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GM deal good for lawyers

Investors of record when stocks crashed can't count on getting rich from settlement.

DETROIT - General Motors Corp. shareholders won't get rich from a $303 million legal settlement that could be made final this month, but the lawyers stand to reap millions.

A judge in Detroit is overseeing the lawsuit, which involves investors who held GM stock or bonds over a six-year period during which the company's common shares crashed 75 percent.

Anyone who owned stock would get roughly 25 cents a share, if every eligible shareholder files a claim. If fewer claims are filed, the payment would rise.

Attorneys, meanwhile, want 19 percent of the cash pool for their work - nearly $60 million.

The deal was struck in the summer before GM went to Washington seeking billions in federal loans to stay alive. U.S. District Judge Gerald Rosen, who has granted preliminary approval, will hold a final hearing Dec. 22.

Still, an investor attorney sees a silver lining in the settlement.

"Call it a combination of luck and good judgment," said James Sabella of New York, a lead attorney for investors. "If we hadn't settled when we did, there's no way we'd be settling now. There's no way they'd be giving us this kind of money."

Not everyone is pleased with the millions in fees sought by attorneys. The Pennsylvania State Employees' Retirement System filed an objection this week.

Glenn Brewer and his wife, Elise Fitzgerald, of Weems, Va., call it "windfall profits" for attorneys. They hold 1,500 GM shares.

"This case typifies a proliferation of class-action claims against large corporations wherein the defendant agrees to a nuisance settlement to avoid further litigation and the shareholders reap minimal benefit," they wrote in a Dec. 1 letter to the judge.

Brewer and Fitzgerald said their slice of the settlement was "obviously insignificant." They paid an average of about $40 each for their shares, which are now trading at less than $5.

The case began with lawsuits in 2005 accusing GM and its directors of major accounting mistakes, especially when reporting revenue, and misleading investors.

The lawsuits were consolidated in Detroit in 2006 and turned into a class-action case involving investors who owned stock or bonds between April 13, 2000, and March 30, 2006.