How much of the $4 billion Lahaina fire settlement should go to attorneys?
That question went before the Hawai‘i Supreme Court Tuesday, as some attorneys who were involved in the years-long Maui fires settlement took issue with how the settlement funds were disbursed.
In June, Maui Judge Peter Cahill declared that the attorneys who worked on the case could only claim up to 8% of the settlement funds, despite state law allowing for attorneys to receive up to 25%.
Cahill’s ruling also established a $222 million fund from the $4 billion award to create a common benefit fund, which Hawai‘i-based lawyers could apply for a share of, commensurate with the amount of work they did on the case. Out-of-state attorneys do not qualify for that fund.
Attorneys from the Hawai‘i law firms Ranken & Shnider, the PACLAW Group and the San Diego-based Montegna & Thickstun appealed Cahill’s ruling, arguing that the judge didn’t have the authority to make that decision, and that disbursing the funds in such a way will be detrimental to the state.
Samuel Shnider told the Supreme Court Tuesday that Cahill’s fee order “jeopardizes access to justice for the people of Hawai‘i in the next disaster,” as he believes attorney’s will be less likely to accept similar cases if a judge can change their fees despite the terms of a settlement agreement.
Shnider argued that even if a judge had the authority to create a common benefit fund — they don’t, he claimed — nobody in the case requested that the funds be disbursed in this way. He added that Cahill’s order “takes away [victims’] right to have that conversation first of all with their attorneys.”
However, as Associate Justice Sabrina McKenna noted, Cahill’s order also would reduce Shnider’s attorney’s fees below what he initially believed he would receive under the contract.
“Are your clients complaining about the fact that they cannot pay any more in attorney’s fees?” McKenna asked.
But Shnider said invalidating Cahill’s order would require attorneys to “follow the principles of reasonableness” and negotiate reasonable fees with their clients. He added that he believes that “market forces and the existing Hawai‘i law” are sufficient to ensure victims are not overburdened by attorney’s fees.
Meanwhile, attorneys for the state argued otherwise. Attorney Cynthia Wong claimed Cahill’s attorney fee order is no different than any other legal exercise of power he made during the case.
Wong added that there are 21,750 victims in the case, who have made claims totaling $12 billion to $15 billion. When the case began, she said, Mainland attorneys “descended upon Maui,” leading to the creation of a case management policy that appointed some attorneys as Liaison Counsel, attorneys who spoke for the whole during the case.
It is those Liaison Counsel attorneys who stand to gain the most from Cahill’s fee order, Shnider argued, reducing other victims’ shares in the process.
On the other hand, state’s attorney Lance Collins said the idea that the attorneys who did the most of the work for the common benefit would not be entitled to request compensation for that work is “an absurd conclusion”.
A decision by the Supreme Court in the case remains pending.
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