The National Credit Union Administration paid two law firms more than $1 billion in fees and expenses to help recover more than $4 billion from banks in cases related to faulty subprime mortgages.
The U.S. agency sued the banks to recover money for failed corporate credit unions that lost money holding residential mortgage-backed securities, the Am Law Daily reports.
Kellogg Huber Hansen Todd Evans & Figel was paid $506.3 million, and Korein Tillery was paid nearly $504.8 million. The contingency agreement by the law firms gave them 25 percent of net recoveries.
NCUA board chairman Rick Metsger defended the contingency arrangement in a statement, according to the Am Law Daily. “Without this fee arrangement, which shifted most of the risk of these legal actions to outside counsel, there would have been no legal investigation of potential claims, no litigation and no legal recoveries,” he said.