The opinion of the court was delivered by: BRODERICK
BRODERICK, District Judge.
The law firm of Cohen, Morris and Rosenthal, on behalf of all counsel for the class action representatives in these actions, has petitioned the Court for the allowance of total fees in the sum of $54,000.00. The petition requests approval of this sum for counsel fees, accountants' fees and other out-of-pocket costs.
The plaintiffs brought these actions pursuant to § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b) and Rule 10b-5 promulgated thereunder by the S.E.C. 17 C.F.R. § 240.10b-5.
The history and status of these proceedings is set out in prior opinions of this Court. See Adelman v. C.G.S. Scientific Corp., 332 F. Supp. 137 (E.D.Pa.1971); Bleznak v. C.G.S. Scientific Corp., 61 F.R.D. 493 (E.D.Pa.1973); Bleznak v. C.G.S. Scientific Corp., C.A. Nos. 70-2840, 70-3039 and 71-1044 (E.D.Pa. July 24, 1974). By Memorandum and Order dated and filed on November 29, 1973, this Court approved the class action status of the cases and determined the scope of the class. By Order dated December 27, 1973, the Court gave preliminary approval to the proposed settlement and directed that notice of the pendency of these actions and of the proposed settlement be given by C.G.S. to all members of the class confirmed by this Court's order of November 29, 1973. The notice was given by first class mail to all shareholders of record of C.G.S. who purchased stock on the open market on or after November 1, 1969 and held such stock on September 17, 1970. The Order of December 27, 1973 and the notice to class members further stated, inter alia, that
Upon approval of the settlement, plaintiff's attorneys will apply to the Court for the allowance of attorneys' and accountants' fees in the total amount of $54,000, inclusive of expenses, as a sum which represents the fair and reasonable value of their services in these actions and for the expenses incurred in the prosecution of these actions
Before deciding whether the settlement and compromise of the consolidated actions if fair, reasonable and adequate, the Court wishes to give members of the class an opportunity to state their views with respect thereto, to make any objections thereto or to withdraw from participation in the class. In accordance with the Order of the Court, you are hereby notified that:
1. A hearing shall be held before Judge Raymond J. Broderick in the United States Court House, 9th and Market Streets, Philadelphia, Pennsylvania on March 1, 1974, at 9:30 A.M. to determine whether or not the settlement set forth in the Stipulation of Settlement is fair, reasonable and adequate and should be finally approved by the Court under Rule 23(e) of the Federal Rules of Civil Procedure, and further, in the event the settlement is approved, to determine the allowance of reasonable fees and expenses for plaintiffs' attorneys and accountants.
In Mills v. Electric Auto-Lite Company, 396 U.S. 375, 389-392, 90 S. Ct. 616, 24 L. Ed. 2d 593 (1970), the Supreme Court recognized that where a securities class action has produced a common fund for the benefit of a group, expenses, including attorneys' fees, should be shared among all the members of the class. The attorneys' fees and costs found to be reasonable by the Court should be paid out of the common fund recovered from the defendant in settlement. This is not a case where the Court is being requested to determine the amount of reasonable attorneys' fees which should be paid by the defendant to plaintiff's counsel.
A recent case in this Circuit setting forth the standards which should be applied in determining a reasonable counsel fee in class action litigation is Lindy Bros. Builders, Inc. v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973). In Lindy, the Court set forth the following as the factors to be considered in making a determination as to the reasonableness of the counsel fee:
(a) the number of hours spent in various legal activities by the individual attorneys;
(b) the reasonable hourly rate for the individual attorneys;
(c) The contingent nature of success; and
(d) the quality of the attorneys' work.
In addition, the Court held that where the facts are disputed, an evidentiary hearing is required and an adequate record must be developed. Lindy, supra, at 169; see also Merola v. Atlantic Richfield Company, 493 F.2d 292 (3d Cir. 1974); Dillon v. Berg, 482 F.2d 1237 (3d Cir. 1973).
The guidelines established in Lindy and Merola are substantially in accord with prior law. In essence, these factors are similar to the guides set forth in the Code of Professional Responsibility (DR 2-106). As noted by the Third Circuit in Dillon, it is essential for the Court to consider the amount of time expended in achieving success in the litigation. Accord, Kahan v. Rosenstiel, 424 F.2d 161, 174-175, n. 16 (3d Cir. 1970). See also Angoff v. Goldfine, 270 F.2d 185, 188-189 (1st Cir. 1959); Powell v. Pennsylvania Railroad Company, 267 F.2d 241, 245 (3d Cir. 1959). Furthermore, Section 1.47 of the Manual for Complex Litigation provides that in addition to the standards set forth in the Code of Professional Responsibility, a Court in approving attorneys' fees in class actions should consider the following:
(1) that in seeking and accepting employment as counsel for a judicially determined class an element of public service is involved; (2) the representation of the class by counsel is not a result of private enterprise but results from provision of an opportunity to represent the class by a judicial determination; and (3) the policy of the law in class actions . . . is to provide a motive to private counsel to represent consumers and to enforce the laws.
Section 1.47 of the Manual also states:
There is no question that representation of a class in a securities litigation requires skill and experience. Petitioning counsel have set forth in detail in their petition and affidavits for allowance of fees, their educational and legal background and experience. These affidavits are part of the official record of this litigation and there is no need or reason to restate the qualifications in detail. Suffice to say that petitioning counsel have the requisite skill and experience. They achieved in this litigation an excellent result for the members of the class represented, as pointed out in this Court's opinion of July 24, 1974. Unlike many other cases in the securities field, counsel did not have the benefit of a prior judgment of a court decree in a case brought by the government.
In their affidavits in support of the petition for fees totaling $54,000, counsel for the class action representatives listed the time spent by attorneys in each of the law firms involved and the hourly billing rate for each lawyer involved. The total time expended by plaintiff's counsel on these cases is 613 hours. The billing rates for plaintiffs' attorneys range from $45.00 per hour to $100.00 per hour. The affidavits reveal that time spent in this litigation was fairly allocated to discovery, legal research, preparation of pleadings, settlement negotiations and general trial preparation. Irving Morris, Esq. of the Wilmington firm of Cohen, Morris and Rosenthal, expended 250.25 hours; his partner, Joseph A. Rosenthal, expended 160.75 hours, and Allen I. Rosenberg of the Philadelphia law firm of Kahn, Bushman, Rosenberg and Weisberg expended 97.5 hours. These three able and experienced trial lawyers expended a total of 508.5 hours, or approximately 83% of the total time spent on these cases by counsel for the class action representatives. Counsel for all the class action representatives undertook these cases on a contingent fee basis. Their only compensation will be the fee awarded by this Court. See Affidavit of Irving Morris, Esq., paragraph 17. The normal hourly rate of Mr. Rosenberg is $60.00 per hour, and the normal hourly billing rate for Messrs. Morris and Rosenthal is $100.00 per hour. A fee calculated solely on the basis of the hourly rate of each counsel would total $53,060.00. The petition requests a total award including counsel fees, accountants' fees and costs in the sum of $54,000.00. The fees requested are approximately 30% of the settlement fund.
According to the affidavits submitted in support of the petition, out-of-pocket expenses have been incurred in the sum of $1,103.38 in this litigation. The Court finds that such costs are fair, reasonable and necessary in connection with this litigation. In addition, prior to filing the complaint, plaintiffs' counsel retained the accounting firm of David Berdon & Co. of New York City as the accountants for the plaintiff in this matter. The Berdon firm was retained and agreed to go forward on the basis of a contingent ...