Discord In The Court

The leader of an organization representing defrauded chasidic Holocaust survivors lashed out at the World Jewish Congress in open court Monday, blasting the agency for its criticism of fees requested by lawyers in the class-action suit against Swiss banks.

Testifying before federal Judge Edward Korman in Brooklyn, Rabbi Morris Shmidman, president of the World Council of Orthodox Jewish Communities, referred to published comments by WJC executive director Elan Steinberg that plaintiffs in the Holocaust assets suit were being exploited by a "feeding frenzy of fee-grabbing lawyers."

Rabbi Shmidman called the remarks "exceedingly painful and distressing" and said they "dishonored the survivors and the memory of the victims."

Rabbi Shmidman said Steinberg should have expressed his opinion about the lawyers fees (a major sticking point as Korman considers approval of the $1.25 billion settlement with Swiss banks) in the courtroom rather than through the media. Steinberg’s comments were published last week in The Jewish Week.

"I don’t mind that an anti-Zionist group that mainly represents Satmar chasidim speaks in favor of lawyers’ fees when they have appointed two lawyers, each of which is asking for more than $2 million," Steinberg fired back after the hearing.

The Satmars oppose the creation of a Jewish state before the arrival of the Messiah. Steinberg said the name World Council of Orthodox Jewish Communities suggests that it represents a broader spectrum of Jewry.

Korman convened the daylong session to provide a forum for comments on the settlement reached in March, which also provides $250 million for a humanitarian fund to aid elderly Holocaust survivors and millions more to locate accounts opened by Jewish refugees during World War II. Nearly all of the speakers (from plaintiffs’ attorneys to Jewish organizational leaders to individual survivors) signaled their approval while stressing that it was a legal and not a moral remedy for misconduct by the Swiss banks. A representative of the U.S. Justice Department related the government’s approval of the deal.A hearing on legal fees will be convened Jan. 5. Many of the lawyers involved have declined to provide timesheets and other documents to justify the millions in compensation they are seeking.

But Rabbi Shmidman, whose organization is a constituent of the World Jewish Restitution Organization, the agency formed to centralize and coordinate Holocaust-era claims, defended the lawyers as "public-minded, distinguished and self-sacrificing." He said Steinberg had characterized them "as if they acted outside the pale of what is professional and ethical conduct."

The controversy could indicate a bumpy road ahead as the final details of the settlement (considered by most parties to be a done deal) heads for court approval. Another sticking point concerns whether the settlement money should go to individual survivors in lump payments of $2,000 each, or to Jewish organizations to establish educational or medical funds.

There is also the question of the impact on outstanding lawsuits against insurance companies, art galleries and banks from other countries that might be considered exempt from further legal action because of the settlement. The current agreement lists only three insurers (Basler, Zurich and Winterther) as excluded from the settlement because of pending litigation.

"The releases are too nebulous," said Norman Rosenbaum, an Australian attorney representing the Australia Asia Pacific Jewish Restitution Committee. "They [affect] people who have excellent stand-alone claims that could be successful in litigation."

Steinberg said anyone with a pending claim against such companies could "opt out" of the settlement.

Rosenbaum also said he would like to see a provision preventing lawyers from "double-dipping:" collecting contingency fees from plaintiffs as well as court-approved legal fees.

Anne Weber, chairwoman of the Commission on Looted Art in Europe, testified that the settlement might also prevent the recovery of items stolen from Jews that are now in the possession of Swiss institutions.

Since the settlement was announced, notices have been mailed to 1.5 million people in 48 countries who requested information after reading about the settlement in some 1,300 news articles, according to testimony by Morris Ratner, representing the plaintiff attorneys. A Web site providing claims information has had more than 330,000 hits, he added.

More than 450,000 people have filled out the initial questionnaire that screens potential members of the class, or group, in whose behalf the suit was filed. Only 200 have expressed comments or objections on the settlement, said Ratner, roughly half of whom were not in the class but sought to be included. Some 300 people have asked to be excluded in order to pursue separate litigation, he said.

But Roman Kent, chairman of the World Gathering of Holocaust Survivors, in later testimony questioned whether the commission had received data from all eligible survivors. He added that the damage to Switzerland’s international reputation was another benefit of the suit. "Switzerland is no longer to be known for cuckoo clocks, skiing and neutrality," he said.

Kent also reserved a measure of indignation for the lawyers. "They are eager to make millions in profits, but many are unwilling even to show timetables to show what they did."

Mel Urbach, one of the attorneys who represents Rabbi Shmidman’s organization, insisted that reserving legal documents was crucial in the event the settlement was rejected by the court.

"If the case goes back to court and the lawyers’ strategy is available to the defendants, the $1.25 billion would be off the table in a flash," he said.

Steinberg believes all attorneys involved should have taken the case on a pro-bono basis (as some did) or at most charged the minimum fee. He said many had charged as much as $600 per hour.

The court-appointed special master in the settlement, Judah Gribetz, is expected to release an initial plan to distribute the funds on Dec. 28. Survivors who testified Monday were divided over whether the money should be divided evenly or distributed to Jewish organizations.

In a related development, a fund set up by Swiss banks and industry in 1997 for needy Holocaust survivors (unrelated to the settlement fund) on Tuesday approved $1.27 million in payments for Jewish and Gypsy applicants, the Associated Press reported.

More than 1,600 people in the Netherlands and Sweden, Germany, Poland and the Czech Republic will benefit from the payments, which bring to $160 million the amount now disbursed by the fund. Another $13 million is yet to be awarded.