A Win For Survivors: Judge Caps Maui Fire Legal Fees At $222M

A Maui judge has significantly reined in legal fees related to the $4.03 billion Maui wildfire settlement, awarding victims’ lawyers a fraction of the $1 billion they had sought.

In an order issued late Friday, Hawaiʻi Circuit Judge Peter Cahill said the lawyers would get $222 million to divide among themselves, with larger amounts going to lawyers who did the bulk of the work. The order is an enormous victory for fire victims who will be able to retain the bulk of the settlement money rather than see a large share go to their attorneys.

Jesse Creed, one of the lead lawyers in the sprawling litigation, said he respected the judge’s order.

“I feel like Judge Cahill has been guided by fairness to the community from the outset of the litigation,” Creed said. “I see this as a matter of sacrifice for the community.”

The August 2023 wildfire killed 102 residents and destroyed much of Lahaina. Investigations ultimately determined that the fire was sparked by a fallen Hawaiian Electric Co. power line that ignited dry grass, setting off a massive blaze that spread through Lahaina. That resulted in thousands of legal claims, primarily against HECO but also against landowners accused of inadvertently enabling the fire’s spread by letting invasive grasses, a known fire hazard, grow out of control.

Lawyers in mass disaster lawsuits typically work for contingency fees of around 25% of the amount they recover for clients. One of the issues Cahill struggled with was how to fairly reward the lawyers who did the bulk of the work, including working out the settlement in mediation in August 2024, without rewarding hangers-on who merely signed up clients after the settlement was reached.

Discussions over the legal fees played out against the backdrop of the grim reality that many wildfire victims would not be made whole by the settlement.

Cahill’s order reduces legal fees for those who signed up after the settlement to 3%. Those who signed up clients before the settlement was reached can receive 8.33%. And lawyers who represented clients whose cases had been set for trial before the settlement could receive 10%.

In his order, Cahill recognized the work that many of the lawyers had done in the case, including negotiating the settlement in an astoundingly short time for a complex disaster, only to be followed by battles over how to allocate the funds fairly.

“The global settlement vessel launched itself on a meander that emptied into a swamp of Stygian proportions,” Cahill wrote, alluding to the mythical River Styx, one of several classical allusions in his 11-page order. “Subrogation liens, class actions, tens of thousands of claims and claimants, and lawyers, all vied for their share.”

Along with Maui lawyers Jan Apo, Cynthia Wong and Jake Lowenthal, Creed was one of several liaison counsel who led the litigation. While he said he and others did an enormous amount of work on the case, Creed said he understood the sentiment guiding Cahill’s order.

“Yes, we did a lot of work,” Creed said. “But I feel Judge Cahill is putting the community first, and we have to respect the decision he’s making.”

Cahill’s order effectively imposes on the lawyers sacrifices everyone involved in the litigation has made. The $4.03 billion settlement includes about $800 million from Hawaiʻi taxpayers, $1.99 billion from HECO and its parent company and $807.5 million from Kamehameha Schools’ trust to benefit Native Hawaiian children. The rest comes from Maui County, telecommunications companies that used HECO utility poles and companies affiliated with Maui landowner Peter Martin.

Insurers, which had paid $2.3 billion for wildfire claims, also took a hit. In other wildfire cases, such as ones stemming from massive California fires that drove Pacific Gas and Electric Co. into bankruptcy in 2019, the insurers paid claims to policyholders and then sued PG&E to recoup what the insurers had paid their policyholders.

But the settlement and a decision by the Hawaiʻi Supreme Court meant the insurers couldn’t do that in this case, and, in the end, they agreed to walk away with 10% of the claims they had paid.

“Everybody’s chipping in,” said Creed, who added that he rarely has anything good to say about insurers.

Ultimately, Creed said, it’s the survivors who are making the biggest sacrifice. Even with the lawyers’ fees reduced to less than half of what they would normally receive, he said, many survivors are likely to recover “fractions on the dollar” needed to rebuild Lahaina.

“The residents are doing the biggest sacrifice of all,” Creed said. ___

This story was originally published by Honolulu Civil Beat and distributed through a partnership with The Associated Press.