This lodestar figure is substantial evidence of a reasonable fee for the services performed.
It is instructive to compare this lodestar figure, $1,507,165 with the contingent fee figure derived above of $1,518,306. Had the Court awarded a full 33 1/3 percent of the Settlement Fund, the two amounts would be grossly disproportionate. The fact that these two figures are so close suggests that this amount is a reasonable and equitable base figure for this attorneys' fee award. However, the Copeland Court provided that the "lodestar" could be adjusted on the basis of several factors, including the risk that the litigation would not result in an award for the plaintiffs. See Copeland v. Marshall, 205 U.S. App. D.C. 390, 641 F.2d 880, 892 (D.C. Cir. 1980). In view of the substantial uncertainty surrounding the successful litigation of these wrongful death claims, it is appropriate to award the plaintiffs' attorneys an additional sum as a "contingency adjustment."
It should be noted that plaintiffs' attorneys faced substantial risks not because they were advancing meritless claims but because the litigation involved several novel legal issues (e.g., choice of law, FFAC representation and the government contractor's defense). Furthermore, the risk involved was increased by the fact that the resolution of these matters required thousands of hours of work over the course of a decade and by the ability of defendants to postpone and protract litigations and thereby exhaust plaintiffs and their resources. Assuming a task of this magnitude on a contingent fee basis must have placed considerable strain on the financial resources of the plaintiffs' attorneys. In light of these risks, a contingency bonus is appropriate.
It might be argued that recent cases in this circuit preclude the consideration of risk in the assessment of attorneys' fees. In Laffey, supra, for example, the D.C. Circuit held that a contingency enhancement should be awarded only in the "exceptional case." 746 F.2d at 28; see also Sierra Club v. E.P.A., 248 U.S. App. D.C. 107, 769 F.2d 796, 809 (D.C. Cir. 1985). Laffey does not control here. First, the history of this litigation demonstrates that it is exceptional. Moreover, in Laffey, successful plaintiffs in a Title VII action sought an assessment of attorneys' fees against the defendant airline pursuant to a federal statute which required the court to compute a reasonable fee. Here, by contrast, the Court is merely using the "lodestar" analysis as a means of checking on the reasonableness of a contingency award imposed on the proceeds of a settlement fund. More importantly, the rationale of Laffey does not apply here. The Laffey Court noted that increasing a Title VII fee award against the defendant when the litigation was especially risky would "creat[e] a perverse penalty for those least culpable." Id. at 26. In this case, since the fees will be subtracted from a settlement fund created for the plaintiffs' benefit, the contingency adjustment creates beneficial rather than "perverse" incentives by alerting plaintiffs, in risky cases, to the substantial costs of litigation. Counsel have also reminded the Court that while they received over $11,000,000 in fees in the survivors' cases, the hours logged in those cases produced a lodestar substantially in excess of the fee awarded to them. For these reasons, a special contingency adjustment of $300,000 will be added to the award figure of $1,518,306 and will be assessed against the fund.
Plaintiffs' attorneys have also requested $780,541 in expenses. These expenses have been reviewed by Keller, Zanger & Co., certified public accountants, and are facially reasonable. Friends For All Children, Inc. Accounting For Expenses of Litigation Exclusive of Attorney Fees (filed May 14, 1986). This conclusion is reinforced by the fact that a previous expense application reviewed by these same accountants received almost complete approval by the Special Masters after 680 hours of vigorous scrutiny. See Friends For All Children, Inc. v. Lockheed, 567 F. Supp. at 802 n. 16. These expenses will be charged against the Fund as a whole rather than subtracting a pro rata share from the awards to each recipient. This method has been chosen because it helps simplify the calculations. Since the award of expenses against the settlement as a whole decreases the funds available to the claimants, a pro rata share of the expenses is implicit in each award. Moreover, this method of allocating expenses appears to be contemplated by the Settlement Agreement which states that "the Court shall make such allowances [from the Settlement Fund] for attorneys' fees, litigation fees and expenses, costs . . . as the Court deems appropriate . . . ." and "the entire Fund . . . shall be subject to allowances for attorneys' fees, litigation fees, and expenses . . . and costs . . . ." Settlement Agreement at para. 5.
One item of expense, however, is a 2% contingency award to Dr. Michael Cohen for his services. By contract, Dr. Cohen is to receive $6,500 per month plus 2% of any judgment or settlement. The only signatory to the contract is Charles R. Work, who signed on behalf of infant beneficiaries of the decedents' estates. He could not bind FFAC or the potential adoptive parents.
Dr. Cohen's affidavit states that the contract was approved by the Court. But it was not. Neither the Court nor the Special Master approved it. Instead, after review by the Special Master, the Court approved a cover letter to the parents of the surviving children. Order (filed February 17, 1984 in Civil Action No. 76-0544).
Dr. Cohen's hours claims are not even facially reasonable. Dr. Cohen was hired to assist plaintiffs on matters requiring medical and technical expertise. A recurring problem in this litigation has been that plaintiffs' counsel have used Dr. Cohen to perform tasks which would normally be included in a law firm's overhead. Friends For All Children, Inc. v. Lockheed, 567 F. Supp. at 815. Here, the same problem resurfaces. As an example, in the single month of February of 1986, Dr. Cohen billed 348 hours for preparation of plaintiffs' list of exhibits. These tasks could have been cost-efficiently delegated to support staff who are available for substantially less than $6,500 per month plus a 2% contingency. In order to establish a reasonable lodestar, attorneys should have demonstrated that they have exercised billing judgment in reducing redundant or non-cost-efficient hours. Dr. Cohen's time sheets do not indicate that sufficient billing judgment was exercised, either by him or by the individuals who hired him.
There is also no reason why Dr. Cohen should recover his full 2% under his contract when it would be inequitable for plaintiffs' attorneys themselves to recover their contractual contingency on the entire Settlement Fund. It is impossible from Dr. Cohen's time sheets to separate what hours were devoted to tasks which required his special expertise and which tasks should have been more efficiently delegated. An equitable solution is allowance of a fee to Dr. Cohen of approximately the same percentage that plaintiffs' attorneys received. Plaintiffs' attorneys requested $3,333,333 and received $1,818,306 or approximately 55%. The same percentage applied to Dr. Cohen's fee results in an award of $143,687.50. Plaintiffs' attorneys' requested expense award will thus be reduced by $ 117,562.50 from $780,540.90 to $662,978.40.
The guardians ad litem have claimed the relatively modest amount of $ 76,806.76 in fees and expenses including $21,479.65 for the fees and expenses of Peabody, Lambert & Meyers, the firm which preceded the guardians' current firm. These amounts are facially reasonable and are therefore approved. The guardians are also entitled to a bonus for risk at the same percentage as the attorneys' bonus (20%). They will therefore receive an additional sum of $15,361.35.
In view of the foregoing, the following plan of distribution is adopted:
Payee Gross Amount Attorneys' Fees Rate Net Amount
Powell $ 900,000 $ 300,000 33.33% $ 600,000
Selzer $ 800,000 $ 266,666 33.33% $ 533,334
45 families of decedents $ 4,857,840 $ 825,840 17% $ 4,032,000
($ 101,205 x 48)
FFAC(Survival Action) $ 740,000 $ 125,800 17% $ 614,200
Attorneys (Bonus) $ 300,000 $ 300,000
TOTAL $ 7,597,840 $ 1,818,306 $ 5,779,534
Attorneys $ 519,290.90 (Exclusive of Dr. Cohen's Fee)
Dr. Cohen $ 143,687.50 (55% of $261,250)
Guardians Ad Litem $ 76,806.76 (fees = $ 53,291.25)
(expenses = $ 2,035.86)
(Peabody = $ 21,479.65)
Guardians Ad Litem (Bonus) $ 15,361.35 (20% of 76,806.76)
FFAC $ 500,000
TOTAL $ 1,255,146.51
TOTALS Distributions $ 5,779,534
Fees $ 1,818,306
Expenses $ 1,255,146.51
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