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IN RE GOULD SECS.

November 13, 1989

IN RE GOULD SECURITIES, LITIGATION

Marvin E. Aspen, United States District Judge.


The opinion of the court was delivered by: ASPEN

MARVIN E. ASPEN, UNITED STATES DISTRICT JUDGE:

 The parties have settled this securities fraud class action. On August 30, 1989, we entered an interim award of attorneys' fees to class counsel. That award was based on figures about which there was no dispute. We now consider the disputed claims for fees and make a final award. There being nor dispute, and based on our own review, we also award all of the expenses claimed in the petition. We further consider, and reject, the claims of the class representatives for incentive awards for having undertaken the litigation of this suit.

 I. Attorney's Fees

 Under the "common-fund doctrine," a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole, rather than from only the named plaintiff's portion of that fund. This doctrine serves the twin goals of removing a potential financial obstacle to a plaintiff's pursuit of a claim on behalf of a class and of equitably distributing the fees and costs of successful litigation among all who gained from the named plaintiff's efforts. Boeing Co. v. Van Gemert, 444 U.S. 472, 478, 100 S. Ct. 745, 749, 62 L. Ed. 2d 676 (1980).

 In considering a petition for attorneys' fees, this Court must act as "fiduciary for the fund's beneficiaries and must carefully monitor disbursement to the attorneys by scrutinizing the fee applications." Skelton v. General Motors Corp., 860 F.2d 250, 253 (7th Cir. 1988). Class counsel have submitted detailed petitions seeking an award of fees based on the lodestar/multiplier method of calculating awards. The lodestar/multiplier method, as it is now applied, requires a calculation of the number of hours reasonably expended by counsel, taking into account factors such as the complexity of the lawsuit and tasks performed. That number is then multiplied by the reasonable hourly rates for such services to arrive at the "lodestar" figure. Factors such as issue novelty and quality and type of work are included in determining the hourly rates to be awarded. The lodestar figure is then increased by a multiple that is based on the risk or contingency borne by counsel at the time the litigation was undertaken. Id. at 258.

 The defendants do not object to the selection of the lodestar/multiplier method of calculating the attorneys' fees award in this case. Rather, the defendants have raised several objections to specific applications of the method and ask us to disallow certain portions of the petition for fees and expenses. In addition, one class attorney has objected to co-lead counsels' petition for a higher multiplier for themselves than for other class counsel. We further note that no class member has objected to either the settlement or the petition fees and expenses.

 We will first consider the reasonableness of the lodestar calculations submitted by the petitioners. Then we will address the appropriateness of the multipliers requested.

 A. Lodestar Calculations

 1. Number of hours

 The eleven law firms representing the plaintiff class expended 6,264.88 attorney hours and 2,078.73 paralegal hours in prosecuting this litigation. Each firm has submitted affidavits showing the services performed by each attorney or paralegal who worked on the case and the expenses incurred. Daily time records were made available for inspection by counsel for the defendants.

 Based on the quality of their response to this petition for fees, it is apparent that counsel for the defendants performed an exhaustive and detailed review of the petition. That response prompted additional submissions from various firms for the plaintiff class, in which counsel clarified and further substantiated their claim for fees. As a result, for the most part, any discrepancies regarding hours have been resolved. Given the complexity of the litigation and the vigorous yet efficient manner by which talented class counsel pursued this matter, we believe that, on the whole, the hours expended were reasonable. There remain only a few minor objections to particular hours which we will briefly address.

 The defendants have objected to 68.4 hours of time spent by Wolf, Haldenstein, Adler, Freeman & Herz as overhead charges which are unreasonable and not properly chargeable to the Settlement Fund. In response, the firm has made clear that 23 hours of that time was spent by paralegals performing legitimate tasks primarily related to the organization of discovery documents and research materials for attorney use. The firm has also clarified that the additional 45.4 hours of contested time, recorded as "time reports" and "time sheets," were spent for non-routine monthly recording and reporting of time and expenses to lead counsel. The firm claims that the recording process was employed to ensure compliance with an order of this Court so that lead counsel could properly control waste and duplication and monitor work in progress. Based on these representations we are satisfied that the hours were properly chargeable to the Settlement Fund.

 Defendants next object to certain hours billed by Kaufman, Malchman, Kaufman & Kirby. At issue are 43.50 hours billed as time spent preparing a document request to a third-party witness at Ernst & Whinney, and 48.75 hours spent on miscellaneous activities such as inter-office conferences, reading articles, "setting up a time report system" and "checking re: financial contributions." Whether the 43.50 hours spent on the document request is excessive depends principally on the detail required in preparing the request, the length of the request, time spent following up on the request and any time spent working on the product of the request. The defendants have provided us with no information from their review of the files supporting the fee application that might suggest that these hours were excessive. Nor do we believe that 43.50 hours is clearly manifestly excessive. The same considerations apply to the 48.75 hours of miscellaneous billings. Defendants have asked us to reduce these hours by 50%, yet have made no effective challenge that this hourly total for the miscellaneous billings is inflated or unreasonable. We do not believe that trimming these hours is warranted.

 The defendants also recommend that we reduce the number of hours billed by Stull, Stull & Brody relating to the preparation for and taking of a two-day deposition of a representative from Ernst & Whinney. The defendants claim that these hours were excessive and unnecessary because they were incurred after the parties had agreed in principle to release Ernst & Whinney. The petition for fees, however, explains that after the "handshake" agreement to settle the case, class counsel decided that depositions should be taken of Ernst & Whinney Manager, James Powell, Gould's former CEO and president, James McDonald, and the chairman of its board of directors' audit committee, David Donahue, to "make doubly sure counsel's assessment of the case was correct and that the settlement was reasonable." (Pet. at 15-16). The defendants have not challenged that the taking of these depositions was an unreasonable attempt to inflate billings. Rather, the defendants claim that Stull, Stull & Brody's petition demonstrates no attempt to "exclude from a fee request hours that are excessive, redundant or otherwise unnecessary just as a lawyer in private practice is ethically obligated to exclude such hours from his fee petition." See Hensley v. Eckerhart, 461 U.S. 424, 434, 76 L. Ed. 2d 40, 103 S. Ct. 1933 (1983). We cannot discern what more the defendants would have Stull, Stull & Brody do in their petition to show that they abided by that standard other than the firm's pledge that they have petitioned for reasonable hours. And we cannot conclude that 212 hours was manifestly unreasonable. Class counsel intended the two-day deposition to be the last effort to ensure ...


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