this Class. Plaintiffs obtained no benefits from any proceedings brought by the government.
A second factor considered in Grinnell I is the standing of counsel at the bar -- both counsel receiving the award and opposing counsel. At the time of the PSI Settlement, this Court found that it "had the opportunity at first hand to observe the quality of plaintiffs' class counsel's representation both here and in prior complex litigation, and is impressed with the quality of plaintiffs' class counsel as representing a caliber adequately fitted to the difficult tasks faced on this unusual series of actions." In re Prudential Sec., 912 F. Supp. at 101. Since the issuance of that opinion the Court continued to observe the quality of Plaintiffs' counsel and, with respect to their representation of the present Class their representation has been equal to that previously stated. Further, Dennis Block and Joseph Allerhand of Weil Gotschal & Manges, defense counsel for Polaris are both highly regarded counsel who tenaciously litigated against plaintiffs throughout these proceedings.
As described in more detail above, the time and labor spent by counsel has been extensive.
This case involving six limited partnerships and more than $ 1 billion invested dollars was of large magnitude and complex because of the complex RICO allegations made, the number of party and non-party witnesses, the volume of documents to analyze and the hurdles to be overcome in view of the Harner, Weisl and Riskind results.
Grinnell I requires the Court to assess the responsibility undertaken by counsel. Here the Court observed first hand the continuous responsibility undertaken by Class Counsel in litigating every aspect of this case and Settlement. The magnitude and complexity of the action demonstrate the substantial responsibility undertaken here. Although there were only six PAIFs, about 135,000 people invested over $ 1 billion in those partnerships, representing approximately 14% of the $ 7 billion invested in all 700 limited partnerships sponsored by PSI. The responsibility undertaken by Class Counsel was enormous and, as the vigor with which they litigated demonstrates, was carried out by Class Counsel with an understanding of the importance of their efforts to plaintiffs and the members of the Class.
Grinnell I requires consideration of the amount recovered for the Class. The recovery here, of $ 22.5 million, when considered as an addition to the $ 110 million already recovered in the PSI settlement, "is a landmark and one of the largest recoveries ever obtained in a class action brought on behalf of investors." In re Prudential Sec., 912 F. Supp. at 101.
Grinnell I also requires the Court to analyze the work product of Class Counsel. In the instant action, the Court has presided over numerous conferences, oral arguments and hearings and has had the opportunity to see first hand the caliber of the attorneys representing the plaintiffs and the class and the quality of their work product. The Court has reviewed and analyzed the multi-volume Consolidated Complaint, memoranda of law and other written work product of Class Counsel. Further, in considering motions for summary judgment and class certification the Court had the opportunity to review numerous transcripts of depositions taken by Class Counsel as well as "smoking gun" documents that could only be uncovered by a meticulous search through hundreds of thousands of pages of documents produced by defendants and third parties. The Court also was intimately involved in the settlement negotiations and the efforts of Class Counsel to obtain the best possible settlement on behalf of plaintiffs and the members of the Class. With respect to each item of work the Court observed Class Counsel perform, the Court is of the opinion that the work product was of the highest caliber.
The eighth factor discussed by Grinnell I is what would be reasonable for counsel to charge a victorious plaintiff. Attorneys entering contingency fee agreements with their clients typically seek between 33% and 40% of recovery. In re Prudential Sec., 912 F. Supp. at 101. Class Counsel here request a fee equivalent to 30% of the recovery.
The final factor discussed in Grinnell I is the risk of litigation. The risk in this action was extremely high, in part because of how long ago the partnerships at issue were sold. Other elements that added to the risk were the numerous defenses available to the defendants including the "bespeaks caution" doctrine and the possible retroactive application of the PSLRA.
The percentage of the common fund analysis of proposed attorneys' fees has found increased favor with the courts in recent years. See Swedish Hosp. Corp. v. Shalala, 303 U.S. App. D.C. 94, 1 F.3d 1261, 1269; Camden I Condominium Ass'n v. Dunkle, 946 F.2d 768, 774 (11th Cir. 1991); Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir. 1989). The Supreme Court has noted that in calculating attorney fees under the common fund doctrine, "a reasonable fee is based on a percentage of the fund bestowed on the class." Blum v. Stenson, 465 U.S. 886, 900 n.16, 79 L. Ed. 2d 891, 104 S. Ct. 1541 (1984). One reason that the percentage-of-the-fund approach has gained favor is that it most closely approximates the manner in which attorneys are compensated in the marketplace for contingent cases. See In re Continental Illinois Sec. Litig., 962 F.2d 566, 572 (7th Cir. 1992).
The Notice of Pendency of Class Action and Settlement Hearing, mailed to Class Members, advised that Class Counsel would request a fee not to exceed 30% of the Settlement fund. No objection to the amount of the requested attorney fees has been received. In determining the reasonableness of a requested fee, numerous courts have recognized that "the lack of objection from members of the class is one of the most important reasons." General Public Utils. Sec. Litig., [1983-1984 Transfer Binder] Fed. Sec. L. Rep. (CCH) P 99,566 at 97,231 (D.N.J. Nov. 16, 1983); In re Art Materials Antitrust Litig., 1983 U.S. Dist. LEXIS 10434, 1984-1 Trade Cas. (CCH) P 65,815 at 67,417 (N.D. Ohio Dec. 27, 1983); Ressler v. Jacobson, 149 F.R.D. 651, 656 (M.D. Fla. 1992).
This Court has previously held in In re Prudential Sec., 912 F. Supp. at 102, that
the calculation of the fees to be awarded in an equitable fund case must be made in accordance with the Second Circuit's decision in City of Detroit v. Grinnell Corporation ("Grinnell I"), 495 F.2d 448 (2d Cir. 1974) which mandates the use of the lodestar method. However, this Court has found it appropriate to test the reasonableness of fee awards by reference to the percentage-of-recovery method. The Court has also recognized that the lodestar analysis is subject to discretionary upward adjustments and provides a useful guide for determining a fair and reasonable fee in common fund recovery cases. (footnotes omitted).