Volkswagen Agrees to Pay American Lawyers $175 Million in Emissions Suit

Volkswagen AG

German automaker Volkswagen AG has reportedly agreed to pay $175 million to U.S. lawyers who are suing it on behalf of some 475,000 vehicle owners over emission issues, according to Reuters.

The payment is meant to cover the legal fees of the lawyers representing VW diesel owners in a class-action suit against the German auto firm over what is now known as the Dieselgate scandal.

Sources told Reuters that the settlement covers attorney fees and some other costs. It marks another obstacle removed in the way to resolving the multi-billion dollar class-action lawsuit, as Volkswagen works to put the forgettable experience behind it.

The lawyers had previously asked for up to $332.5 million to cover their fees and other costs in a class-action settlement that would pay $10 billion to American owners of 2.0-liter, pollution-causing vehicles. Elizabeth Cabraser, lead lawyer for the car owners’ legal team, said in August that the higher amount requested was even significantly lower than about 25 percent established in the law.

In September 2015, Volkswagen admitted that it used advanced secret software to enable its pollution-emitting vehicles to pass exhaust emissions tests across the globe. The tool allowed its cars sold in the U.S. since 2009 to release up to 40 times pollution levels allowed under local law.

The owners’ settlement of $10.033 billion, which was agreed in June, will see the world’s No. 2 car maker buy back affected vehicles and pay compensation on them. This is the largest buyout ever in the U.S. auto industry. The company has the option of offering vehicle fixes subject to regulatory approval and if owners agree.

Volkswagen has also agreed to pay its dealers in the U.S. up to $1.21 billion as compensation. In addition, it has reached agreement to pay $600 million to 44 states in the country and to spend up to $2 billion on zero-emission vehicle (ZEV) promotion and infrastructure. It will be required to spend another $2.7 billion to counteract the effects of pollution.

In all, the German automaker looks set to pay up to $16.7 billion in compensation to its vehicle owners as well as dealers and regulators at both state and federal levels.

There will be a hearing on Tuesday before U.S. District Judge Charles Breyer to determine whether to approve the settlement for the car owners. It would also be determined at that hearing whether to grant approval to the $175 million the automaker has agreed to pay the lawyers in the class-action suit as settlement for their fees.

However, Volkswagen may still have to pay several billions more in fines. The U.S. Justice Department is considering financial penalties for larger pollution-emission vehicles that were not covered in the $10 billion settlement, as reported by Reuters.

Discussions are currently ongoing between the German automaker and American regulators on whether it should also buy back thousands of 3.0-liter Audi, Porsche and VW vehicles in the U.S.

The Dieselgate scandal has badly hurt Volkswagen’s global business and done significant damage to its reputation. It resulted in the removal of its chief executive in 2015.