Opinion ID: 685182
Heading Depth: 2
Heading Rank: 1

Heading: Percentage of the Fund vs. Lodestar

Text: 10 Many courts have addressed the propriety of utilizing the percentage of the fund instead of the lodestar in calculating attorneys' fees in common fund cases. See, e.g., Florin v. Nationsbank of Georgia, N.A., 34 F.3d 560 (7th Cir.1994); In re Washington Pub. Power Supply Sys. Litig., 19 F.3d 1291, 1295-96 (9th Cir.1994); Rawlings v. Prudential-Bache Properties, Inc., 9 F.3d 513, 515-17 (6th Cir.1993); Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1265-71 (D.C.Cir.1993); Camden I Condominium Ass'n v. Dunkle, 946 F.2d 768, 771-74 (11th Cir.1991). There are recognized advantages and disadvantages with each method, although the more recent trend has been toward utilizing the percentage method in common fund cases. See generally Monique Lapointe, Attorney's Fees in Common Fund Actions, 59 Fordham L.Rev. 843 (1991); Christopher P. Lu, Procedural Solutions to the Attorney's Fee Problem in Complex Litigation, 26 U.Rich.L.Rev. 41 (1991). 3 11 In Brown, we held that calculating an attorneys' fee award as a percentage of a common fund was not per se an abuse of discretion. Brown, 838 F.2d at 454. We did not, however, explicitly express a preference for one methodology over the other in common fund cases, although we recognized and discussed at length the fundamental differences between common fund cases and statutory fee-shifting cases, and how those differences affect the analysis of a fee award. Furthermore, we held that the twelve factors originally developed in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974) for statutory fee cases apply equally to percentage fee awards in common fund cases. 4 Our approach has been called a hybrid approach, combining the percentage fee method with the specific factors traditionally used to calculate the lodestar. Lapointe, supra, at 869-70. 12 In Uselton, we cited and discussed Brown 's holding: 13 In Brown v. Phillips Petroleum Co., 838 F.2d 451 (10th Cir.), cert. denied, 488 U.S. 822, 109 S.Ct. 66, 102 L.Ed.2d 43 (1988), this court distinguished common fund cases from statutory fee cases and recognized the propriety of awarding attorneys' fees in the former on a percentage of the fund, rather than lodestar, basis. Id. at 454-56; accord Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1268 (D.C.Cir.1993); Camden I Condominium Ass'n v. Dunkle, 946 F.2d 768, 774 (11th Cir.1991). 14 Uselton, 9 F.3d at 853 (emphasis added). The two cited cases, Swedish Hosp. Corp. and Camden I Condominium Ass'n, are the only two circuit decisions explicitly rejecting the use of the lodestar method in common fund cases, concluding, after extensive analysis of the history and rationales of the two approaches, that the percentage of the fund method is the appropriate one for common fund cases. Other circuits since Uselton have explicitly held that either method is appropriate, depending on the particular circumstances of the particular case. See Florin, 34 F.3d at 565 (We therefore restate the law of this circuit that in common fund cases, the decision whether to use a percentage method or a lodestar method remains in the discretion of the district court.); In re Washington Pub. Power Supply, 19 F.3d at 1296 ([W]e restate the law of our circuit that, in common fund cases, no presumption in favor of either the percentage or the lodestar method encumbers the district court's discretion to choose one or the other.); Rawlings, 9 F.3d at 516 (In this circuit, we require only that awards of attorney's fees by federal courts in common fund cases be reasonable under the circumstances.). At least one circuit has explicitly adhered to the lodestar method, acknowledging that the prevailing trend in other circuits was to use the percentage method. Longden v. Sunderman, 979 F.2d 1095, 1099 n. 9 (5th Cir.1992); see also In re Agent Orange Prod. Liab. Litig., 818 F.2d 226, 232 (2d Cir.1987) (suggesting that lodestar was the proper method in either a common fund or a statutory fee-shifting case). 15 In our circuit, following Brown and Uselton, either method is permissible in common fund cases; however, Uselton implies a preference for the percentage of the fund method. 5 In all cases, whichever method is used, the court must consider the twelve Johnson factors. The district court issued its opinion before Uselton, and therefore did not have the benefit of its implicit preference for percentage of the fund. 16 Because this case involves the propriety of the district court's decision to reject a special master's recommendation as to methodology and amount of attorneys' fees, we begin with a review of the special master's report and the district court's opinion.