The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge
MODIFIED MEMORANDUM OPINION REGARDING AWARD OF ATTORNEYS' FEES AND EXPENSES
This is a class action brought on behalf of all persons or entities who purchased or otherwise acquired the securities of Baan Company between January 28, 1997 and October 12, 1998. On June 26, 2003, counsel for Lead Plaintiffs and Defendants entered into a Settlement Agreement, which provides for the settlement of the case in exchange for the payment by Defendants of $32.5 million, plus interest from August 15, 2003 (hereinafter, the "Gross Settlement Fund").
Plaintiffs' Counsel have moved for an award of attorneys' fees for services rendered in this case in an amount equal to 32% of the Gross Settlement Fund ( i.e., $10.4 million), together with reimbursement of costs and expenses in the amount of $1,241,098.77. After a hearing before the Court held on September 30, 2003, and upon due consideration of the briefs, submissions and the prior proceedings, the Court will grant Counsel's motion in part and will award attorneys' fees in the amount of $9.1 million, representing 28% of the Gross Settlement Fund, plus reimbursement of litigation expenses in the amount of $1,241,098.77. In making this determination, the Court makes the following findings of fact and conclusions of law:
1. Courts have recognized that "a litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole." Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980); Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261 (D.C. Cir. 1993) ("Swedish Hosp."); In re Lorazepam & Clorazepate Antitrust Litig., 2003 U.S. Dist. LEXIS 12344, at *1 (D.D.C. June 16, 2003). The "common fund doctrine" allows an attorney whose efforts created, increased or preserved a fund "to recover from the fund the costs of his litigation, including attorneys' fees." Vincent v. Hughes Air West, Inc., 557 F.2d 759, 769 (9th Cir. 1977).
2. "When awarding attorneys' fees, federal courts have a duty to ensure that claims for attorneys' fees are reasonable." Swedish Hosp.,1 F.3d at 1265. This mandate is also required for federal securities class actions brought under the Private Securities Litigation Reform Act of 1995 ("PSLRA"). See 15 U.S.C. § 78u-4(a)(6).
3. In determining a reasonable attorneys' fees, two different approaches have generally been employed: the percentage method and the "lodestar" method. See Report of the Third Circuit Task Force, "Court Awarded Attorney Fees." 108 F.R.D. 237 (1986). Pursuant to Swedish Hospital and its progeny, this Circuit has elected to use the percentage method. See Swedish Hosp., 1 F.3d at 1271 ("In sum, we join the Third Circuit Task Force and the Eleventh Circuit, among others, in concluding that a percentage-of-the-fund method is the appropriate mechanism for determining the attorney fees award in common fund cases."); In re: Newbridge Networks Sec. Litig., 1998 U.S. Dist. LEXIS 23238, at *10 (D.D.C., Oct. 23, 1998) ("In this Circuit, attorneys' fees are calculated according to 'a percentage-of-the-fund method'.") (citation omitted).
4. Pursuant to Swedish Hospital, this Court has considerable latitude on the issue of reasonableness, but as noted by the Circuit,"a majority of common fund class action fee awards fall between twenty and thirty percent." 1 F.3d at 1272.
5 Courts have looked to several factors in assessing the reasonableness of a fee request, including: (1) the size of the fund created and the number of persons benefitted; (2) the presence or absence of substantial objections by members of the class to the settlement terms and/or fees requested by counsel; (3) the skill and efficiency of the attorneys involved; (4) the complexity and duration of the litigation; (5) the risk of nonpayment; (6) the amount of time devoted to the case by plaintiffs' counsel; and (7) the awards in similar cases. In re Lorazepam & Clorazepate Antitrust Litig., 2003 U.S. Dist. LEXIS 12344, at *27.
6. With respect to the first factor, the $32.5 million settlement fund represents a substantial recovery for Class members. In addition, the fund is over 16% of Plaintiffs' estimated damages in a best case scenario; between 32.5% and 54% of Defendants' estimated damages; and substantially exceeds the median settlement of 3.6% of estimated damages in similar class actions brought under the PSLRA. Moreover, since over 17,500 notices were mailed to potential members of the Class, it is likely that the settlement fund will inure to the benefit of a sizeable number of Baan investors that sustained damages as a result of Defendants' alleged misconduct. See In re Vitamins Antitrust Litig., 2001 U.S. Dist. LEXIS 25067, at *62 (D.D.C. July 16, 2001) ("Courts have regarded exceptional benefits to a large class as grounds for a higher fee award").
7. Also noteworthy is the fact that only one objection to counsel's application for attorneys' fees has been filed. According to that objector, Plaintiffs' Counsel should be entitled to only 20% of the settlement fund because that is what the Court awarded in Swedish Hospital. In making this assertion, however, neither the objector nor his counsel apparently reviewed the briefs and declarations of Plaintiffs' Counsel filed on September 3, 2003, and thus, they are unaware of the work and effort devoted to this case by Plaintiffs' Counsel. The objector also seems to be unaware of the actual percentage requested by counsel and provides no principled basis for imposing a 20% cap on the recovery of fees. Given the absence of any helpful factual or legal analysis, the Court finds that the objection is of no value to the Court in making its determination, and it is therefore overruled.
8. In addition, this was undeniably a challenging and complex case. Plaintiffs' Counsel had to review and analyze thousands of financial and accounting documents regarding Baan's many transactions with affiliated parties that were in dispute. Plaintiffs' Counsel had to master complicated accounting principles regarding the accounting treatment to be accorded to sales of Baan's software licenses. Plaintiffs' Counsel also had to address difficult and novel legal questions resulting from Vanenburg's and Baan's incorporation in the Netherlands, such as the interpretation and impact of Dutch law on the conduct of the named Defendants; the enforceability of judgments in the United States against Netherlands companies; and the Court's jurisdiction over Netherland's residents.
9. There was also a substantial risk that Plaintiffs' Counsel would not be paid for their efforts. There were many factors that could have eliminated any chance of recovery in this case, including the precarious financial condition of the London-based company that purchased Baan in 2001; the deteriorating state of Baan's directors' and officers' insurance policy; the uncertainty concerning enforcement of United States judgments in the Netherlands; and the absence of a prominent regulatory investigation to spearhead claims against the Company.
10. There were also serious risks associated with proving Plaintiffs' claims at trial. For example, Plaintiffs' ability to prove Defendants' knowing misconduct would have been exceedingly difficult given that several accounting firms had approved the financial statements and third-party transactions that Plaintiffs had alleged were improperly reported and disclosed. Plaintiffs also faced formidable loss causation hurdles because the disclosures at the end of the Class Period that resulted in a sharp decline in the price of Baan's securities were not clearly related to the alleged fraud at issue in the case. Thus, this was a situation where success was not in any way assured. To the contrary, there were a number of liability and ...