Opinion ID: 738304
Heading Depth: 3
Heading Rank: 1

Heading: The 25% cap.

Text: 18 Dunne argues that the district court should have chosen between the lodestar method of multiplying reasonable hours times an hourly compensation rate or the percentage of the fund method, but erred in using both, with the percentage of the fund as a cap on the lodestar amount. He argues that the magistrate judge considered his claims of hours spent in light of the relationship between the product of hours times rate and 25% of the common fund. The district court, not the magistrate judge, made the award, but the district judge's order indicates that he adopted the magistrate judge's determination rather than substituting a different analysis of his own. 19 When Dunne's earlier fee award was appealed, we vacated and remanded because the district court had not considered the burden to the common fund of the other pending fee applications. State of Florida v. Dunne, 915 F.2d 542, 546 (9th Cir.1990). The fact that seventy-two percent of the common fund could be distributed in attorney's fees and costs in this case is disturbing. Id. 20 In common fund cases, fees are based on the equitable notion that those who have benefitted from litigation should share in its costs. Id. at 545. That means that the people who benefit from the money the lawyers' efforts brought in should share the burden of paying the lawyers. Thus, the people of Florida should pay Dunne and the other lawyers a reasonable amount for enriching them by $5,120,000. 21 We have said that common fund fees commonly range from 20% to 30% of the fund created, and that the district court should take note that 25 percent has been a proper benchmark figure. Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 270 (9th Cir.1989); cf. In re Pacific Enterprises Securities Litigation, 47 F.3d 373, 379 (9th Cir.1995). The district court has discretion to use the lodestar method or the percentage of the fund method in common fund cases. In re Washington Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1295 (9th Cir.1994). Reasonableness is the goal, and mechanical or formulaic application of either method, where it yields an unreasonable result, can be an abuse of discretion. See id. at 1294-95 n. 2. A 25% benchmark might be reasonable in some cases, but arbitrary if the fund were extremely large. Id. at 1297. 22 It is not entirely clear from the record whether the magistrate judge looked for possible cuts to his claim to bring the total fees and costs charged to the common fund below the 25% benchmark, or whether she would have made the same cuts to Dunne's charges regardless. We assume for purposes of discussion that she did, as Dunne suggests, look for cuts to make on his bill in order to stay within the benchmark. Assuming she did, she did not abuse her discretion to Dunne's detriment. 23 It is reasonable for the district court to compare the lodestar fee, or sum of lodestar fees, to the 25% benchmark, as one measure of the reasonableness of the attorneys' hours and rates. This resembles what lawyers commonly do when they draft a bill based on hours spent, consider the bottom line as compared with the value of the result, then cut the bill if the total seems excessive as compared with the results obtained. The district court should evaluate whether the combined effect of granting the fee applications in toto would be to reduce substantially the size of the common fund available for distribution to the plaintiff class. Dunne I, 915 F.2d at 546. The plaintiff class should ordinarily receive 75% of the wealth the attorneys brought them, according to the 25% proper benchmark, Paul, Johnson, 886 F.2d at 270, at least where the size of the common fund does not make that benchmark arbitrary, Washington Pub. Power, 19 F.3d at 1297. If the lodestar amount overcompensates the attorneys according to the 25% benchmark standard, then a second look to evaluate the reasonableness of the hours worked and rates claimed is appropriate. 24