Health Care Costs Too Much And Delivers Too Little (coauthored with David A. Hyman)

To Sue is Human: Medical Malpractice Litigation in Texas 1988-2005 (coauthored with Bernard Black, David Hyman, and William Sage).

BOOKS

Health Law and Economics, Edward Elgar (coedited with Ronen Avraham and David Hyman).

Law of Class Actions and Other Aggregate Litigation, 2nd Edition, Foundation Press (2013) (with Richard Nagareda, Robert Bone, Elizabeth Burch and Patrick Woolley).

Professional Responsibilities of Insurance Defense Counsel, LexisNexis Mathew Bender (2012) (with William T. Barker) (Annual Updates 2013-2105).

PUBLICATIONS AND WORKS IN PROGRESS

I. "A Private Law Defense of the Fiduciary Duty" (in progress) (presented at several law schools and conferences), available at http://ssrn.com/abstract=2728326.

2. "The DOMA Sideshow" (in progress), available at http://ssrn.com/abstract=2584709.

3. "It Was on Fire When I Lay Down on It: Defensive Medicine, Tort Reform, and Healthcare Spending," in I. Glenn Cohen, Allison Hoffman, and William M. Sage, eds., OXFORD HANDBOOK OF AMERICAN HEALTH LAW (forthcoming 2016) (with David A. Hyman).*

4. "Compensating Persons Injured by Medical Malpractice and Other tortious behavior for Future Medical Expenses Under the Affordable Care Act," 25 Annals of Health Law 35 (2016) (with Maxwell J. Mehlman, Jay Angoff, Patrick A. Malone, and Peter H. Weinberger)

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5. Insurance Crisis or Liability Crisis? Medical Malpractice Claiming in lllinois, 1980- 2010," J. Empirical Legal Stud. (forthcoming 2016) (with BernardS. Black, David A. Hyman, and Mohammad H. Rahrnati).

6. "Is the Price Right? An Empirical Study of Fee-Setting in Securities Class Actions," 115 Columbia L. Rev. 1371 (2015) (with Lynn A. Baker and Michael A. Perino).

7. "The Treatment of Insurers' Defense-Related Responsibilities in the Principles of the Law of Liability Insurance: A Critique," Rutgers U. L. Rev. (forthcoming 2015) (with William T. Barker) (symposium issue).

8. "The Economics of Plaintiff-Side Personal Injury Practice," U. Ill. L. Rev. 1563 (2015) (with BernardS. Black and David A. Hyman).

9. "Fix Problems Where They Arise: The Liability System Is Not To Blame For The Problems of Healthcare," Oxford Handbook of American Health Law (Glenn 1. Cohen, Allison Hoffman, and William Sage, eds.) (forthcoming 2015) (with David A. Hyman) (invited chapter).

10. "Policy Limits, Payouts, and Blood Money: Another Look at Med Mal Settlements in the Shadow oflnsurance," U.C. Irvine L. Rev. (forthcoming 2015) (with BernardS. Black, David A. Hyman, and Mynngho Paik) (invited symposium).

11. "The Basic Economics of the Duty to Defend," in D. Schwarcz and P. Siegelman, eds., RESEARCH HANDBOOK IN THE LAW & ECONOMICS OF INSURANCE (forthcoming 2015) (peer­ reviewed).

12. "Does Tort Reform Affect Physician Supply? Evidence from Texas," Int'l Rev. of L. & Econ. (2015) (with David A. Hyman, Bernard S. Black and Myungho Paik) (peer­ reviewed), available at http://dx.doi.org/l 0.10 16/j.irle.2015.02.002.

13. "Insurer Rights to Limit Costs ofindcpcndcnt Counsel," ABA/TIPS Insurance Coverage Litigation Section Newsletter 1 (Aug. 2014) (with William T. Barker).

14. "Regulation of Fee Awards in the Fifth Circuit," 67 The Advocate (Texas) 36 (2014) (invited submission).

15. "What Can We Learn by Studying Lawyers' Involvement in Multidistrict Litigation? A Comment on Williams, Lee, and Borden, Repeat Players in Federal Multidistrict Litigation," 5 J. ofTort L. 181 (2014), DOI: 10.1515/jtl-2014-0010 (invited symposium).

16. "Double, Double, Toil and Trouble: Justice-Talk and the Future of Medical Malpractice Litigation," 63 DePaul L. Rev. 574 (2014) (with David A. Hyman) (invited symposium).

17. "Litigation Funding Versus Liability Insurance: What's the Difference?," 63 DePaul L. Rev. 617 (2014) (invited symposium).

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18. "Setting Attorneys' Fees In Securities Class Actions: An Empirical Assessment," 66 Vanderbilt L. Rev. 1677 (2013) (with Lynn A. Baker and Michael A. Perino).

19. "Five Myths of Medical Malpractice," 143:1 Chest 222-227 (January 2013) (with David A. Hyman) (peer-reviewed).

20. "How do the Elderly Fare in Medical Malpractice Litigation, Before and After Tort Reform? Evidence From Texas" (with Bernard Black, David A. Hyman, Myungho Paik, and William Sage), Amer. L. & Econ. Rev. (2012), doi: 10.1093/aler/ahs017 (peer­ reviewed).

21. "Ethical Obligations of Independent Defense Counsel," 22:4 Insurance Coverage (July­ August 2012) (with William T. Barker), available at http ://apps.americanbar .org/litigation/ committees/insurance/articles/julyaug20 12-ethieal­ obligations-defense-eounsel2.html.

22. "Healtb Care Quality, Patient Safety and the Culture of Medicine: 'Denial Ain't Just A River in Egypt,"' (coauthored with David A. Hyman), 46 New England L. Rev. 101 (2012) (invited symposium).

23. "Medical Malpractice and Compensation in Global Perspective: How Does tbe U.S. Do It?", in Ken Oliphant & Richard W. Wright (eds.) MEDICAL MALPRACTICE AND CoMPENSATION IN GLOBAL PERSPECTIVE (2013), originally published in 87 Chicago-Kent L. Rev. 163 (2012) (coauthored witb David A. Hyman).

24. "Justice Has (Almost) Nothing to Do With It: Medical Malpractice and Tort Reform," in Rosamond Rhodes, Margaret P. Battin, and Anita Silvers, eds., MEDICINE AND SOCIAL JUSTICE, Oxford University Press 531-542 (2012) (with David A. Hyman) (peer reviewed).

25. "Will Tort Reform Bend the Cost Curve? Evidence from Texas" (with Bernard Black, David A. Hyman, Myungho Paik), 9 J. Empirical Legal Stud. 173-216 (2012) (peer­ reviewed).

26. "The Responsibilities of Lead Lawyers and Judges in Multi-District Litigations," 79 Fordham L. Rev. 1985 (2011) (invited symposium).

27. "Fiduciaries and Fees," 79 Fordham L. Rev. 1833 (2011) (with Lynn A. Baker) (invited symposium).

28. "The Impact of the Duty to Settle on Settlement: Evidence From Texas," 8 J. Empirical Leg. Stud. 48-84 (2011) (witb Bernard Black and David A. Hyman) (peer reviewed).

29. "Ethics and Innovation," 79 George Washington L. Rev. 754 (2011) (invited symposium).

35 App. 227

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30. "O'Connell Early Settlement Offers: Toward Realistic Numbers and Two-Sided Offers," 7 J. Empirical Legal Stud. 379 (2010) (with Bernard Black and David A. Hyman) (peer reviewed).

31. "Access to Justice in a World without Lawyers: Evidence from Texas Bodily Injury Claims," 37 Fordham Urb. L. J. 357 (2010) (with David A. Hyman) (invited symposium).

32. "The Quasi-Class Action Method of Managing Multi-District Litigations: Problems and a Proposal," 63 Vanderbilt L. Rev. 107 (2010) (with Geoffrey P. Miller).

33. "The Effects of'Early Offers' on Settlement: Evidence From Texas Medical Malpractice Cases, 6 J. Empirical Legal Stud. 723 (2009) (with David A. Hyman and Bernard S. Black) (peer-reviewed).

34. "Estimating the Effect of Damage Caps in Medical Malpractice Cases: Evidence from Texas," 1 J. Legal Analysis 355 (2009) (with David A. Hyman, Bernard S. Black, and William M. Sage) (inaugural issue) (peer-reviewed).

35. "The Impact of the 2003 Texas Medical Malpractice Damages Cap on Physician Supply and Insurer Payouts: Separating Facts from Rhetoric," 44 The Advocate 25 (2008) (with David A. Hyman and Bernard Black) (invited symposium).

36. "Defense Costs and Insurer Reserves in Medical Malpractice and Other Personal Injury Cases: Evidence from Texas, 1988-2004," 10 Amer. Law & Econ. Rev. 185 (2008) (with Bernard Black, David A. Hyman, and William M. Sage) (peer-reviewed).

37. "Inccntivizing Institutional Investors to Serve as Lead Plaintiffs in Securities Fraud Class Actions," 57 DePaul L. Rev. 471 (2008) (with Sam Dinkin) (invited symposium), reprinted in L. Padmavathi, ed., SECURITIES FRAUD: REGULATORY DIMENSIONS (2009).

38. "Malpractice Payouts and Malpractice Insurance: Evidence Jrom Texas Closed Claims, 1990-2003," 33 Geneva Papers on Risk and Insurance: Issues and Practice 177-192 (2008) (with David A. Hyman, Bernard S. Black, William M. Sage and Kathryn Zeiler) (peer-reviewed).

39. "Physicians' Insurance Limits and Malpractice Payments: Evidence from Texas Closed Claims 1990-2003," 36 J. Legal Stud. S9 (2007) (with Bernard Black, David A. Hyman, William Sage, and Kathryn Zeiler) (peer-reviewed).

40. "Do Defendants Pay What Juries Award? Post-Verdict Haircuts in Texas Medical Malpractice Cases, 1988-2003," J. Empirical Legal Stud. 3-68 (2007) (with Bernard Black, David A. Hyman, William M. Sage, and Kathryn Zeiler) (peer-reviewed).

41. Reasonable Attorneys' Fees in Securities Class Actions: A Reply to Mr. Schneider, 20 The NAPPA Report 7 (Aug. 2006).

42. "The Allocation Problem in Multiple-Claimant Representations," 14 S. Ct. Econ. Rev. 95 (2006) (with Paul Edelman and Richard Nagareda) (peer-reviewed).

36 App. 228

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43. "Dissent from Recommendation to Set Fees Ex Post," 25 Rev. of Litig. 497 (2006) (accompanied Task Force on Contingent Fees, Tort Trial and Insurance Practice Section of the American Bar Association, "Report on Contingent Fees in Class Action Litigation," 25 Rev. ofLitig. 459 (2006)).

44. "In Texas, Life is Cheap," 59 Vanderbilt L. Rev. 1875 (2006) (with Frank Cross) (invited symposium).

45. "Medical Malpractice Litigation and Tort Reform: It's the Incentives, Stupid," 59 Vanderbilt L. Re,. 1085 (2006) (with David A. Hyman) (invited symposium).

46. "A Rejoinder to Lester Brickman: On the Theory Class's Theories of Asbestos Litigation," 32 Pepperdine L. Rev. 765 (2005).

47. "Medical Malpractice Reform Redux: Deja Vu All Over Again?" XII Widener L. J. 121 (2005) (with David A. Hyman) (invited symposium).

48. "Stability, Not Crisis: Medical Malpractice Claim Outcomes in Texas, 1988-2002," 2 I Empirical Legal Stud. 207-259 (July 2005) (with Bernard Black, David A. Hyman, and WilliamS. Sage) (peer-reviewed).

49. "Speak Not of Error, Regulation (Spring 2005) (with David A. Hyman).

50. "The Poor State of Health Care Quality in the U.S.: Is Malpractice Liability Part of the Problem or Part of the Solution?," 90 Cornell L. Rev. 893 (2005) (with David A. Hyman).

51. "Merging Roles: Mass Tort Lawyers as Agents and Trustees," 31 Pepp. L. Rev. 301 (2004) (invited symposium).

52. "Believing Six Improbable Things: Medical Malpractice and 'Legal Fear,"' 28 Harv. J. L. and Pub. Pol. 107 (2004) (with David A. Hyman) (invited symposium).

53. "We're Scared To Death: Class Certification and Blaclanail," 78 N.Y.U. L. Rev. 1357 (2003).

54. "When Should Government Regulate Lawyer-Client Relationships? The Campaign to Prevent Insurers from Managing Defense Costs," 44 Ariz. L. Rev. 787 (2002) (invited symposium).

55. "Introduction: Civil Justice Fact and Fiction," 80 Tex. L. Rev. 1537 (2002) (with Lynn A. Baker).

56. "Does Civil Justice Cost Too Much?" 80 Tex. L. Rev. 2073 (2002).

57. "Defense Lawyers' Professional Responsibilities: Part II-Contested Coverage Cases," 15 G'town J. Legal Ethics 29 (2001) (with EllenS. Pryor).

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58. "A Critique of Burrow v. Arce," 26 Wm. & Mary Envir. L. & Policy Rev. 323 (2001) (invited symposium).

59. "You Get What You Pay For: Result-Based Compensation for Health Care," 58 Wash. & Lee L. Rev. 1427 (2001) (with David A. Hyman).

60. "The Case for Result-Based Compensation in Health Care," 29 J. L. Med. & Ethics 170 (2001) (with David A. Hyman).

61. "Defense Lawyers' Professional Responsibilities: Part !--Excess Exposure Cases," 78 Tex. L. Rev. 599 (2000) (with EllenS. Pryor).

62. "What's Not To Like About Being A Lawyer?," 109 Yale L. J. 1443 (2000) (with Frank B. Cross) (review essay).

63. "Due Process and the Lodestar Method: You Can't Get There From Here," 74 Tul. L. Rev. 1809 (2000) (invited symposium).

64. "The Aggregate Settlement Rule and Ideals of Client Service," 41 S. Tex. L. Rev. 227 (1999) (with Lynn A. Baker) (invited symposium).

65. "Representative Lawsuits & Class Actions," in Int'l Ency. OfL. & Econ., B. Bouckaert & G. De Geest, eds., (1999) (peer-reviewed).

66. "Preliminary Thoughts on the Economics of Witness Preparation," 30 Tex. Tech L. Rev. 1383 (1999) (invited symposium).

67. "The Lost World: Of Politics and Getting the Law Right," 26 Hofstra L. Rev. 773 (1998) (invited symposium).

68. "Flat Fees and Staff Attorneys: Unnecessary Casualties in the Battle over the Law Governing Insurance Defense Lawyers," 4 Conn. Ins. L. J. 205 (1998) (invited symposium).

69. "I Cut, You Choose: The Role of Plaintiffs' Counsel in Allocating Settlement Proceeds," 84 Va. L. Rev. 1465 (1998) (with Lynn A. Baker) (invited symposium).

70. "And Such Small Portions: Limited Performance Agreements and the Cost­ Quality/Access Trade-Oft;" 11 G'town J. Legal Ethics 959 (1998) (with David A. Hyman) (invited symposium).

71. "Mass Lawsuits and the Aggregate Settlement Rule," 32 Wake Forest L. Rev. 733 (1997) (with Lynn A. Baker) (invited symposium).

72. "Professional Liability Insurance as Insurance and as Lawyer Regulation: A Comment on Davis, Institutional Choices in the Regulation of Lawyers," 65 Fordham L. Rev. 233 (1996) (invited symposium).

38 App. 230

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73. "All Clients are Equal, But Some arc More Equal than Others: A Reply to Morgan and Wolfram," 6-3 Coverage 47 (May/June 1996) (with Michael Sean Quinn).

74. "Are Liability Carriers Second-Class Clients? No, But They May Be Soon-A Call to Arms against the Restatement of the Law Governing Lawyers," 6-2 Coverage 21 (Jan./Feb. 1996) (with Michael Sean Quinn).

75. "Bargaining Impediments and Settlement Behavior," in Dispute Resolution: Bridging the Selllement Gap, D.A. Anderson, ed. (1996) (with Samuel Issacharoff and Kent D. Syvemd).

76. "The Legal Establishment Meets the Republican Revolution," 37 S. Tex. L. Rev. 1247 (1996) (invited symposium).

77. "Do We Know Enough About Legal Norms?" in Social Rules: Origin; Character; Logic: Change, D. Braybrooke, ed. (1996).

78. "The Professional Responsibilities of Insurance Defense Lawyers," 45 Duke L. J. 255 (1995) (with Kent D. Syverud), reprinted in Ins. L. Anthol. (1996) and 64 Def. L. J. 1 (Spring 1997).

79. "Wrong Turns on the Three Way Street: Dispelling Nonsense About Insurance Defense Lawyers," 5-6 Coverage 1 (Nov./Dec.1995) (with Michael Sean Quinn).

80. "Introduction to the Symposium on Bad Faith in the Law of Contract and Insurance," 72 Tex. L. Rev. 1203 (1994) (with Ellen Smith Pryor).

81. "Does Insurance Defense Counsel Represent the Company or the Insured?" 72 Tex. L. Rev. 1583 (1994), reprinted in Practising Law Institute, Insurance Law: What Every Lawver and Businessperson Needs To Know, Litigation and Administrative Practice Course Handbook Series, PLI Order No. HO-OOOS (1998).

82. "Your Role in a Law Firm: Responsibilities of Senior, Junior, and Supervisory Attorneys," in F.W. Newton, ed., A Guide to the Basics of Law Practice (3d) (Texas Center for Legal Ethics and Professionalism 1996).

83. "Getting and Keeping Clients," in F.W. Newton, ed., A Guide to the Basics of Law Practice (3d) (Texas Center for Legal Ethics and Professionalism 1996) (with James M. McCormack and MitchelL. Winick).

84. "Integrating Theory and Practice into the Professional Responsibility Curriculum at the University of Texas," 58 Law and Contemporary Problems 213 (1995) (with John S. Dzienkowski, Sanford Levinson, and Amon Burton).

85. "Advertising and Marketing Legal Services," in F.W. Newton, ed., A Guide to the Basics of Law Practice (Texas Center for Legal Ethics and Professionalism 1994).

39 App.231

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86. "Responsibilities of Senior and Junior Attorneys," in F.W. Newton, ed., A Guide to the Basics of Law Practice (Texas Center for Legal Ethics and Professionalism 1994).

87. "Thoughts on Procedural Issues in Insurance Litigation," VII Ins. L. Anthol. (1994).

88. "A Model Retainer Agreement for Legal Services Programs: Mandatory Attorney's Fees Provisions," 28 Clearinghouse Rev. 114 (June 1994) (with Stephen Yelenosky).

89. "Incoherence and Irrationality in the Law of Attorneys' Fees," 12 Tex. Rev. of Litig. 301 (1993).

90. "A Missed Misalignment of Interests: A Comment on Syverud, The Duty to Settle," 77 Va. L. Rev. 1585 (1991), reprinted in VI Ins. L. Anthol. 857-870 (1992).

91. "Unloading the Lodestar: Toward a New Fee Award Procedure," 70 Tex. L. Rev. 865 (1992).

92. "Comparing Class Actions and Consolidations," 10 Tex. Rev. ofLitig. 496 (1991).

93. "A Restitutionary Theory of Attorneys' Fees in Class Actions," 76 Cornell L. Rev. 656 (1991).

94. "Elmer's Case: A Legal Positivist Replies to Dworkin," 6 L. & Phil. 381 (1987) (peer­ reviewed).

95. "Justice In Settlements," 4 Soc. Phil. & Pol. 102 (1986) (with Jules L. Coleman) (peer­ reviewed).

96. "Negative Positivism and the Hard Facts of Life," 68 The Monist 347 (1985) (peer­ reviewed).

97. "Utilitarian Participation," 23 Soc. Sci. Info. 701 (1984) (peer-reviewed).

98. "Public Opinion and the Federal Judiciary: Crime, Punishment, and Demographic Constraints," 3 Pop. Res. & Pol. Rev. 255 (1984) (with Robert Y. Shapiro) (peer­ reviewed).

NOTABLE SERVICE ACTIVITIES

Associate Reporter, American Law Institute Project on the Principles of Aggregate Litigation

Interested Party, Statistical Information Task Force, National Association ofTnsurance Commissioners, Model Medical Malpractice Closed Claim Reporting Law

Invited Academic Member, American Bar Association/Tort & Insurance Practice Section Task Force on the Contingent Fee

Chair, Dean Search Committee, School of Law, University of Texas at Austin

40 App. 232

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Chair, Budget Committee, School of Law, University of Texas at Austin

Coordinator, General Faculty Colloquium Series, School of Law, University of Texas at Austin

Sole Drafter, Assessment Report for the Juris Doctor Program at the School of Law, University of Texas at Austin, for the Commission on Colleges of the Southern Association of Colleges and Schools

RECENT AWARDS

Distinguished Fellow, Searle Center on Law, Regulation, and Economic Growth, Northwestern University School of Law (2014)

Robert B. McKay Law Professor Award, Tort Trial & Insurance Practice Section, American Bar Association (2009)

Faculty Research Grants, University of Texas at Austin (various years)

MEMBERSHIPS

American Bar Foundation

Texas Bar Foundation (Life Fellow)

State Bar of Texas (admitted 1988)

Tort Trial and Insurance Practice Section, American Bar Association

Society for Empirical Legal Studies

American Law and Economics Association

American Association for Justice

Association of American Law Schools

41 App. 233

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EXHIBIT B: CLASS ACTIONS WITH RECOVERIES OF $100 MILLION OR MORE AND FEE AWARDS OF AT LEAST 20 PERCENT

42 App. 234

Case 4:16-cv-00212-A Document 56-4 Filed 07/06/16 Page 38 of 42 PageID 2046

Mega-Fund Class Actions with Fee Awards of20% or More

RecoYery Case Fee Award (minions)

Allapaltah Services, Inc v. Exxv11 Corp., 454 F. Supp. 2d 1185 I $1,060 31.33% (S.D. Fl<1. 2006) In re II T & T Mobility Wireless Data Sen•ices Soles Tax Utig .. 2 $956 20.00% 792 F. Supp. 2d 1028 (N.D. Ill. 2011)

In re Brand Name Prt'saiprion Drugs Allfitrust Utig. , No. 94 3 $697 25.00% C 897. 2000 WL 204112 (N.D. Ill. Feb. I 0, 2000)

In re Fmctose Anthrust LiNg., MDL No. 1087. Master File No. 4 $531 25.00% 94-1577 (C. I). Ill. Oct. 4, 2004) In re Initial Pub. Offering Sec. Litig .. 671 F.Supp.2d 467 5 $510 33.30% (S.D.N.Y. 2009) Spartwdmrg Regional Health Services Dist., Inc., et a!. "· 6 Hillenbrand Industries. Inc. et a/., No. 7:03-2141-HFF (D. $468 25.001}(1 S.C. Aug. 15, 2006) In re Adelphia Comnums. Coi]J. St?C. ami Derivari1•e Utig., No. 7 03 MDL 1529(LMM), 2006 WL 3378705 (S.D.N.Y. Nov. 16, $455 21.40% 2006)

In re Air Cargo Shipping Servs. Antitrust Litig. ("Air Cargo 1 "), No. 06-MD-1775, 2009 WL 3077396 (E.D.N.Y. Sept. 25. 2009) (S85 million); In re Air Curgo Shipping Senices Antitrust Litig. (Air Cargo Jl), No. 06-MD-1775, MDL 1775, 8 $422.2 25.00% 2011 WL 2909162 (E.D.N.Y. July 15, 2011) ($153.8 million): & In re Air Curgo Shipping Sen,ices Antitrust Litig. (Air Cargo Ill), No. 06-MD-1775, MDL 1775,2012 WL 3138596 (E.D.N.Y. Aug. 2, 2012) ($183.4 million)

San Allen, Inc. 1'. Buehrer, Admin.., Ohio Bureau of Workers' 9 Compensation, CV~0?-644950 (Common Pleas, Cuyahoga Cty, $420.0 32.70% OH Nov. 25. 2014) Re (Bank of America) Checking Account Overdraft 10 $410 30.00% Litigation,'" 830 F.Supp.2d 1330 (S.D. Fla. 2011) In re Freddie Mac Sec. Litig., No. 03-CV-4261 (.IES), II $410 20.00% (S.D.N.Y. Oct. 27, 2006) In re Vitamins Antitrust Litig.' No. 99-197, 2001 WL 12 $365 34.60% 34312839 (D.D.C. July 16, 2001) In Re Dynamic Random Access Memory (DRAM) Antitrust 13 Litigation, No. M:02-cv-01486-PJH. MDL-02-1486 (N.D. $326 25.00% Cal. Nov. I, 2006) In re Neuromin Marketing and Sales Practices Litig ., Civil 14 $325 28.00% Action No. 04-10981-PBS (Nov. 10, 2014)

In re Rite Aid Corp. Sec. Litig. (Rite Aid I), 146 F.Supp.2d 706 15 (E.D.Pa.2001 )($193 million) & In re Rite Aid Co1p. Sec. Litig. $319 25.00% (!We Aid /1). 362 F.Supp.2d 587 (E.D.Pa.2005) ($126 million) ·- App.235

Case 4:16-cv-00212-A Document 56-4 Filed 07/06/16 Page 39 of 42 PageID 2047

Recovery Case Fee Award (millions)

In re Tricor Indirect Purchaser Antitrust Litigation. C.A. No. 05-360, Order and Final Judgment Approving Settlement (Oct. 16 $316 33.33% 28, 2009); In re Trh·or Direct Purchaser Antitrust Litigution, C.A. No. 05<~40. Order and Final Judgment. 4/2.3/2009

Cooper 1'. IBM Personal Pension Pion, 1005 \VL 1981501 17 $314 2~.30% S.D. 111. 2005J' In re Williams Sec. Litig., No. 02-cv-072-SPF-FHM (N.D. 18 $311 25.00% Okla. Feb. 12. 2007) De Lauch V. Phillip Morris Cos., No. I :OOCVO 1235, 2004 WL 19 $310 27.00% 5508762 (M.D.N.C. Mar. 31,2005 In re Oxford Health Plans, Inc. Sec. Litig., MDL 1222 20 $300 28.00% (S.D.N.Y. June 2003) In re DaimlerChrysler AG Sec. Litig ., No. 00-0993 (KAJ) (D. 21 $300 22.50% Del. Feb. 5. 2004) In re U.S. Foodscrl'ice_, Inc. Pricing Litig., No. 3:07-md-1894 22 $297 36.00% (AWT) (D. Ct. Dec. 9, 2014) Sullivan v. DB Investments, Inc., 04-CV-2819 (SRC) (May 22, 23 $292 25.00% 2008) (DeBeers antitrust litigation) In re Enron C01p. Sec. and ERISA Litig., MDL 1446, Case 24 $264 20.00% 4:01-cv-03913 (S.D. Tex. July 24, 2006) In m Am. Continental Coq,./l.im:oln Sm•. &. l.oan S'ec. !.itig., 25 $250 26.60% MDI. No. RJ4 (0. Ariz. July 24, 1990)2 ln re Tricor Direct Pnrchuser Litig., D. Del. 05-340-SLR, Doc. 26 $250 33.33% No. 543 In re Comverse Technology. Inc. Stxurities Litig.. 2010 WL 27 $225 25.00% 2653354, 6 (E.D.N.Y., 2010) In re Buspirone Amitrust Litig., No. 01-MD-1410 (S.D.N.Y. 28 $220 33.30% Apr. 11. 2003)3

In re Thirteen Appeals Arising Out (4 San Juan Dupont Plaza 29 $220 30.00% Hotel Fire Litig. , 56 F.3d 295 (l st Cir. 1995)

In re Waste Mgmr .. Inc. Sec. Litig .. No. 97-7709, 21 Class 30 $220 20.80% Action Rep. 263 (N.D. Ill. filed Sept. 17, 1999) In re Washingt011 Mutual, Inc. Sec. Litg . . No. 2:08~md~O 1919 31 $208.5 21.00% MJP (W.O. Wash. Nov. 4, 2011) In re Linerboard Amitrust Litig., 2004 ''VL 1221350 (E.D. Pa. 32 $203 30.00% 2004)

Si!l'erman \'. Motorola, Inc., No. 07 c 4507, 2012 WL 33 $200 27.50% 1597388 (N.D.IIL May 7. 2012)

Weathe1jOrd Roofing Co., er a/. V, Employers National Ins. 34 $190 31.60% Co. , No. 91-05637 (I 16th Dist. Ct, Dallas, TX) (Dec. l, 1995)

In re Lease Oil AnfilrU.\'1 Lilig., 186 P.R. D. 403 <1.:1011 -,.:; ()(10;.:, " App, 236

Case 4:16-cv-00212-A Document 56-4 Filed 07/06/16 Page 40 of 42 PageID 2048

Recovery Case Fee Award (millions)

In re Neuromi11 Antitrust Litigation, D.N.J. 2:02-cv-01830, 36 $!90 33.33% Doc. No. 114 111 re Home-Stake Prod. Co. Sec. Litig.. MDL No. !53 37 $!85 30.00% (N.D.Okla. Jan. 2, 1990) !11 re Mern*Go-Rowul Enterprises, Inc .. 244 B.R. 327 (Bankr. 38 $!85 40.00% D. Md. 2000)5 !11 re Re!t~{en Antitmst Litig .. No. 01-12239. 2004 U.S. Dist. 39 $!75 33.30'k LEXIS 2880! (D. Mass. Apr. 9, 20041 Alaska Elec. Pension Fund v. Pharmada Corp., No. 03-1519 40 $164 27.50% (D.N.J. Jan. 30. 20!3) Stmulard Iron Works v. Arcelormittal eta/., No. 08-C-5214 41 $164 33.33% (N.D. Ill., Oct. 22, 2014) 111 re Titanimn Dio:ride Antitrust Litig., I 0-CV -003!8 (D. 42 $164 33.33% Maryland, Dec. 13, 2013) In re: (Chase Rank) Checking Acc~ount Overdraft /Jtig., No. 43 $162 30.00% 1:09-MD-02036 (S.D. Fla. Dec .. 19, 2012) In re Dollar Gen C01p. Sec. Litig., No. 01-388 Order (M.D. 44 $162 21.60% Tenn. May 24, 2002) MBA Surety Agency. Inc. "· AT&T Mobility LLC, No.I222- 45 $152.6 25.00% CC09746 (Mo. Cir. Ct. Mar. 7, 2013) In re: Managed Care Litig .• No. 00-MD-1334, MDLI334, 46 $150 29.00% 2003 WL 22850070 (S.D. Flu. Oct. 24. 2003

Schwurtz v. TXU Coq> .. No. 3:02-CV-224?>-K. 2005 WL 47 $!50 22.20% 3148350 (N.D.Tex. Nov.5, 2005)

In re Flonase Antitmst Litig. . 95 I F. Supp. 2d 739 (E.D. Pu. 48 $!50 33.33% 2013) 111 re Apollo Group Inc. Securities Litigation , 2012 WL 49 $145 33.00% 1378677, at *9 (D.Ariz .. April20. 2012) In re Coordinated Pretrial Proceedings In Petroleum Prods. 50 Antitrust Litig .. No. MDL !50, 1994 WL 675265 (C.D. Cal. $140 21.00% Aug. II, 1994) Cwpeniers Health v. Coco~Cola Co., 587 F.Supp.2d 1266 51 $138 2l.009'o (N.S. Ga. 2008) In re: (Citizens Bank) Checking Accoullf Overdraft Litig ., No. 52 $137.5 30.00% 1:09-MD-02036 (S.D. Fla. Mar. 12, 2013) In re Computers ttssocs. Class Action Sec. Litig., CV H98-4839 53 $136 25.00% TCPl IF.D. NY 2003\6 In re b{formix Coq1. Sec. Litig., Master File No. C-97-!289- 54 $132 30.00% CRB (N.D.Cul. Nov. 2. 1999)

55 In re Combustion. luc.. 968 F.Supp. 1116 (W.D.La.I997) $127 36.00%

111 re Infant Formula Antitrut ., MDL No. 878. (N.D. Fla. Sept. 56 $125 25.00% 7. !993) ~ . ~· ...... ~ ~ """' .... App. 237

Case 4:16-cv-00212-A Document 56-4 Filed 07/06/16 Page 41 of 42 PageID 2049

Recovery Case Fee Award (millions)

Kun:,tveil 1'. Philip Morris Co., Im:., Nos. 94 Civ. 58 2373(MBM). 94 Civ. 2546(BMB). 1999 WL 1076105 $123 30.00% (S.D.N.Y. Nov. 30. 1999) In re Deulsche Telekom AG Sec. Litig ., No. 00-CV-9475-NRB 59 $120 28.00% (S.D.N.Y.2005)

Hershey. eta/. 1'. Puc. lin·. Mgmt. Co. LLC. No. I :05-cv~0468l 60 $120 20.00% (N.D. Ill. May 2, 201 I )7 In re: Bank One Sec. Litig. First Chicago S'lwlder Claims. No. 61 $120 22.50% 00-CV-0767 (N.D. Ill. Aug. 26, 2005) Chieftain Royalty Co. v. QEP Energy Co . . Case No. CIV -11- 62 $119 39.00% 212-R (W.D. Okla. May 31, 2013) in re Sumitomo Copper Litig., 74 F.Supp.2d 393 63 $116 27.50% (S.D.N.Y.I999) In re OSR Antitrust Litig., Master File No. 06-826 (March 4, 64 $111 33.30% 2009) In re Ikon O.ffice Solutions. Inc. Sec. Litig .. 194 F.R.D. 166 65 $111 30.00% (E.D.Pa.2000)

Klein F. O'Neul, Inc., 705 F.Supp.2d 632 (N.D. Tex. Apr. 9, 66 SilO 30.00% 2010) In re Curdiwn CD Antitrust Litig., No. 99-MD-1278, at 18-20 67 $110 30.00% (E.D.Mich. Nov. 26, 2002) In re Prudential Sec. Inc. Ltd. P'ships Litig .. 912 F.Supp. 97 68 $110 27.00% (S.D.N.Y.l996)

69 In re Sunbeum Sec. Litig .. 176 F.Supp.2d 1323 (S.D.F1a.2001) $110 25.00%

In re DPL Inc. Sec. Litig .• 307 F.Supp.2d 947 (S.D. Ohio 70 $110 20.00% 2004) In re Methionine Antitrust Litig .. No. C 99-3491, MDL No. 00- 71 $107 23.30% 1311 (N.D. Cal. Oct. 3, 2002)

In re Automoth·e Re.finishing Pldnt Antitmst Litigation. MDL 72 SI06 32.70% No. 1426 (E.D. Pa. Jan. 3, 2008)

City r~f Greenville v. Syngenla Crop Protection, No. 3: I 0-cv- 73 $105 33.33% 00188 (S.D. Ill. Oct. 23, 2012) Haynes •·· Shoney's, No. 89-30093-RV, 1993 WL 19915 (N.D. 74 $105 21.20% Fla. Jun. 25, 1993) 8

In re Prison Realty St?c. Utig., Civil Action No. 3:99-0458. 75 $104 30.00% 2001 U.S. Dist. LEXIS 21942 (M.D. Tenn. Feb. 9. 2001)

46 App.238

Case 4:16-cv-00212-A Document 56-4 Filed 07/06/16 Page 42 of 42 PageID 2050

Recovery Case Fee Award (millions)

76 Ingram v. Coca-Co/a, Co17>. , 200 F.R.D. 685 (N.D. Ga. 200 I) 9 $104 20.00%

In Re: Chase Bank USA. N.A. "Check Loan" Contract 77 $100 25.00% Litigation, 3:09-md-02032-MMC (D. N.J. 2012)

Baird 1'. Thomson Consumer Elecs. , No. 00-761 (ill. Cir. 78 $100 22.00% Court. Madison Co. June 15,2001)

79 In reAT&TC01p. Sec. Lilig .. 455 F. 3d !GO (3d Cir. 2006) SJOO 2!.25%

Stop N Shop Supermarket Company, et. a/. v. SmithK!ine 80 $100 20.00% Beedwm Corp .. Civil Action No. 03-CV-4578 (E. D. Pa. 2005)

1 The Court awarded a graduated amount ranging from 17-29% of the recovery. After an appeal reversed a portion of the award, this table reflects the actual settlement and tee realized.

2 The Comt awarded an increasing graduated amount (25% of the first $150 million and 29% of any larger amount). This table reflects the values realized.

3 The global settlement exceeded $500 million, of which $220 million was reserved for the Direct Purchaser Class. The u·ial court approved a fee equal to 33 J/3% of the Direct Purchaser fund.

4 The Court awarded 25% in five settlements and a 15% fee award in two others. This table lists $190 million, the total recovery from aH settlements. 5 While technically not a class action, this case is equivalent to a class-action in which the fee was negotiated ex ante. 6 The settlement fund was paid in shares of stock. Class counsel received a percentage of the stock as fees. 7 The attorneys' fee award was not part of the final judgment. The settlement notice stated that class counsel would request 20% of the recovery as fees and the final judgment approving the

8 This amount reflects only the cash relief. Additional non-cash relief was valued at $30 million.

9 The fund amount excludes $10 million in a "Promotional Achievement Fund'' and $43.5 million in ''future pay equity adjustments."

47 App.239