connection with this case. We recognize that our award of attorneys' fees must be adequate to encourage competent counsel to continue to pursue this type of complicated commercial securities litigation on behalf of a class. On the other hand, we must ensure that the class recovery is optimized. Having considered carefully the request for attorneys' fees, including the supporting memoranda and the appendices of affidavits and time logs, we are prepared to award attorneys' fees in the total amount of $ 2,900,000.00, which represents 29% of the settlement. We regard this amount as the maximum fee recovery allowable under the circumstances of this case. We are convinced, after our careful examination of the fee request and supporting information, that this amount constitutes a fair and reasonable fee. Also, having received and reviewed in confidence a summary of the attorneys' fees billed and charged by the counsel for the defense in this case, we are convinced that our award is both fair and reasonable in the context of the legal services performed in the prosecution of this case.
Our award of fees in the amount of 29% of the settlement is within the "normal" range of attorneys' fees allowed in class actions of this type. We do not wish to over-emphasize this point as we believe that each case must be considered carefully in the context of its individual circumstances. Moreover, as stated above, we believe that our hybrid approach is preferable to the straightforward application of the percentage-of-the-fund method of fee determination. Cf. In re Activision Securities Litigation, 723 F. Supp. 1373, 1378 (N.D. Cal. 1989) (court concludes that "in class action common fund cases the better practice is to set a percentage fee and that, absent extraordinary circumstances that suggest reasons to lower or increase the percentage, the rate should be set at 30%").
However, commentators who have surveyed attorneys' fee awards in similar cases suggest that in common fund cases such as the one before us at this time, attorneys' fees are typically awarded in the range of 20% to 30%. See, e.g., Herbert Newberg, Attorney Fee Awards, supra, at 51-52 ("In common fund cases attorney's fees should not usually exceed 50% of the fund recovered and are typically in the 20% to 30% range."); Court Awarded Attorney Fees, Report of the Third Circuit Task Force, October 8, 1985 (Arthur R. Miller, Reporter), 108 EF.R.D.F 237, 247 n. 32 (1985) ("Judges systematically awarded fees in the range of twenty to twenty-five percent of the fund . . . .").
Our research of case law supports the conclusion that fee awards typically range from 20% to 50% of the fund, and lost often constitute 20% to 30% of the fund. See, e.g., In re Telesphere International Securities Litigation, 753 F. Supp. 716 (N.D. Ill. 1990) (in securities class action, fees awarded constitute 21.7% of settlement fund of $ 1,519,500.00); In re Security America Corporation Securities Litigation, 750 F. Supp. 352 (N.D. Ill. 1990) (in securities class action, fees awarded constitute 11.4% of the $ 15,184,951.00 common fund); Rudolph v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 1990 U.S. Dist. LEXIS 593, 1990 WL 7168 (N.D. Ill. Jan. 18, 1990) (in securities class action, fees awarded constitute 15% of settlement fund of $ 10,000,000.00); In re Gould Securities Litigation, 727 F. Supp. 1201 (N.D. Ill. 1989) (in securities class action, fees awarded constitute at least 20.4% of settlement fund of $ 10,000,000.00); Mashburn v. National Healthcare, Inc., 684 F. Supp. at 697 (in securities fraud class action, fees and costs awarded constitute 30.29% of $ 9,925,000.00 cash portion of $ 17,425,000.00 common settlement fund); Howes v. Atkins, 668 F. Supp. at 1027 (in shareholders' derivative action, fees and costs awarded constitute 40% of cash settlement fund of $ 1,000,000.00); Enterprise Energy Corp. v. Columbia Gas Transmission Corp., 137 F.R.D. 240, 250 (S.D. Ohio 1991) (in class action, fees and costs awarded constitute 15.6% of $ 32 million cash portion of settlement of $ 56.6 million); In re Cincinnati Gas & Electric Co. Securities Litigation, 643 F. Supp. 148 (S.D. Ohio 1986) (in securities class action, fees awarded constitute 15% of common fund of approximately $ 14 million); In re Dun & Bradstreet Credit Services Customer Litigation, 130 F.R.D. 366, 375 (S.D. Ohio 1990) (fees awarded constitute 15% of settlement fund of $ 18 million); In re Warner Communications Securities Litigation, 618 F. Supp. 735, 754 (S.D.N.Y. 1985), aff'd, 798 F.2d 35 (2d Cir. 1986) (in securities fraud class action, fees awarded constitute approximately 25% of cash settlement fund of $ 18.4 million); In re TSO Financial Litigation, 1989 U.S. Dist. LEXIS 8253, 1989 WL 80316 (E.D. Pa. July 17, 1989) (fees awarded constitute 23% of settlement fund of $ 2,850,000.00); Harman v. Lyphomed, Inc., 787 F. Supp. 772, 778 (N.D. Ill. 1992) (in securities fraud class action, fees awarded constitute 20% of settlement fund of $ 9,900,000.00); Edmonds v. United States, 658 F. Supp. 1126, 1128-30 (D.S.C. 1987) (in class action, fees awarded constitute 5% of common fund of approximately $ 27-30 million); In re Activision Securities Litigation, 723 F. Supp. 1373, 1378 (N.D. Cal. 1989) (in securities class action, fees awarded constitute 30% of the common fund).
Several other courts have also surveyed recent cases and reached similar conclusions regarding the amounts typically awarded as attorneys' fees in common fund cases. See, e.g., Warner Communications Securities Litigation, 618 F. Supp. at 749-50 (survey of cases suggests that fees are typically awarded in the range of 20% to 50% of common fund); Enterprise Energy, 137 F.R.D. at 250 (survey of cases reveals fee awards ranging from 18% to 33% of common fund); Harmen, 787 F. Supp. at 774 (survey of recently reported class action securities fraud cases from Northern District of Illinois reveals fee awards ranging from 10.3% to 21.7% of common fund); TSO Financial Litigation, 1989 WL at App. A. (appendix of fee awards in class actions, concluding that fee awards are typically 19% to 45% of the common fund). See also In re Domestic Air Transp. Antitrust Litigation, 148 F.R.D. 297 (N.D. Ga. 1993) (fees awarded in common fund cases typically constitute 20% to 30% of fund).
4. An Alternative: The Market Approach to Attorneys' Fees
While we continue to advocate application of the hybrid approach articulated above, we note that several alternative approaches to fee determinations have recently been proposed. In their petition, class counsel have directed our attention to one new method in particular. In In Matter of Continental Illinois Securities Litigation, 962 F.2d 566 (7th Cir. 1992) (Posner, J.), the Seventh Circuit articulated an alternative method of attorneys' fee determination based on an analysis of the relevant legal market.
The court first noted that the object in awarding a reasonable fee is to give the lawyer what he would have gotten in an arm's length negotiation, had one been feasible. In a class action suit, the court suggested that much time and expense might be saved by abandoning the lodestar computation and, instead, basing the reasonable attorneys' fee on fee arrangements for similar services within the relevant market. The court stated:
The judicial task might be simplified if the judge and the lawyers bent their efforts on finding out what the market in fact pays not for the individual hours but for the ensemble of services rendered in a case of this character. . . . The class counsel are entitled to the fee they would have received had they handled a similar suit on a contingent fee basis, with a similar outcome, for a paying client.