The substantial work performed by five of these experts and
consultants related to the development of document databases to
capture the nuances of the commodity futures trades and the
myriad liability and damages issues. Two of those experts alone
have each been paid in excess of $200,000 and the experts
together make up approximately 50% of the total expert expenses
As another indication of the immensity of the tasks confronted,
approximately $324,000 was incurred in the copying costs of lead
counsel's firm alone, and the other firms incurred significant
additional copying costs. The magnitude of the document copying
to corral the fundamental issues was unprecedented in lead
Counsel's experience. Counsel report that in order to reasonably
hold down the vast copying expenses, substantial document
inspections were made in the Defendants' premises. Prosecuting
the case and its myriad issues resulted in photocopying literally
in excess of 1,000,000 pages of documents.
Postage expense, while a minor matter, together with newspaper
advertisements and related expenses necessarily incurred involved
in excess of $176,000. The remainder of the costs of lead counsel
largely involved the essential and extensive foreign travel,
domestic travel, document storage and legal research.
The unprecedented effort of Counsel exhibited in this case led
to their successful settlement efforts and its vast results.
Settlement posed a saga in and of itself and required enormous
time, skill and persistence. Much of that phase of the case came
within the direct knowledge and appreciation of the Court itself.
Suffice it to say, the Plaintiffs' counsel did not have an easy
path and their services in this regard are best measured in the
enormous recoveries that were achieved under trying circumstances
in the face of natural, virtually overwhelming, resistance. The
negotiation of each settlement that was made was at arms length
and exhibited skill and perseverance on the part of lead counsel
and an evident attempt to gain for the Class the optimum
settlement figures that could be reached.
Turning now to the recognized methods for establishing a
suitable fee award in the circumstances of this case, two
recognized methods exist for determining an appropriate award in
a class action, namely, the "lodestar" method and the "percentage
of the recovery" method.
No one expects a lawyer whose compensation is contingent on
success of his services to charge, when successful, as little as
he would charge a client who in advance has agreed to pay for his
services, regardless of success. Nor, particularly in complicated
cases producing large recoveries, is it just to make a fee depend
solely on the reasonable amount of time expended. However, it is
the Court's duty to avoid any sense of vicarious generosity or to
permit the lodestar to be enhanced without restraint above a fair
and reasonable amount under all the facts and circumstances,
precluding any notion that there are no decent limits to
compensation for services of an attorney serving another's
It has long been recognized that a lawyer who recovers a
"common fund" is entitled to a reasonable attorney's fee from the
fund as a whole. See Boeing Co. v. Van Gemert, 444 U.S. 472,
478, 100 S.Ct. 745, 62 L.Ed.2d 676 (1980).
The United States Supreme Court consistently has held in
decisions involving the computation of a common fund fee award
that it is appropriate for a fee to be determined on a
percentage-of-the-fund basis. See Blum v. Stenson,
465 U.S. 886, 900 n. 16, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984) ("under the
`common fund doctrine', . . . a reasonable fee is based on a
percentage of the fund bestowed on the class"); see also
Trustees v. Greenough, 105 U.S. 527, 532-33, 15 Otto 527, 26
L.Ed. 1157 (1881); Central R.R. & Banking Co. v. Pettus,
113 U.S. 116, 124-25, 5 S.Ct. 387,
28 L.Ed. 915 (1885); Sprague v. Ticonic Nat'l Bank,
307 U.S. 161, 165-66, 59 S.Ct. 777, 83 L.Ed. 1184 (1939).
Courts increasingly have come to recognize the shortcomings of
the lodestar/multiplier method as a universal rule for
compensation. Support for the lodestar/multiplier approach in
common fund cases has eroded, and there has been a "ground swell
of support for mandating a percentage-of-the-fund approach" in
the common fund cases. See Florida v. Dunne, 915 F.2d 542, 545
(9th Cir. 1990) (emphasis added).
In Gwozdzinnsky v. Sandler Assoc., 159 F.3d 1346 (2d Cir.
1998), the Second Circuit affirmed an award of attorneys' fees
equaling 25% of a common fund recovery. Gwozdzinnsky was a
summary affirmance upholding a percentage fee award, citing Blum
v. Stenson, 465 U.S. 886, 900 n. 16, 104 S.Ct. 1541, 79 L.Ed.2d
After Gwozdzinnsky, this Court then employed the percentage
fee method in In re Prudential Sec. Inc. Ltd. Partnership Sec.
Litig, ("Prudential"), Order dated February 18, 1999. The
first part of that fee order "awarded 27.5% of the settlement
pools from each of the monetary settlements" as fees in a
recovery of $110,000,000. Id.
The Second Circuit plainly stated in Savoie v. Merchants
Bank, 166 F.3d 456, 460 (2d Cir. 1999) that "the Supreme Court
has implied that the percentage-of-the-fund method is a viable
alternative" method of awarding fees in a common fund case. Id.
Savoie was not a case in which a cash common fund was created
for the benefit of a class by settlement of that action. In
contrast, this case involves precisely (and nothing but) a cash
At least eight other circuits — the First, Third, Sixth,
Seventh, Ninth, Tenth, Eleventh and District of Columbia Circuits
— have affirmatively approved the percentage-of-recovery method
as an appropriate method for determining attorneys' fees.
The petitioners herein suggest that 27.5% is an appropriate
percentage award in the circumstances of this case. Petitioners
call attention to the following facts among others in the
evidentiary record as significant:
1. generally, price manipulation cases are
notoriously risky and are more difficult and risky
than securities fraud cases;
2. this case entailed substantial additional risks
(relating to the size of the class, the duration of
the manipulation, the absence of dominant
positions, and extraterritorial aspects) which have
been absent from all the previous, highly risky
commodity manipulation cases.
Although the percentage-of-the-recovery formula is not
necessarily optional for all cases, it has advantages and tends
to align the interests of the attorneys with those of the class.
One should recognize that it is uniquely the formula that mimics
the compensation system actually used by individual clients to
compensate their attorneys. The contingent fee is an incentive
system that substitutes for more costly judicial or individual
monitoring of the attorney's performance. Indeed, in the large
class action, individual negotiations between the attorney and
the class (and individual monitoring by the class member) is not