The Moore counsel requested $23,000 in fees plus $891.32 in costs and expenses from the Fund. They showed 130 hours spent on the case. In the alternative, they informed the Court that counsel fees would be provided by the contingent fee agreements between themselves and their three clients. Under the agreement Mr. Moore would pay 35% of his total recovery ($8,400) and Messrs. Smith and Walker would pay 25% of their respective total recoveries ($6,500 each).
Counsel for the Adkins group petitioned for $14,485.83 in fees and $97.26 in costs to be taxed to the Defendants. Alternatively, they requested that the Court honor their contingent fee agreements which sought a percentage of only the accrued (past) pension benefits rather than out of future benefits. The agreements provided for a flat fee of $1,500 from each client out of their accrued pensions plus 33 1/3% of the accrued pension over $1,500 from Mr. Adkins ($2,400) and 50% of the accrued pension over $1,500 from Messrs. Madden and Hensley. The Adkins group's attorney expended 286 hours on the case, according to their counsel's affidavit.
The Kiser attorneys also had a contingent fee agreement with the original Plaintiff, Mr. Kiser, for one-third of his accrued pension. As partial compensation for the 2,065 hours logged as class counsel, the Kiser attorneys seek 33 1/3% of each class miner's accrued pension to be deducted from the total recovery of accrued benefits plus 10% of each miner's future pension and benefits ($1,600,000) to be paid by the Fund from general revenues over the next ten years. Counsel has informed the Court that 401 miners have signed a "fee agreement" consenting to this contingent fee formula.
The "consents" to Kiser attorneys fees has caused some confusion in the record. The consent forms were mailed to the members of the class on January 22, 1973, several days after the judgment was entered in this case and the Court informed counsel that it would determine the question of attorneys fees. The form was attached to a covering letter describing the successful judgment. In the last paragraphs of the three-page letter, counsel informed class members of the fee formula and urged the members to sign the agreement.
It is alleged that shortly after the original Opinion of the Court on January 19, counsel for all parties met with the Court in Chambers, and it is further alleged that the letter was discussed. The Court does not recall such discussion as to any contingent fees, etc. and neither do the attorneys for the Defendant Fund. The record discloses that one day after that meeting, the Kiser petitioners mailed the letter with the proposed fee agreement to the class members. When the fact of this letter came to the Court's attention, the matter was promptly set down for a hearing on February 15, 1973; and while the transcript will speak for itself, Kiser petitioners did not dispute at any place therein the following:
(a) the Court did not countenance a contingent fee agreement of the kind contemplated by Kiser's attorneys in this particular case; and
(b) the Court wanted a new notice sent out to all members of the class; and
(c) counsel were directed to submit an order for a new notice to the Court for its approval with an opportunity on the part of the defendants to object.
Counsel for Defendant Trustees did not submit the Order requested, and none was entered. In any event, and in order to set the record straight, this Court at no time ever approved a contingent contract in the manner set forth in the aforementioned letter sent out by the Kiser attorneys to the class members.
II. The Class Action Standard of Reasonable Attorney's Fees Must Consider Time, Effort, Skill, Complexity, Risk, Results, Incentive, and Public Service in Light of the Attorney-Class Relationship, and Not Solely a Flat Percentage
The facts of this case exemplify the inherent controversy and problems attendant with the question of counsel fees in class actions. The fundamental concern has been that the attributes of the class action -- speed and efficiency in the administration of justice -- will be obliterated if certain factors are left uncontrolled. The potential for abuse lies in the area of unreasonable charges for attorney fees and improper solicitation of such fees from actual or potential class members. As a preventive measure for such abuses, it has been strongly recommended that the matter of attorney's fees be left to the determination of the Court using a standard applicable to the unique situation of a class action. § 1.41 "Preventing Potential Abuse of Class Action," Manual for Complex Litigation, 1 Moore's Federal Practice Part I at 27-28 (1973).
The standard used to determine class action attorney's fees must meet the problem on two levels. On the first level, it must weigh the following factors: (1) time and effort expended; (2) the novelty and difficulty of the issues; (3) the skill required to perform the legal services properly; (4) the amount of duplication of other counsel's work; (5) the amount of risk involved; and (6) the nature and amount of the results obtained.
On the second level, the standard must include three considerations unique to the class action. They are: (1) The Attorney-client Relationship -- The representation of the class is not the result of private enterprise but the result of judicial determination; (2) Public Service Element -- an element of public service is involved in seeking and accepting employment as counsel for the class; and (3) Incentive Factor -- the policy of the law in class actions is to provide a motive to private counsel to represent the public and enforce the law. See, § 1.47 "Control of Attorneys Fees and Expenses in Class Actions," Manual for Complex Litigation, supra at 62-64.
These class action standards in the preceding paragraph incorporate several of the factors used to judge the reasonableness of the fee charged for services to an individual client, but consider them in a different perspective. As the form, nature and substance of the relationship between the class members and class counsel are different from those which characterize the relationship between counsel and an individual party capable of contracting for the payment of attorney's fees, so also is the standard measuring the attorney's fees different.
The question of appropriate counsel fees has been tied to apron strings of the contingent fee percentage for too long. In saying this, the Court is not unmindful that contingent fees in many instances, as a practical matter, have a long tradition in the legal profession, and have served and will serve a useful public purpose. However, in class actions, under Rule 23, it is incumbent upon the bar and bench to apply their imagination to a solution for this pressing problem. As Judge Decker in Illinois v. Harper & Row Publishers, 55 F.R.D. 221 (N.D. Ill. 1972) has warned:
". . . If Rule 23 is to be preserved against deserved criticism, some attempt must be made by the court to suit the award of fees to the performance of individual counsel in light of the size of the settlement. Otherwise, the attorneys who are taking advantage of class actions to obtain lucrative fees will find themselves vulnerable to the criticism expressed in the Italian proverb, 'A lawsuit is a fruit tree planted in a lawyer's garden.'" at 224.
Thus, while a fee awarded in a class action suit might reflect a percentage of the total recovery, this selected percentage cannot be the primary determinate. After counsel has been adequately compensated, including a premium to provide a motive for class representation, no further incentive is needed. Therefore, though the amount recovered bears consideration, the primary focus should be upon the time and effort expended, the skill needed (papers which are merely repetitive work of others count for little), the risk involved, the nature of the benefits recovered and the effect of the award on the public interest and reputation of the courts. § 1.47 Manual on Complex Litigation, supra, at 64. As the Manual goes on to state succinctly:
"In no event should representation of a judicially determined class be allowed on the same basis as in a contingent fee contract between competent contracting counsel and client." Id, at 64.