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IN RE CONTINENTAL ILLINOIS SECS. LITIG.

September 20, 1990

IN RE CONTINENTAL ILLINOIS SECURITIES LITIGATION

John F. Grady, Chief United States District Judge.


The opinion of the court was delivered by: GRADY

JOHN F. GRADY, CHIEF UNITED STATES DISTRICT JUDGE

 This case is concluded, and counsel for the plaintiff class have submitted their final petitions for fees. They have previously received $ 3.13 million in interim payments. They now request an additional $ 5.87 million in fees and $ 1.15 million in interest. This opinion will consider those requests. *fn1"

  I

 FACTUAL BACKGROUND

 This class action arises out of the relationship between Continental Illinois National Bank & Trust Company of Chicago and Penn Square Bank of Oklahoma City. Penn Square made billions of dollars in loans to gas and oil enterprises in Texas and Oklahoma during the 1970s through the middle of 1982. Penn Square sold over $ 1 billion of these loans to Continental. In these "loan participation" transactions, the money disbursed to the borrowers by Penn Square was actually provided by Continental; Penn Square's role was to obtain the borrowers, process the loans and oversee collection.

 The Penn Square loan portfolio consisted largely of energy loans, and, when the world price of oil fell in 1982, many of the borrowers defaulted. On July 6, 1982, federal regulators closed Penn Square for insolvency. The energy portfolio, including the Continental loan participations, was largely uncollectible. Publicity about the Penn Square disaster and its effect on Continental was immediate and widespread.

 News articles published in July were filled with tales of the reckless loan policies of Penn Square Bank. Loans had been made without adequate investigation of the borrower's financial responsibility, without appraisal of collateral and often without taking the necessary steps to perfect security interests. Many of the loans were secured by nothing more than unproven oil reserves. Others were secured by drilling rigs, for which no buyers could be found when oil prices collapsed. Deficiencies in the loan procedures at both Penn Square and Continental, already under investigation by the Federal Deposit Insurance Corporation ("FDIC") and the Comptroller of the Currency, became the subject of Congressional hearings shortly after the closing of Penn Square. Officers of Continental testified before the House Committee on Banking, Finance and Urban Affairs in August and September of 1982. The testimony before the Committee indicated that Continental Bank had allowed Penn Square to manage the energy loans with little supervision.

 Class action suits by purchasers of the stock of Continental Illinois Corporation (the holding company for Continental Bank) were not long in coming. Bernard I. Mirochnick, a resident of Illinois, purchased shares of Continental Illinois Corporation on July 12, 1982, and filed suit in this court on July 29, 1982, on behalf of himself and all other purchasers of Continental stock during the period February 15, 1981, to July 29, 1982. Mirochnick was represented by the Pennsylvania firm of Greenfield & Chimicles and the Chicago firm of Much Shelist Freed Denenberg Ament & Eiger ("Much Shelist"). The theory of the complaint was that Mirochnick and his fellow class members had been misled into purchasing the stock at prices far in excess of its actual value. Named as defendants were Continental Illinois Corporation, the Continental Bank, various officers of the bank, and the auditing firm of Ernst & Whinney. It was alleged that the bank and its officers concealed or recklessly ignored the poor quality of the bank's loan portfolio and made misleading statements to the public concerning the financial condition of the bank. Ernst & Whinney was charged with having failed to audit the bank in accordance with generally accepted auditing standards and having recklessly certified the false and misleading financial statements of Continental Illinois Corporation. The complaint alleged violations of § 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5 of the Securities and Exchange Commission.

 On July 19, 1982, Andrew Goodman, a resident of New York, purchased shares of Continental and, on August 11, 1982, filed a similar class action against the same defendants. He also designated February 15, 1981, to July 29, 1982, as the class period. Goodman was represented by various New York firms and the Chicago firm of Much Shelist.

 On July 21, 1982, Howard Bleier, M.D., P.C. Profit Sharing Plan Trust, purchased shares of Continental *fn2" and, on September 7, 1982, filed suit in this court naming as defendants Continental Illinois Corporation and Ernst & Whinney. Bleier, a New York resident, was represented by the Chicago firms of Cherry & Flynn and Sachnoff Weaver and Rubenstein ("Sachnoff Weaver").

 The four cases were consolidated before one judge of this court, who entered several orders relating to the organization of class counsel and general management of the litigation. On October 18, 1982, the original judge recused himself and the consolidated cases were reassigned to me. On November 3, 1982, the separate complaints were superseded by a consolidated complaint in which the plaintiffs Goodman, Mirochnick, Steinlauf and Bleier repeated the class action allegations against all of the defendants previously named by Steinlauf. In addition, Bleier asserted a shareholders derivative action on behalf of Continental Illinois Corporation against Ernst & Whinney and the bank officers and directors whose negligence was allegedly responsible for the losses on the bank's loans. Bleier alleged that the shareholders had made a proper demand upon the directors of Continental Illinois Corporation to file suit against the responsible defendants, but that the directors had refused to do so.

 Counsel for the various plaintiffs pressed for certification of a class represented by their clients that would include persons who purchased their shares as late as the end of the proposed class period, July 29, 1982. Counsel refused to concede that there was any material difference between a person who purchased Continental stock before the failure of Penn Square Bank and one who purchased after the failure and in the glare of the publicity concerning the effect on the Continental Bank. I found that the pre-failure purchasers would be seriously prejudiced by association with purchasers who had obviously bought their shares with knowledge of many of the facts of which the pre-failure purchasers had been ignorant. On November 7, 1983, I certified a class of purchasers of Continental stock during the period from September 1, 1981, through July 5, 1982, the day before the Penn Square closing. I certified Fred Steinlauf, the only named plaintiff who had purchased during the class period, as the sole class representative.

 It was apparent from the outset of the case that too many lawyers were involved on the plaintiffs' side. Nine law firms had filed appearances and 25 lawyers from those firms had filed individual appearances. There was no telling how many more were logging time behind the scenes. On June 21, 1983, I entered an order outlining the rules that would govern payment for services in the event the class were to make a recovery. In re Continental Illinois Securities Litigation, 572 F. Supp. 931 (N.D. Ill. 1983). The order emphasized the need for individual responsibility and the avoidance of unnecessary and duplicative work. The order also provided that any fee petition submitted to the court should have a breakdown of work by specific task, to facilitate a determination of how much time was spent on each task and the extent to which it benefitted the class. The order concluded by suggesting to counsel that they attempt to agree among themselves as to who would comprise the reduced number to be designated as class counsel.

 A partial reduction occurred when two of the bank officer defendants moved to disqualify counsel from simultaneously representing plaintiffs in the class action and in the derivative action. I concluded that these defendants were correct in their argument that a potential conflict of interest existed between the class plaintiffs, who were suing the corporation in their own interest, and the derivative plaintiff, who was suing on behalf of the corporation. The conflict seemed especially likely in the area of settlement negotiations, where the two kinds of plaintiffs might be competing for limited funds (as later proved to be true in regard to liability insurance coverage on the defendant bank officers). On April 2, 1984, I ordered that the class would have to be represented by different counsel than those who represented the derivative plaintiff. Counsel thereafter agreed upon a division of responsibilities.

 There were still too many class counsel, however, and it was obvious that there would be no voluntary departures. Lawrence Walner, attorney for Steinlauf, asked leave for Steinlauf to withdraw as a plaintiff in the consolidated complaint, to file an amended complaint on behalf of the class and to add new class counsel. The motion was opposed by all the other plaintiffs' attorneys in the case, who accused Steinlauf and Mr. Walner of attempting to take over the case for their own financial benefit. I summed up my reactions to the situation in a memorandum opinion:

 
The accusations which have been made back and forth in this fight over who will represent the class have caused me to have serious doubts as to whether any of the contenders should be allowed the privilege. What is really at stake in this unseemly contest is the financial interest of the lawyers, although, of course, the rhetoric is couched in terms of the welfare of the class. Mr. Walner, . . . is accused of padding his time by appearing at depositions not "assigned" to him. In addition, counsel for the other class plaintiffs are critical of the quality of Mr. Walner's work, claiming, for instance, that a memorandum he wrote was so inadequate it was not usable. Mr. Walner, for his part, accuses the other attorneys of overstaffing the case, misunderstanding the issues and needlessly involving East Coast counsel whose only interest is fees.
 
* * * *
 
The principal reason I have delayed so long in naming counsel for the class is that I have had misgivings about the attorneys who urged me to certify a class of persons whose interests were in conflict. Those attorneys represented only clients who purchased their stock after July 5, 1982. Clearly, the post-July 5 purchasers had serious legal and practical problems not common to the pre-July 5 purchasers. Whether this misguided effort to certify an incompatible class was motivated by a desire to control the class through the only clients these attorneys had, or was simply the result of a failure to recognize problems an experienced litigator would immediately grasp, is unclear. In either event, however, I came away from the class certification phase of the case with distinct reservations about whether the attorneys for the post-July 5 purchasers would be adequate representatives for a pre-July 5 class.

 Memorandum Op. at 1-2 (Nov. 27, 1984). However, it was apparent that the services of more than just one or two lawyers would be required. It seemed sensible to continue with representation by lawyers who had already invested considerable time in the case. I decided, therefore, to appoint Lawrence H. Eiger (one of the original lawyers for Mirochnick and Goodman), James D. Fornari (originally for Goodman), Nicholas E. Chimicles (Mirochnick), and Lawrence Walner (Steinlauf) as co-counsel for the class. I authorized them to utilize the services of attorneys and paralegals from their respective firms when necessary. Id. at 3.

 Extensive settlement negotiations took place between the plaintiffs (the class and the FDIC) and Continental, the bank officer defendants and their insurance carriers. A settlement was reached and given preliminary approval by me in April 1986. In return for dismissal of the securities fraud claim of the class plaintiffs, Continental paid $ 25 million into a settlement fund for the class. The bank officers had attempted to persuade their insurance carriers to settle plaintiffs' claims, but no agreement could be reached with the carriers. The total amount of director and officer insurance ("D&O") was $ 100 million. The combined claims of the class and the FDIC against the individual defendants greatly exceeded that amount. The individual defendants settled with plaintiffs for the full policy limits and assigned to plaintiffs, in full satisfaction of the settlement, their claims against the D&O carriers for bad faith or negligent refusal to settle within policy limits. Eighty percent of the assignment went to the FDIC and 20 percent to the class. I gave final approval to these settlements on July 25, 1986.

 Some of the D&O carriers then a filed declaratory judgment suit against Continental and the bank officers and directors, seeking to avoid liability on their policies. They claimed that the reckless conduct alleged by the class was not within the coverage of their policies and that the settlements with the class and the FDIC were collusive. That case was assigned to Judge Milton I. Shadur of this court. Steinlauf, as class representative, attempted to intervene as a defendant on the ground that the interests of the class would not be adequately represented by the FDIC and the individual defendants. Judge Shadur denied leave to intervene, holding that the FDIC and the officer and director defendants "have the incentive and the obligation to make all the relevant legal arguments that Steinlauf would make if he were a defendant. His interest in establishing insurance coverage for the class claims will be adequately represented." Nat. U. Fire Ins. Co. v. Continental Illinois Corp., 113 F.R.D. 532, 538 (N.D. Ill. 1986).

 The claims against the D&O carriers were settled at various times during 1987 and 1988, with the class plaintiffs receiving a total of $ 13 million on their $ 20 million assignment. The class has therefore received a total of $ 38 million in settlement payments, and that amount earned another $ 7 million in interest by the end of 1989.

 The remaining defendant was Ernst & Whinney. The parties were unable to settle, and I presided over an 18-week jury trial in 1987. The class endeavored to persuade the jury that Ernst & Whinney had been reckless in its audits and its certifications of Continental financial statements, resulting in an artificial inflation of the purchase prices of Continental stock during the class period. The FDIC contended that Ernst & Whinney had been negligent in its audits of Continental and in failing to advise Continental's officers and directors of the dangers lurking in the energy loan portfolio. The jury returned verdicts in favor of Ernst & Whinney on both claims. No appeal was taken.

 II

 FEE PETITION OF CLASS COUNSEL

 The court's basis for awarding fees in this case is the familiar "common fund" theory. The services of counsel have contributed to the creation of the settlement fund which will be distributed to the class, and it is equitable that counsel be compensated from the fund for those services. The problem is how to value those services. From the outset of this case, the court and counsel have proceeded on the premise that the Lindy "lodestar" method would be used. No other method was suggested by counsel, nor did the case law at the time suggest that an alternative would be permissible. Under the lodestar method, the first step is to determine "the amount to which attorneys would be entitled on the basis of an hourly rate of compensation applied to the hours worked." Lindy Bros. Bldrs., Inc. of Phila. v. American R. & S. San. Corp., 487 F.2d 161, 167 (3rd Cir. 1973). The premise of this approach is that "the value of an attorney's time generally is reflected in his normal billing rate." Id.

 Petitioners have grouped their services into 284 categories. Category No. 1, for instance, is "Pre-Complaint Investigation." Category No. 2 is "Preparation of Complaint." Each category is documented by chronological time entries indicating services performed in that category by each attorney and paralegal over the life of the case. These time sheets are in a 23-volume appendix entitled "Statement of Services." Appendix I contains categories No. 1 through No. 16; Appendix II contains No. 17 through No. 26; and so on.

 The Statement of Services has also been separated into three stages. Stage One covers the period through May 31, 1986, when the first interim fee award was made. Stage Two covers June 1986 through July 1988, when the second interim fee award was made. Stage Three covers services rendered subsequent to July 31, 1988. These interim payments were 50 percent of the hourly charges claimed by counsel for each stage. I made no determination as to whether the full amounts claimed were justified and expressly reserved that question until the conclusion of the case.

 Petitioners argue they should be paid for their work on the Ernst & Whinney claim, even though the trial resulted in a loss. They urge that what they learned in the Ernst & Whinney trial was useful in their pursuit of the D&O carriers and was instrumental in bringing about the D&O settlements. The argument is strained, *fn3" but, more than that, it is unnecessary. There is no question that petitioners should be paid for their work on the Ernst & Whinney claim. The class was advised that the case against Ernst & Whinney would be pursued following the settlement with the bank and the individual defendants, and no class member objected. Had the claim been successful, the class would have recovered an amount from Ernst & Whinney perhaps in excess of that obtained in the settlements with the other defendants. (I do not recall what amount class counsel requested of the jury in final argument, but at the time of the settlement with Continental and the individual defendants in July 1982, counsel estimated that the class damages were between $ 101 million and $ 116 million. Statement in Support of the Estimate of Class Damages at 1.) The claim against Ernst & Whinney was a plausible one, and it was clearly worth pursuing. Although the class did not recover, it had the benefit of a full scale effort. It would be unjust to deny class counsel reasonable compensation for making that effort.

 In the final petition, counsel claim compensation for 23,930 hours of attorney and paralegal time in Stage One, 17,450 hours in Stage Two, and 575 hours for Stage Three. They ask for compensation based on their "lodestars" (hours x billing rates) and, in addition, for "multipliers" of the lodestars for all Stage One work and for the D&O work in Stages Two and Three.

 It will be useful to analyze the petition in terms of the number of hours, the hourly rates, and finally, the question of multipliers.

 In the Revised Memorandum of Class Plaintiffs' Counsel in Support of a Final Award of Attorneys' Fees and Reimbursement of Expenses ("Memorandum"), counsel acknowledge the troublesome nature of hourly charges:

 
The primary defect of the lodestar approach is its emphasis on the quantity of hours expended as a basis for arriving at a reasonable attorneys' fee. Because of this emphasis on hours worked, the lodestar methodology penalizes efficiency and creates a disincentive to resolve cases at the earliest appropriate opportunity. See Third Circuit Report, 108 F.R.D. at 248; Kirchoff v. Flynn, 786 F.2d 320, 324 (7th Cir. 1986) ("An hourly fee creates an incentive to run up hours, to do too much work in relation to the stakes in the case."). (footnote omitted).

 Memorandum at 23 (footnote omitted). Petitioners repeatedly invite me to deemphasize the matter of hours and consider the fee request in light of the percentage it represents of the total amount recovered by the class. They point out that the $ 9 million they are requesting in fees and interest would represent "only" 22 percent of the settlement fund.

 There are two problems with the percentage approach. First, this is not the basis on which the representation in this case was undertaken. Counsel, the court, and the members of the class have all understood from the outset that compensation in this case would be on an hourly basis. It is too late to change the rules. Secondly, the percentage approach has its own problems. Lindy itself was a rejection of what the reviewing court believed was an excessive percentage fee; the case was remanded for a determination of the appropriate fee under the "lodestar" method, which the court thought was "the only reasonably objective basis for valuing an attorney's services." 487 F.2d at 167. There is nothing about 22 percent that strikes me as more reasonable than an amount properly computed on a time basis with appropriate adjustments.

 The settling defendants have made their payments into the settlement fund and have no further interest in how the money is disbursed. No member of the class has filed an objection to the fee petition. The situation before the court is well described by the Third Circuit Task Force on Court Awarded Attorney Fees:

 
Another difference between fund-in-court and statutory fee cases is that in the former category there is a greater need for the judge to act as a fiduciary for the beneficiaries (who are paying the fee), particularly in the class action situation, because few, if any, of the action's beneficiaries actually are before the court at the time the fees are set. Judicial scrutiny is necessary inasmuch as the fee will be paid out of the fund established by the litigation, in which the defendant no longer has any interest, and the plaintiff's attorney's financial interests conflict with those of the fund beneficiaries. As a result, there is no adversary process that can be relied upon in the setting of a reasonable fee.

 Court Awarded Attorney Fees, Report of the Third Circuit Task Force, 108 F.R.D. 237, 251 (1985) (footnote omitted). I have examined each of the hundreds of pages of time entries submitted in support of the 41,955 hours of attorney and paralegal time claimed in the petition. I have also examined the 16-volume set of appendices containing copies of every pleading or memorandum on which more than 20 hours time was spent. It may be that only an exercise of this kind can convince one of the futility of attempting to decide what amount of time was necessarily spent on a case of this breadth and duration. I attempted to regulate the timekeeping in this case in a manner that would permit measurement of the time spent on each task and a determination of whether that amount of time was necessary and productive. In re Continental Illinois Securities Litigation, 572 F. Supp. 931 (N.D. Ill. 1983). Petitioners' Statement of Services, unfortunately, does not accomplish what I had in mind. Instead of listing discrete tasks and the time spent on each, the time entries are grouped in "categories." Some of the categories are manageable, since they collect all work related to a particular task and are confined to that work. Each of the 140 depositions, for instance, is a separate category. Other categories defy analysis. For instance, Category No. 218, "Designation and Preparation of Exhibits" for the Ernst & Whinney trial, consists of 37 pages of chronological entries such as: Activity Name Date Description Hours Telephone call with B. Rosen re: coordination of trial exhibits and witness MBH 10/19/85 designations. 5.40 * * * * DLS 11/06/85 Documents for trial exhibit list; conference with Chimicles re: same 4.00 * * * * S-K 11/14/85 Identify reg. gen. documents for trial use. 4.30

 The total attorney time claimed for this category (not including paralegal time) is 582 hours and the requested fees for the time are $ 83,500.00. The examples just quoted are typical of most entries in the Statement of Services. It is impossible to tell, except in the most general way, what was done. In Category No. 218, all one can tell is that the persons involved spent time organizing documents for the trial. There is no indication, and no way of telling, how much of the time was spent on documents that were actually used in the trial. There is no way to determine whether the time claimed is more than necessary to accomplish what was done, and no way of identifying what benefit the class derived from the activity referred to in any of the entries. Would it help if the entries concerning the organizing and reviewing of documents were more detailed? Perhaps a little. But there is only so much that can be described. Assuming it would be possible to describe everything that was done in 4 1/2 hours of organizing documents, it is doubtful that the effort itself would be cost-efficient. And even such a lengthy recitation would leave unanswered the questions of whether the work should have taken 4 1/2 hours and whether anything useful was accomplished. In fairness, then, it is not always clear that a detailed time entry would give the reader much more useful information than do entries like those quoted above or the following from Category No. 219, Strategy and Planning Conference Regarding Trial: Activity Name Date Description Hours FLF 10/21/86 Research/briefs. 3.00

 Whether the description of the work is general or specific, acceptance of the proposition that the time spent was no more than necessary, and that it produced something useful for the client, is often an act of faith. *fn4" This is no less true when the person attempting the determination is not the client but the judge who presided over the case. Most of the activity for which compensation is claimed -- drafting, reviewing, conferring, researching, corresponding, traveling -- is time spent out of court. Little of it has even an indirect product that can be seen and evaluated by the judge.

 The reviewing courts have recognized the difficulty of deciding what particular aliquots of time are excessive or unproductive. Percentage reductions have been approved, even recommended, as the preferable method of eliminating excessive time:

 
The district court acted within its discretion when it chose to cut the number of hours by a lump sum in response to appellees' claim that the time was inflated. We endorse the court's approach as a practical means of trimming fat from a fee application; it is generally unrealistic to expect a trial court to evaluate and rule on every entry in an application. Cf. New York State Association for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1146 (2d Cir. 1983) (percentage reduction of hours appropriate in cases with voluminous fee applications), and the cases there cited.

 Tomazzoli v. Sheedy, 804 F.2d 93, 98 (7th Cir. 1986). See also Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 776 F.2d 646, 656-658 (7th Cir. 1985) (15 percent reduction in hours approved); Northcross v. Bd. of Education of Memphis City Schools, 611 F.2d 624, 636-637 (6th Cir. 1979).

 Applied strictly, the rule that a court "may eliminate hours that are not documented in sufficient detail," Tomazzoli, 804 F.2d at 98 n. 5, would result in elimination of most of the time claimed in this case. In deciding not to make reductions of that size, I have taken into consideration that petitioners have the burden of proving something which is difficult to prove -- i.e., that they necessarily spent a particular number of hours on a particular task. In an effort to be as fair as possible to the petitioning attorneys, I will disallow hours only where I am convinced the time is excessive or that the time did not significantly benefit the class. I will resolve moderate doubts in favor of petitioners, which means that an enormous amount of time evidenced only by vague entries will be approved. Most categories will survive intact as far as the number of hours is concerned, and I will discuss only those categories where I order a reduction. The reductions are in time spent on work I warned counsel would be subject to particular scrutiny: excessive time spent on legal research; too much time spent on "reviewing" the work of others; and too much time spent by counsel "conferring" with each other. In re Continental Illinois Securities Litigation, 572 F. Supp. at 933, 934-935. I have not disturbed the paralegal and law clerk time but have concentrated on the attorney time, which I find more susceptible of analysis. *fn5"

 The courts that have made percentage reductions in fee petitions have not tried to explain why they have chosen one percentage rather than another. If precise explanations were possible, resort to percentages would be unnecessary; specific time could be identified as excessive. The selection of a percentage is a judgment call, based on the judge's general experience and knowledge of the issues in the particular case, as to how much of the claimed time is in excess of what was required for the useful portion of the work. The determination is necessarily impressionistic and, to a degree, arbitrary. In this, however, it is not unlike other decisions our system of justice calls upon factfinders to make, as, for instance, the selection of a particular dollar figure -- rather than another -- to compensate for disfigurement, pain and suffering or injury to reputation.

 No. 2 Preparation of Complaint

 This category must be considered in light of Category No. 1, Pre-Complaint Investigation, for which 93 attorney hours, totalling $ 25,000.00, are claimed. Category No. 2 seeks an additional $ 30,000.00 for 114 attorney hours. Time is claimed for the preparation of the Goodman, Mirochnick and Steinlauf complaints, although, as noted above, only Steinlauf was an appropriate class representative. I will allow the 21 hours claimed by Lawrence Walner & Associates in Category No. 2, since Mr. Walner was the attorney for Steinlauf. The attorney time for the other two firms will be reduced by 35 percent. The only practical way to accomplish this is to reduce the time of each attorney by that percentage, since it is not possible to differentiate among them in terms of duplicative time. (This same method will apply to all categories where time is reduced.)

 No. 3 Preparation of Consolidated Complaint

 The claim here is for 107 attorney hours, valued by petitioners at $ 32,000.00. The consolidated complaint was a refinement of the Steinlauf complaint, with the addition of Bleier's shareholder derivative action. In their Memorandum, petitioners say they are not claiming any time for the derivative action, but considerable time in relation to that action is in fact claimed in Category No. 3. See, e.g., entries of August 9, 31, 1982, September 8, 10, 14, 16, 17, 1982. Another problem is that the firm of Sachnoff Weaver, which was co-counsel for all plaintiffs on the consolidated complaint, has filed a separate petition for fees earned during the time it was co-counsel for the class. This firm alleges that it "took on primary responsibility for drafting a consolidated complaint," and seeks $ 11,000.00 for the 62 hours it devoted to that work. If I were to grant the claims of all attorneys for the drafting of the consolidated complaint, that document would cost $ 43,000.00.

 The attorney time for Category No. 3 will be reduced by 50 percent.

 No. 4 Pretrial Orders, Order for Preservation of Documents and Protective Orders

 A total of 165 attorney hours and $ 38,000.00 is claimed for this category. The time entries are mostly for drafting and for lawyers conferring with each other. It is impossible to make even a rough guess as to how much of the time in this category or any other in the petition was spent in conferences among counsel, since it is rare that a time entry will refer only to a conference; usually, the conference is listed along with several other items, with no allocation of the time. In setting the ground rules, I attempted to discourage unnecessary conferences:

 
Generally, attorneys should work independently, without the incessant "conferring" that so often forms a major part of the fee petition in all but the tiniest cases. Counsel who are not able to work independently should not seek to represent the class.

 In re Continental Illinois Securities Litigation, 572 F. Supp. at 933. If this admonition had any effect at all, it is imperceptible. I have little doubt that "conferring" is the activity which consumed more time than any other in the case. How much of it was necessary and productive is obviously impossible to gauge. *fn6"

 A specific example of excessive time in this category is the trip that both Mr. Greenfield and Mr. Chimicles took from Philadelphia to Chicago on September 8, 1982, to attend a meeting with other counsel. Each of them has charged 16 hours for the trip and the conference. (I have seen no instance in this petition where travel time is not billed at the full hourly rate; every moment in transit was apparently spent working on the case.) Multiplying these 32 hours by the requested hourly rates for Messrs. Greenfield and Chimicles, the class is being asked to pay $ 9,440.00 for their attendance at the meeting. The petition contains not the slightest hint of what was accomplished at the meeting.

 The attorney time in Category No. 4 will be reduced by 75 percent.

 No. 5 Class Action Related Discovery

 Petitioners claim 85 attorney hours at $ 21,000.00 for this category, which consisted largely of defending against the defendants' efforts to undercut the bona fides of Mirochnick, Goodman and Bleier as class representatives. There was a sound basis for defendants' position, inasmuch as these plaintiffs had purchased their shares after the calamity at Continental had been well publicized. None of them was certified as a class representative, and the efforts to have them certified were not beneficial to the class.

 The attorney time for this category will be reduced by 75 percent.

 No. 7 Notice -- No. 1 (1985)

 The claim here is for 62 hours of attorney time at $ 12,500.00. The work was preparation and mailing of a relatively simple notice to the class describing the pleadings and the status of the case.

 The attorney time is reduced by 50 percent.

 No. 12 Class Certification -- General

 The time entries here are laden with conferences, meetings and phone calls among counsel. Much of the activity was devoted to the attempt to certify Mirochnick, Goodman and Bleier as class representatives, which, had it succeeded, would have been detrimental to the class. The claim is for 150 hours at $ 35,000.00.

 Mr. Walner's time will be reduced by 25 percent, and the time of the other attorneys will be ...


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