The opinion of the court was delivered by: SHADUR
MILTON I. SHADUR, UNITED STATES DISTRICT JUDGE
On October 23, 1990 this Court approved the settlement in this securities class action as fair, reasonable and adequate. But because it had not then been provided with all the necessary information as to the one issue on which the class was not independently represented -- the amount of attorneys' fees to be charged against the settlement fund, a question as to which class counsel and class members by definition have conflicting interests -- this Court requested and has now received additional input from class counsel bearing on that subject.
That added information is sufficient to permit the exercise of an informed judgment as to a reasonable fee award. In that respect this memorandum opinion and order will first look at the "lodestar" approach to that question, then (as counsel have suggested) will turn to the percentage-of-recovery approach in the process of evaluating whether or not that approach, or perhaps a multiplier times the so-called "lodestar," should apply to compensate for counsel's risk-taking.
Some factors that enter into the "lodestar" calculation as it has been tendered by counsel require a fresh (or more accurately an objective) look. They will be dealt with at the outset, after which an adjusted "lodestar" figure will be developed based on those factors.
As for the hours actually spent by counsel, the lawyers themselves recognize the existence of some wastage in that respect. First of all, this litigation began with a multiplicity of lawsuits -- the familiar (if not invariable) result when a public company, with stockholders located all around the country, suffers an event that sets the antennae of plaintiff class action securities lawyers vibrating.
That multiplicity alone meant that a substantial number of lawyers had engaged in much the same threshold activity, very likely of significant scope, in order to prepare and file their complaints. And of course that initial activity was necessarily duplicative and ultimately provided no more benefit to the class than a single law firm's efforts would have done.
At the next stage the various suits ended up grouped on this Court's calendar via transfer and consolidation. And even though this Court then insisted on dismissal of all the individual suits in favor of a single consolidated complaint, the problems of selecting lead counsel and thereafter of monitoring the efforts of the several law firm participants had to be dealt with by the lawyers -- once again with some inevitable duplication of effort even on the most favorable assumptions.
To put the matter most simply, there is just no question that the hours spent by ten law firms, as evidenced by plaintiffs' counsel's submissions, had to exceed by some substantial amount the time that lawyers in one law firm handling the ultimate single lawsuit would have had to spend in its preparation, filing and prosecution. And that is so no matter how efficiently the lead counsel and liaison counsel were in their efforts at coordination and in parceling out the work once the litigation team was organized.
Nevertheless this Court has not sought to carve any time out of the total hours to reflect that indisputable factor.
Instead the just-described point has been made in this opinion to recognize that any so-called lodestar figure that accepts the lawyers' hours at face value already contains a multiplier of some material but unquantified amount. After all, from the point of view of the clients -- the stockholder class -- no added value is contributed by a multiplicity of actions. In terms of the real value of legal services, the logical measure of a reasonable fee would be the amount that would have been earned by a single law firm handling the matter for the plaintiff class from the inception of the case.
As for the other component of the conventional lodestar calculation -- hourly rates -- more than one factor calls for discussion. They too will be addressed before this opinion applies the principles outlined here to the factual submissions.
First, as to the delay factor,
this Court has on several occasions explained why historical hourly rates with an adjustment for interest provide a substantially more precise level of compensation for the phenomenon of delay in payment than the simplistic (though convenient) application of today's hourly rates to all time spent by counsel during the course of the litigation (see, e.g., Brandt v. Schal Associates, Inc., 131 F.R.D. 512, 520-22 (N.D. Ill. 1990)), Lippo v. Mobil Oil Corp., 692 F. Supp. 826, 838-42 (N.D.Ill. 1988) and Fleming v. Kane County, 686 F. Supp. 1264, 1272-74 (N.D.Ill. 1988). In this instance the supplemental submission made by plaintiffs' counsel in response to this Court's request provides a number of confirmations of that proposition. Only a few of those confirmations bear brief mention, as drawn for example from the largest single request received from the participating law firms:
1. For one thing, fully 25% of the total fees of all the lawyers as requested in this case, when viewed in terms of the lodestar at current rates ($ 86,800 out of $ 348,890.50), represent the time of a single lawyer, Stephen Ramos, Esq. ("Ramos"), who moved from associate to partnership status in his firm on January 1, 1990. That type of advancement was specifically and accurately portrayed by Fleming, 686 F. Supp. at 1273 as a classic ...