Opinion ID: 685182
Heading Depth: 2
Heading Rank: 2

Heading: Special Master's Report

Text: 17 The special master initially reviewed both lodestar and percentage of the fund methodologies. He noted the mounting criticism of the lodestar, and the trend toward using a percentage of the fund in common fund cases. He correctly observed that under Tenth Circuit law then in effect, Brown v. Phillips Petroleum Co., 838 F.2d 451 (10th Cir.1988), either approach is permissible in a common fund case. He finally selected the percentage of the fund approach in this case for seven reasons: (1) it most closely matches the methodology actually employed in the marketplace; (2) because it matches the market, it provide[s] incentive for counsel to pursue actions such as this on behalf of large groups of investors; (3) it is less subjective than the lodestar plus multiplier approach; (4) it gives primary consideration to the results obtained by counsel; (5) because class counsel was initially retained on a contingent fee basis, a percentage fee most closely approximates the original agreement between client and counsel; (6) a fee expert retained by class counsel opined that percentage fee awards are customary and reasonable in cases like this one; and (7) because of the large number of law firms seeking compensation in this case, a lodestar approach could result in overcharging the class. Report of Special Master (Report) at 1466-68, Appellants' J.A. at 1457. 18 Having determined that a percentage of the fund approach was appropriate, the special master followed Brown 's dictate to apply the Johnson factors and concluded that an appropriate lodestar for class counsel was $2,959,250, applying the hourly rate that is normally charged in the forum where the case is prosecuted. Report at 14 n. 5, Appellants' J.A. at 1470. 6 He then specifically considered each remaining Johnson factor and concluded that an appropriate fee was 22.5% of the settlement fund, or $9,900,000. 19 He next turned to the issue of allocation of that fee among counsel who had submitted fee applications. He concluded that Class Counsel were entitled to ninety percent of the total fee awarded. 7 With respect to Non-Designated Counsel, he found that [t]he work performed by non-class counsel was clearly duplicative of work undertaken by class counsel, and, in many instances, the efforts of the firms not ultimately selected to represent the class were duplicative of each other. Report at 24, Appellants' J.A. at 1480. He nonetheless recommended an award of ten percent of the total fee to Non-Designated Counsel, on the ground that the duplication of work was largely unavoidable, permitting Non-Designated Counsel to recover some of their fees encourages enforcement of the securities laws, and the multiplicity of law suits initially filed enhances the possibility that at least one named plaintiff will be an appropriate class representative. 20 Finally, the special master concluded that counsel for the Objector-Appellants should receive some compensation for their legal work, on the theory that they presented their arguments cogently and competently and some arguments resulted in reductions in the fees and expenses awarded to several of the applicants. Report at 31, Appellants' J.A. at 1487. They were therefore awarded a total of $7000 in fees and $1750 in expenses.