Lawyers to Get 25% of Prudential Class-Action Settlement : Securities: Judge apparently ignores complaints from SEC and California officials that the fee requests were excessive.

A federal judge has awarded a group of lawyers 25% of the $90-million settlement won for small investors in a private class-action suit involving Prudential Securities’ oil and gas partnerships.

In making the award, U.S. District Judge Marcel Livaudais Jr. of New Orleans made no mention of unusual letters he received from the Securities and Exchange Commission and California’s corporations commissioner raising concerns that the lawyers’ fee requests were excessive.

The roughly $22 million in legal fees--which gives most of the investors’ lawyers the sums they were seeking--comes out of the settlement pool, reducing the amount that will go to investors.

The case involves Prudential’s Energy Income Funds partnerships, in which 130,000 predominantly elderly investors put money in the late 1980s.

The funds suffered major losses; under the class-action settlement, most investors will end up with 80% to 90% of their initial investments.

Both the SEC and state securities regulators have said recently that they are scrutinizing such class-action cases for abuses by lawyers, including fee requests out of proportion to the work done.

In his ruling, Livaudais said the fee award is justified because “all counsel have prosecuted the case in an efficient, cooperative and diligent manner, bringing the litigation to a swift and successful conclusion” for investors.

Edward A. Grossmann, the lead class-action lawyer for investors in the case, drew criticism last year from state regulators and other lawyers for initially agreeing to a settlement that would have paid investors far less. Only after the other lawyers and regulators intervened was the cash portion of the settlement greatly boosted.

The largest portion of Livaudais’ award will go to Grossmann’s law firm. The judge concluded that lawyers who objected to the original settlement had not fully documented their fee requests.

SEC general counsel Simon Lorne, who wrote the SEC’s letter to the judge, declined to comment on the fee award. Gary Mendoza, the California corporations commissioner, was said to be traveling Thursday and could not be reached for comment.

Stuart C. Goldberg, a Texas attorney who has represented Energy Income investors, strongly objected to the fee award.

“I think it’s an outrage,” said Goldberg, who asked for no fees from the class-action pool. “It’s my conclusion that the class-action plaintiffs were not well represented, that the settlement was totally inadequate and that the attorneys made millions.”

Goldberg said investors who chose not to participate in the class action but instead have sought redress through an entirely separate settlement obtained by the SEC so far have been getting much more of their money back.

Under the SEC settlement--which covers a range of Prudential limited partnerships--the firm has established an initial pool of $330 million to reimburse investors.

Grossmann said the settlement is fair. “I think the judge’s opinion makes it clear that the judge believes (investors) were well represented,” he said.