946 F.2d at 775; First Fidelity, 750 F. Supp. at 163. In re TSO, 1989 U.S. Dist. LEXIS 8253, 1989 WL 80316, at *6-7. "In most instances, there will... [arise] factors unique to a particular case which will be relevant to the district court's consideration." Camden I, 946 F.2d at 775.
Equitable factors such as these should play a role in many cases where reasonable attorneys' fees are awarded under a percentage approach. But they do not on their own suggest an appropriate percentage. Rather, they must be applied to a percentage or range of percentages that is an appropriate starting point or benchmark.
One option which readily suggests itself is to apply these equitable factors to a range based upon the results in other cases. See, e.g., GNC Shareholder, 668 F. Supp. at 452 (range of 20% to 30% apparently used as a starting point); Sala, 128 F.R.D. at 215-16 (starting with range of 25%-30% and awarding roughly 32% of fund after noting the skill and efficiency of counsel); Smithkline Beckman, 751 F. Supp. at 533-34 1990) (starting with range of 20%-27% and awarding 25% of fund after noting the skill and efficiency of counsel); In re TSO, 1989 U.S. Dist. LEXIS 8253, 1989 WL 80316, at *7 (noting range in other cases of 19%-45% and then finding request for 23% of fund "wholly justified" in light of the results of litigation and efficiency of counsel).
However, even if a range appropriate for a $ 111 million settlement were used as a starting point for applying other factors, this approach would be unsatisfactory. Such an approach might still prove unfair in that it could greatly undercompensate or overcompensate the attorneys for the amount of work they have actually done on the case. While the court would be willing to risk foregoing the close alignment of an attorneys' efforts to the award of fees for the sake of fairness and simplicity in the case of a negotiated percentage, the court will not do so in the instant litigation by simply granting a percentage that is "in the ballpark" of previously awarded fees.
In the absence of a previously negotiated percentage, the court will determine a reasonable percentage by incorporating a modified lodestar analysis, less exacting and time-consuming than a full-scale lodestar analysis. Under this approach, the court will calculate a range of fees that would result from a full-scale lodestar analysis. The court will then determine a reasonable percentage based upon the lodestar range as well as other, equitable considerations.
3. Percentage Lodestar
Based upon an extensive review of cases in which attorneys' fees were awarded out of a common fund, the court concludes that combining the percentage and lodestar approaches is consistent with the way in which courts calculate reasonable attorneys' fees. To begin with, the outcomes of these fee determinations are instructive. Courts that employ the percentage approach appear to be motivated in part by a lodestar dynamic. Because courts are reluctant to give fee awards totally incommensurate with the efforts of the attorneys, percentage awards generally decrease as the amount of recovery increases. See, e.g., Smithkline Beckman, 751 F. Supp. at 534 (sliding scale implicit in many decisions in which percentage approach is applied); Sala, 128 F.R.D. at 215 (recognizing and approving of this "inverse relationship between fund and fee"); In re TSO, 1989 U.S. Dist. LEXIS 8253, 1989 WL 80316, at appendix (only cases with total awards below $ 12 million showed fee awards of 25% or above); In re Domestic Air Transportation Antitrust Litigation, 148 F.R.D. 297, 352 (N.D. Ga. 1993) (though the benchmark in common fund cases is 20%-30%, fee awards usually fall in the 13%-20% range for funds of $ 51-$ 75 million, and in the 6-10% range for funds of $ 75-$ 200 million; fee award of 5.25% of roughly $ 300 million "adequately accounts for the economies of scale in class actions of this size"); First Fidelity, 750 F. Supp. at 163 (sliding scale used to determine fee award: 30% of the first $ 10 million, 20% of the next $ 10 million, and 10% of all monies over $ 20 million). As Judge Sarokin noted in First Fidelity, "there is considerable merit to reducing the percentage as the size of the fund increases. In many instances the increase is merely a factor of the size of the class and has no direct relationship to the efforts of counsel." Id. at 164 n.1. Accordingly,
the fee percentage would be significantly more modest as the common fund recovery begins to reach recoveries approaching or exceeding $ 100 million, based on the notion that the effort necessary to achieve recovery dollars at the high end was less onerous, on a sliding scale, than the effort expended for recovering the threshold sums by judgment or settlement.
Newberg on Class Actions, supra, § 14.03 at 190.
A similar phenomenon is evident in cases where the lodestar approach is used. The outcomes in many of these cases suggest a concern with how much of the common fund will remain after attorneys' fees are deducted. As the proportion of the lodestar to the common fund increases, courts are less willing to employ large multipliers and transfer money from the class to the attorneys.
Conversely, when this proportion is very small, courts often grant large multipliers. Thus, the state of attorneys' fees is such that one judge can heap lavish praise on counsel in three separate cases, yet use multipliers of 8.4, Muchnick v. First Federal Sav. & Loan Ass'n of Philadelphia, NO. CIV.A. 86-1104, 1986 WL 10791, at *1 (E.D. Pa. Sept. 30, 1986) ($ 250,000 award of fees -- between 3.7% and 6.25% of fund -- justified under lodestar method even though lodestar is only $ 29,732.50); 1.78, Sherin v. Smith, [1987-88 Transfer Binder]Fed. Sec. L. Rep. (CCH) P 93,582, at 97,608 (E.D. Pa. 1987) (award is 28% of settlement fund); and 0.87, In re Fiddler's Woods Bondholders Litigation, [1987-88 Transfer Binder]Fed. Sec. L. Rep. (CCH) P 93,537, at 97,409-10 (E.D. Pa. 1987) (where lodestar method is used and lodestar was $ 2,439,321, reasonable fees award is $ 2,116,500, or 32.7% of the settlement fund). In short, "lodestar analyses in practice tend to result in a bottom line that approximates a fair percentage." Howes v. Atkins, 668 F. Supp. 1021, 1027 (E.D. Ky. 1987) (citing Understanding the Plaintiff's Attorney, supra, 86 Colum. L. Rev. at 678-79 n.26).
Not only do the results suggest a connection between the two approaches, but the very methodology of the approaches often provides for both lodestar and percentage considerations as well. Many courts determine an award using one method, convert that award into terms of the other method, and then eyeball the second figure to ensure that the award would be appropriate under either method. See, e.g., Eltman v. Grandma Lee's, Inc., [1986-87 Transfer Binder]Fed. Sec. L. Rep. (CCH) P92,798, at 93,907 (E.D.N.Y. 1986) (after calculating lodestar with a multiplier of 2, court finds that resulting award of slightly less than 30% of fund fell reasonably within range of 20% to 50% awarded in similar cases); Golden v. Shulman, [1988-89 Transfer Binder]Fed. Sec. L. Rep. (CCH) P 94,060, at 90,953 (E.D.N.Y. 1988) (calculating lodestar, applying multiplier, and finding that 30% is within appropriate range for percentage awards and thus justified); Brewer v. Southern Union Co., 607 F. Supp. 1511, 1536 (D. Colo. 1984) (fee award calculated under lodestar approach amounts to 13.97% of fund, a percentage "well within the range of awards in similar cases"); Steiner, 835 F. Supp. at 791 (fee award calculated under lodestar amounts to 24.5% of the fund, a percentage consistent with other awards where the funds were of similar size); Meshel v. Nutri/System, Inc., 102 F.R.D. 135, 140 (E.D. Pa. 1984) (fee calculated under lodestar approach amounts to 25% of fund, which is within the range of fee recoveries in class actions); Muchnick, 1986 WL 10791, at *4 ("low percentage of the fund which this [lodestar] fee represents confirms my conclusion that the fee is a reasonable one"); Superior Beverage, 133 F.R.D. at 133; Sala, 128 F.R.D. at 216 ("in order to avoid allowing the kind of windfall fee awards which depressed support for the percentage of recovery method in the first place," court finds that a similar result would also have resulted under lodestar approach); In re Crazy Eddie Securities Litigation, 824 F. Supp. 320, 327 (E.D.N.Y. 1993); First Fidelity, 750 F. Supp. at 164 (court admits to "manipulating the [multiplier] so as to arrive at the pre-ordained fee," i.e. the previously calculated percentage award, in determining that a multiplier of 2.5 would be appropriate).
Moreover, some courts calculate an award under one approach, and then undertake a second calculation using the other approach to demonstrate the reasonableness of the award. See, e.g., Edmonds, 658 F. Supp. at 1143 (out of "an abundance of caution," court will also calculate fees using lodestar approach); Mashburn, 684 F. Supp. at 698 (same); In re Public Service Co. of New Mexico, [1992 Transfer Binder]Fed. Sec. L. Rep. (CCH) P 96,988, at 94,290 (S.D. Cal. 1992) ("in light of the magnitude of [the] settlement fund," court utilizes each approach); Domestic Air, 148 F.R.D. at 356-57 (undertakes lodestar analysis to help determine reasonableness of percentage award).
Even when courts focus on only one of the two approaches, the approach chosen is seldom unrelated to the other. The lodestar approach typically entails the classical percentage consideration. Courts in this circuit consider percentages in assessing a contingency enhancement. For example, the Lindy court cautioned that the lodestar might be "so large a proportion of the total recovery that [a contingency enhancement] would be minimal." Lindy I, 487 F.2d at 168. As one court in this district explained in finding that a contingency multiplier was inappropriate under the circumstances of the case, "an upward adjustment would make the Settlement Fund a fund for counsel for the class rather than a fund for the class." Fickinger v. C.I. Planning Corp., 646 F. Supp. 622, 635 (E.D. Pa. 1986). See also Baughman v. Wilson Freight Forwarding Co., 583 F.2d 1208, 1218-19 (3d Cir. 1978) (where lodestar had been multiplied by 2 to account for contingency and the resulting fees were more than two-thirds of the settlement fund, Court of Appeals for the Third Circuit instructed the trial court to consider the size of plaintiff's award in comparison to the initial lodestar calculation before awarding an enhancement for contingency); Zeffiro v. First Pennsylvania Bank, N.A., 574 F. Supp. 443, 450 (E.D. 1983)("It would be an abuse of this Court's discretion to adjust the lodestar for contingency given that the lodestar... is a significant amount in comparison to the total amount of the settlement fund.").
Other courts have made similar percentage considerations in determining an adjustment to the lodestar. See, e.g., Warner Communications, 618 F. Supp. at 747 (a proper factor is "the requested fee in relation to the settlement")
; Van Gemert v. Boeing Co., 516 F. Supp. 412, 420 (S.D.N.Y. 1981)("'[recognizing] that the amount of fees must bear a reasonable relationship to actual recovery...'" the court awards a multiplier of 1.7.); In re AIA Industries, Inc. Securities Litigation, 1988 U.S. Dist. LEXIS 2952, No. CIV.A. 84-2276, 1988 WL 33883, at *4(E.D. Pa. March 31, 1988) (in determining multiplier, "a court should take into account what percentage of the settlement the lodestar figure represents"; no enhancement warranted since combined expenses and fees constitute over 40% of fund); Bebchick v. Washington Metropolitan Area Transit Com'n, 256 U.S. App. D.C. 296, 805 F.2d 396, 406-07 (D.C. Cir. 1986) (first factor supporting enhancement of lodestar was fact that this was a common fund case, for which a percentage approach is permitted, and that the requested enhancement of 60% would result in an award which was 25% of the fund, a reasonable percentage); State of Florida v. Dunne, 915 F.2d 542, 546 (9th Cir. 1990) (in applying the lodestar approach, district court erred in not considering the effect of other pending fee applications, namely that 72% of the common fund could be distributed to attorneys). In light of this phenomenon, it may be concluded that "even judges who use (lodestar) analyses always blend lodestars and percentages." Superior Beverage, 133 F.R.D. at 126.
Similarly, the percentage approach currently employed by courts often entails the lodestar calculation. Some courts use the traditional lodestar factors -- including the labor expended -- to determine a reasonable percentage. See, e.g., Brown, 838 F.2d at 454-55 (the Johnson factors, including time and labor involved and customary fee, are appropriate in determining percentage fee awards in common fund cases)
; Camden I, 946 F.2d at 775 (same); Basile v. Merrill Lynch, Pierce, Fenner, & Smith, Inc., 640 F. Supp. 697, 700 (in Sixth Circuit, factors to be considered in determining reasonable percentage include the value of the services on a hourly basis) Crazy Eddie, 824 F. Supp. at 326-27 (E.D.N.Y. 1993) (one of factors justifying 33.8% award is that the award is "a reasonable multiple of the hours spent").
Clearly, then, courts may use the lodestar, or an adjusted lodestar, as a starting point in determining a final percentage. In this regard, the court finds particularly relevant the case of Diamond v. Fogelman, [1992 Transfer Binder] Fed. Sec. L. Rep. (CCH) P 96,980 (E.D.N.Y. 1992).
In December 1991, the Board of Judges of the Eastern District of New York adopted the Civil Justice Expense and Delay Reduction Plan ("the Plan"). According to the Plan:
in cases that settle after significant attorney time has been expended, [the] fee award shall be based on a percentage of recovery; but the attorneys shall be required to submit time records, as is required under the lodestar approach, which shall serve as a guideline for the court in setting the percentage recovery.