Full opinion text
MEMORANDUM OPINION AND ORDER DIRECTING PAYMENT OF ATTORNEYS’ FEES AND COSTS LUCAS, District Judge. After a duly noticed evidentiary hearing during the two days of May 10 and 11,1977, the Court is prepared to fix and direct the payment of attorneys’ fees in this class action securities litigation. I. BACKGROUND FACTS The history of this multi-district, securities litigation has been well-documented in the press, in books, in special reports, and in numerous judicial opinions. It would be imprudent as well as impossible to repeat in this short space what has consumed volumes; however, before making an evaluation and award on the fees requested, a brief review of the history and nature of this litigation is in order. While a detailed history of this ease is unnecessary, some background information is essential to an understanding of the Court’s conclusions that follow. The litigation arose out of a massive securities fraud perpetrated through Equity Funding Corporation of America (hereinafter “EFCA”) and its subsidiaries. In March, 1973 more than eight years of public trading in EFCA securities was halted by the New York Stock Exchange and the Securities and Exchange Commission. Soon thereafter, in an action brought by the SEC in the Central District of California, EFCA consented to a decree enjoining the continuation of the scheme to defraud investors. Following numerous press reports in April, 1973 disclosing the fraud at EFCA, numerous investor suits were filed throughout the country. More than 110 class action complaints and more than 15 private actions were filed relating to- the alleged EFCA fraud. The majority of these actions were filed either in the Central District of California or the Southern District of New York. Although these actions were based on the same underlying set of operative facts, the complaints and the theories for recovery they contained were as diverse as the parties and counsel who pressed the actions. The list of defendants totaled more than 260 and included EFCA, its officers, its inside and outside directors, the accountants, investment banking firms which acted as underwriters, a host of tippee defendants who allegedly sold after learning of the EFCA fraud, New York banks, brokerage houses, the New York and American stock exchanges, and the Illinois and California insurance departments. A characterization and classification with exactitude of all the original claims in this litigation would be impossible; however, the Judicial Panel on Multidistrict Litigation (hereinafter “the JPML”), in its opinion consolidating and transferring these actions to this Court, fairly and accurately described the claims as follows: “A. Primary or Underlying Fraud Claims The primary or underlying fraud claims relate to an alleged scheme by Equity Funding and its subsidiaries to inflate assets and earnings by, among other things, creating and selling to reinsurers bogus life insurance policies in order to present to the investing public an image of a successful, growing and prosperous enterprise. The alleged fraud, facilitated by the use of computers, enabled Equity Funding to overstate its assets and record non-existent assets, which eventually appeared in its financial statements. The defendants in the fraud actions typically include Equity Funding, its officers, directors and subsidiaries, and its accountants and auditors who prepared the financial statements and reports which concealed the alleged fraud. “B. Trading or So-Called ‘Tippee’ Claims These claims are asserted by purchasers of Equity Funding’s securities against parties who allegedly possessed material, non-public information concerning Equity Funding and traded in the securities of the corporation without making such information generally available to the investing public. Plaintiffs typically allege that in March, 1973 a former Equity Funding employee informed a securities analyst for a research oriented brokerage firm that a massive fraud was being perpetrated at the company; that the analyst conducted his own investigation and passed information he gathered to certain investors and agents for investors in Equity Funding’s securities; and that those in possession of this inside information used it to their advantage until trading in all securities of Equity Funding was suspended. Plaintiffs also necessarily allege the facts of the primary or underlying fraud. Some of the complaints which contain trading or ‘tippee’ claims name as defendants not only parties which allegedly traded securities when in possession of inside information but also party-defendants to the primary fraud claims. “C. Combination Primary Fraud-Trading Claims Some of the complaints contain a single claim for relief based upon allegations of both primary fraud and trading on inside information. “D. Underwriting Claims These claims are asserted by purchasers of debentures of Equity Funding and focus upon the financial statements in the separate registration statements and prospectuses disseminated with respect to the public offerings of the debentures. The claims necessarily contain allegations to the underlying fraud at Equity Funding. “E. Rescission Claims Claims for rescission and damages are made arising out of Equity Funding’s acquisition of Bankers National Life Insurance Company and Liberty Savings & Loan Association. Plaintiffs were stockholders in the corporations at the time of the acquisitions and received Equity Funding stock in exchange for their shares. They allege that the financial statements used by Equity Funding in connection with the acquisitions were false and misleading. But included in plaintiffs’ claim for rescission are allegations concerning facts relevant to the primary fraud. “F. Miscellaneous Claims 2. Indenture Trustee Actions Independent Investor Protective League has filed two actions in the Southern District of New York against the indenture trustees of the Equity Funding debentures, alleging that the trustee violated its fiduciary duties to protect the rights of the bondholders. Plaintiff is opposed to transfer of either of the actions. The complaints on their face, however, raise questions of fact common to the other actions and we find that these parties will to some extent benefit from participation in the coordinated or consolidated pretrial program in California. 3. Broker-Dealer Actions Individuals who purchased Equity Funding securities before trading was suspended have filed actions against their brokers and representative agents alleging violations of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. These actions necessarily involve the primary fraud at Equity Funding and, in order to eliminate the possibility of duplicative discovery and inconvenience to the parties and witnesses, they should be transferred to the Central District of California and placed under the general supervision of the transferee judge.” In re Equity Funding Corporation of America Securities Litigation, 375 F.Supp. 1378, 1381-82 (Jud.Pan.Mult. Lit.1974), (citations omitted). Prior to the consolidation and transfer of the claims to this Court pursuant to the above-quoted opinion, groups of counsel in New York and California attempted to organize their respective aspects of the litigation. Counsel in each city met and elected Steering Committees. Pursuant to pretrial orders entered in this Court and the Southern District of New York, attempts were made to draft unified and consolidated complaints. Plaintiffs in California filed a single unified and consolidated complaint containing requests for definition of four separate classes encompassing the primary fraud, trading or tippee, underwriting and rescission claims. These same efforts at coordination among New York counsel resulted in the filing of four separate consolidated class action complaints. It is clear that the delayed action of the JPML and the inability of California and New York counsel to agree upon a unified approach caused much duplication of efforts and waste of judicial resources in the beginning of this litigation. The polarity of positions between New York and California counsel was evidenced in the proceedings before the JPML. Plaintiffs’ Steering Committee in California embraced the belief that consolidation and centralization of all cases in one location was vital to the successful prosecution of the litigation. The trading plaintiffs and other New York plaintiffs, as well as certain defendants, pressed for bifurcation of the action and argued that at least the trading and underwriter cases should remain in the Southern District of New York. The respective positions were exhaustively briefed and argued before the JPML on two separate occasions. After lengthy oral argument, the JPML in a 5 to 4 decision filed February 1, 1974, ordered all EFCA cases transferred to the Central District of California, including the underwriting and trading cases. The centralization of the cases in California prevented the possibility of overlapping and inconsistent class determinations, the duplication of discovery and the possibility of conflicting district court and appellate court decisions being applied to the litigation. After the consolidation and transfer of the litigation, efforts to coordinate the proceedings were doubled. Recognizing the reality that the New York cases were being sent to California, all counsel set out to organize the separate plaintiffs’ committees into one unified committee of counsel. This was accomplished by expanding the membership of the California Plaintiffs’ Steering Committee, which then included Messrs. Marshall Grossman, Jack Corinblit and David Gold, to include Messrs. Philip Jones, Paul Bernstein, Stuart Wechsler, Leon Gold, and Herbert Wachtell, all of New York, Mr. Harold Kohn of Philadelphia, and Mr. Lowell Sachnoff of Chicago. The primary responsibility for organizing the prosecution of this litigation was, thereby, placed in the hands of these counsel. Immediately after the Order of the JPML, the Court noticed a status conference which was held on December 20, 1973. The result of this status conference was the issuance by the Court of an Order staying all proceedings in all actions in “M.D.L. Docket 142,” the docket number given to all EFCA cases. The purpose of this stay was to prevent pell-mell and haphazard discovery and to permit the physical transfer of the files from numerous jurisdictions. This stay also allowed counsel to organize themselves and their litigation strategy. By order, dated May 21, 1974, the Court undertook the convening of a preliminary pretrial conference. This order established June 17, 1974 as the date for the preliminary pretrial conference and listed ten items as an agenda. Among the items set on the agenda was consideration of “consolidated proceedings versus coordinated proceedings” (including the type of complaint to be used; the establishment of pleading deadlines; and discovery procedures.) At the conference on June 17, approximately 110 attorneys participated, and a considerable number availed themselves of the opportunities provided by the Court to file written memoranda both before and after the hearing. This hearing resulted in the issuance of “General Management Order No. 1” and “Practice and Procedure Order No. 1.” The major features of these orders included the establishment of a single organization of plaintiffs’ counsel rather than separate or- ganizations for class action counsel and private action counsel; a separate organization of class action counsel for the sole purpose of preparing motions under Rule 23 of the Federal Rules of Civil Procedure; the requirement of a single unified and consolidated complaint; and establishment of dates for hearing motions under Rules 12 and 23 of the Federal Rules of Civil Procedure. In addition, these orders authorized limited discovery on the Rule 12 and 23 motions and discovery on the merits of the claims against the tippees, the accountants, and the underwriters. After the filing of the plaintiffs’ First Amended Unified and Consolidated Complaint, the Court issued “Discovery Order No. 1,” filed November 19, 1974, which allowed discovery to begin in the trading cases. As a result of this Order, numerous depositions were taken and thousands of documents were produced. Also, at the end of 1974, exhaustive interrogatories were served upon all plaintiffs’ counsel by many of the major defendants in the litigation, including the accounting defendants and the trading defendants. The massive discovery efforts in this case had begun. The major catalyst to full-scale discovery in this litigation, which was extensive and extended throughout the United States, was “Discovery Order No. 2,” issued by the Court on October 15, 1975. There is no doubt that conducting discovery, pursuant to the provisions of Discovery Order No. 2, constituted the most time-consuming aspect of these MDL proceedings. From the outset of this litigation discovery had been vigorously pressed by the plaintiffs and vigorously opposed by defendants. This order, which was written after the Court received briefs and heard oral argument from all parties who desired to be heard, attempted to accommodate the discovery needs of all parties, and to serve the interests of justice by moving this complex litigation toward trial relatively expeditiously. Its most salient feature was its mandate that concurrent and overlapping depositions should be taken in this case. Discovery in this case included over 250 depositions and an assembly of some 1,000,-000 pages of documents. A majority of the discovery, both written and oral, involved extremely technical matters and complex issues in a field where the accounting, auditing and legal principles are unsettled. There is no doubt that the organized and thorough discovery efforts by plaintiffs’ counsel in this case allowed them to adequately respond to the numerous and varied motions in this case and intelligently discuss the possibility of settlement of all, or part, of the litigation. ■ Pursuant to General Management Order No. 1, a host of defendants filed voluminous motions to dismiss the First Amended Unified and Consolidated Complaint pursuant to Rule 12 of the Federal Rules of Civil Procedure, raising a plethora of novel and complex procedural and substantive issues. The complexity of the issues raised was caused by numerous facts, including the financial size of EFCA and many other defendants, the alleged time span of the fraud at EFCA, the size and complexity of the First Amended Unified and Consolidated Complaint, the interrelationship between the often divergent positions of the numerous representative plaintiffs, and the divergent positions of numerous defendants and their insurance carriers. Remarkably, to the credit of the members of Plaintiffs’ Steering Committee, plaintiffs were able to present a coordinated and unified opposition to the motions and diverse arguments of the various defendants. Such a response allowed the Court to effectively focus its attention, in a meaningful and succinct manner, on the many complex questions of law presented by the Rule 12 motions. The Court filed its Opinion on January 23, 1976. In Re Equity Funding Corporation of America Securities Litigation, 416 F.Supp. 161 (C.D.Cal.1976). Proceedings to certify this action as a class action, pursuant to Rule 23 of the Federal Rules of Civil Procedure, were likewise vigorously contested by the parties. Again, the plaintiffs were able to present to the court a unified motion seeking the certification of various plaintiff and defendant classes. Additionally, plaintiffs’ counsel prepared a detailed and sophisticated reply memorandum to the varied oppositions of the defendants. The importance of class certification to the plaintiffs cannot be overstated. Some counsel have viewed it as the “sine qua non to the settlements” in this action. In the Court’s view, the importance of the class certification issues compares favorably to the importance of the transfer and consolidation issues present before the Judicial Panel on Multidistrict Litigation in 1973. In July, 1975, class certification of the plaintiff class and subclasses was tentatively ordered by the Court substantially as prayed for by the plaintiffs. On March 26, 1976, the Court filed its detailed Memorandum Opinion and Order on the issues. That memorandum also certified the defendant classes. Armed with the massive amount of information obtained during discovery and with definitive rulings from the Court on major substantive and procedural issues, counsel instituted serious settlement negotiations with the major defendants. From the record before this Court, these negotiations appear to have been nearly as arduous as the discovery proceedings in this case. In January 1976, the Court, after discussions with counsel, designated the Honorable W. Matthew Byrne, Jr. as the Settlement Judge in this litigation. During the next 18 months, through lengthy and complicated settlement negotiations and with numerous discussions with Judge Byrne, these counsel were able to settle substantially all of the countless claims which arose from the demise of Equity Funding Corporation of America.. The settlements, which stand as a tribute to the quality, skill, integrity, industry and team effort of counsel for all parties to this litigation, deserve mention at this point. II. THE SETTLEMENTS The benefit to the class by virtue of the settlements in this action consists of sixty million dollars ($60,000,000) in cash. Counsel have represented that this is the largest monetary settlement or judgment in a securities class action in the history of the securities laws. It befits the massiveness of the fraud in this case that the settlements would be unparalleled in the history of securities litigation. The settlements will result in cash payments to the class members from the following defendants in the following amounts: Amounts A. Settling Defendants to be Paid Wolfson, Weiner & Co., Wolf-son, Weiner, Ratoff & Lapin, Seidman & Seidman, Haskins & Sells, and certain of their present and former partners, employees and agents $39,000,000 Bache Halsey Stuart, Inc. (formerly known as Bache & Co.), and New York Securities Co., Incorporated $3,467,500 Joseph Froggatt & Co. and certain of its former partners 3,000,000 Milliman & Robertson, Inc. 3,000,000 The Estate of Michael R. Riordan and certain donees of and beneficiaries under the Will of Michael R. Riordan 2,000,000 Pennsylvania Life Company and certain of its subsidiaries, directors, officers and employees 5,000,000 Certain former directors, officers and employees of EFCA and its subsidiaries 227,381 Dishy, Easton & Co. 50,000 Trading Defendants 4,000,000 B. The Trustee of EFCA 250,000 The benefits to the class achieved in this litigation are in addition to those achieved for the former holders of EFCA securities in the EFCA reorganization proceedings and in the Equity Funding Life Insurance Company (EFLIC) liquidation proceedings. A detailed history of the settlement proceedings is unnecessary at this point. Nor is this the proper place to recount the strengths and weaknesses of the plaintiffs’ claims against the various settling defendants. A few comments will suffice. The class settlements were not negotiated in the early stages of the dispute. All the parties had been able to assess the risks of success after nearly 3V2 years of litigation. Discovery by interrogatories and requests for production of documents had been completed. Counsel had also labored through roughly 250 depositions. The results obtained support the proposition that plaintiffs’ counsel wisely negotiated from a position of strength. The settlement package was the product of lengthy and difficult negotiations conducted over a period extending nearly two years in length, variously with and among the insurers, with and among the defendants, and with and among the various plaintiffs. The settlements consist of an extremely complex series of interrelated agreements, releases, waivers and assignments of causes of action. They were masterfully constructed and meticulously composed. The settlements reached are indeed impressive when considered in light of the fact that, during the course of this litigation, the applicable legal principles were undergoing remarkable changes and were subject to differing interpretations. Not many of the major decisions rendered during this period served to make the liability of the major defendants in this case clearer. See, e. g., Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S.Ct. 1375, 47 L.Ed. 668 (1976); Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975); Fridrich v. Bradford, 542 F.2d 307 (6th Cir. 1976); Blackie v. Barrack, 524 F.2d 891 (9th Cir. 1975); Clegg v. Conk, 507 F.2d 1351 (10th Cir. 1974), cert. denied, 422 U.S. 1007, 95 S.Ct. 2628, 45 L.Ed. 669 (1975); Kerbs v. Fall River Indus., Inc., 502 F.2d 731 (10th Cir. 1974). The final act in the drama of concluding these settlements, as is the case in most complex class action cases, constitutes the applications by plaintiffs’ counsel for reasonable fees. Since such applications are the occasion for this opinion, and armed with the brief background facts outlined above, the Court is prepared to proceed with an examination of the specific fee applications in this litigation. III. THE PRESENT FEE APPLICATIONS Pursuant to the Stipulations of Settlement, the Notice sent to members of the class, and Orders of the Court, thirty-two applications for awards of attorneys’ fees have been filed with the Court. These applications seek a total award of more than $13.5 million in attorneys’ fees for services rendered in this litigation. The following table accurately reflects the name of each applicant, the attorneys’ fees sought by each applicant, the amount of expenses for which reimbursement is sought by each applicant, and a breakdown of the amount of time expended by personnel in each applicant’s firm. The applications filed with the Court are thorough and exhaustive. The contents of the applications were dictated by an order of the Court, filed February 2, 1977, which reads substantially as follows: “In addition to any affidavits and exhibits counsel may wish to include in their fee applications, the Court, by this Order, requires each counsel who applies for fees in this litigation to include in his or her fee application the following information: (1) Complete copies of all time records kept by counsel in M.D.L. Docket No. 142 for which fees are sought. (2) Complete copies of any written fee contract, if any, relating to this litigation and entered into with counsel’s respective clients or a recitation in full of any oral agreement re fees in this litigation entered into with their respective clients. (3) Complete copies of any written fee arrangement, or a recitation in full of any oral agreement, by and between any counsel or group of counsel in this litigation. (4) A recitation and brief explanation of any and all fees obtained by any counsel in any EFCA-related litigation or proceeding, including, but not limited to, the EFLIC proceedings in Illinois, proceedings before the M.D.L. panel, and the EFCA reorganization proceedings. Additionally, a recitation of any duplicated or overlapping fee requests and, if such exist, a statement in justification of such duplicative requests. Finally, complete copies of all time records kept by counsel for work done in any EFCA-related litigation or proceeding. (5) Complete copies of all fee applications and time records in all other contingency cases handled by counsel during the pendency of this litigation in which court approval of attorneys’ fees was required and in which such approval has either (a) been obtained or (b) is pending, excepting any time records relating to In Re Consolidated Mattel Securities Cases. In contingency matters handled by counsel during the pendency of this litigation in which fee applications have not been filed, but are anticipated to be filed pursuant to counsel’s obligation to obtain court approval of attorneys’ fees, counsel must state (a) the name of the case, (b) the nature of the case, (c) an estimate of the amount of hours expended to date, and (d) the dates between which such services were rendered. Production of the information and records listed above, along with affidavits of counsel, will meet the minimum standards, as established by this Court, for complete and accurate fee applications. For a discussion of the general standards that will be employed by the Court in reviewing the fee applications, counsel’s attention is directed to the cases of Grunin v. International House of Pancakes, 513 F.2d 114 (8th Cir. 1975); City of Detroit v. Grinnell Corporation, 495 F.2d 448 (2d Cir. 1974); Lindy Bros. Builders, Inc. v. American Radiator and Standard Sanitary Corporation, 487 F.2d 161 (3d Cir. 1973); Liebman v. Petersen Coal & Oil Co., 63 F.R.D. 684 (N.D.Ill.1974). The Court also commends to counsel’s attention the Manual for Complex Litigation, pt. I, § 1.47 (rev. ed. 1973) and the Code of Professional Responsibility of the American Bar Association § DR 2-106.” Pursuant to this order, the Court received more substantiating evidence of the effort expended by counsel than that submitted in any other securities class action of which the Court is aware. Each application consists of volumes of detailed information regarding the nature of the services performed by counsel and the members of their law firms. Each application has been carefully reviewed by the Court. Additionally, this Court has first-hand knowledge of the numerous factors which comprise the fee applications, having lived with this litigation and every facet of it over the past four years. In this position, the Court has presided over proceedings which consume some 131 pages of docket entries and which have resulted in the issuance of in excess of 183 written orders and memorandum opinions. It is from this unique perspective that each application for attorneys’ fees will be viewed. Pursuant to paragraph 55 of the Important Notice of Proposed Settlements and Class Action Determination to Present and Former Owners of Equity Funding Corporation of America, certain counsel of record and some parties filed written objections to the fee applications of certain counsel in this litigation. Objections were filed by (a) counsel for the State Teachers Retirement Board of Ohio, (b) counsel for class members Linda Levy and Richard Kamen, (c) the firm of Fine, Kaplan and Black, (d) Marshall B. Grossman and Jack Corinblit, Plaintiffs’ Liaison Counsel and Plaintiffs’ Co-Chairman, respectively, (e) counsel for Lawton General Corporation, (f) counsel for Fidelity Corporation, (g) counsel for Princeton University and other defendants, (h) counsel for Robert Selig, representative plaintiff for Class I, 91/2% debenture holders, (i) Morgan Guaranty Trust Company of New York and The Ford Foundation, and (j) counsel for plaintiff Stanley Ferber, the class representative of Subclass Three. These objections were carefully read and considered by the Court and they proved valuable in illuminating the plethora of issues raised by the thirty-two fee applications. The issues raised by the objections will be discussed in this Opinion’s analysis of the reasonable fees for counsel in this litigation. The objections also resulted in the extension of the time for the fee hearing from the originally-allotted three hours to two full days. During the two-day evidentiary hearing various counsel testified under oath and were cross-examined, numerous counsel argued in support of their fee applications, and every counsel and class member who desired to speak was given the opportunity. In making the awards that follow, the Court has carefully considered all the pleadings mentioned above, including the thirty-two applications, their exhibits, and all objections they prompted. Due consideration has also been given to the comments and testimony of counsel contained in the 381 page Reporter’s Transcript of the evidentiary hearing held by the Court. IV. THE PROPER STANDARD Under Rule 23(e) the district court acts as a fiduciary who must serve as a guardian of the rights of absent class members. See, e. g., Grunin v. International House of Pancakes, 513 F.2d 114, 123 (8th Cir. 1975); Norman v. McKee, 431 F.2d 769, 774 (9th Cir. 1970). In fulfilling that duty, a proper fee award can only be made on the basis of sufficient specific evidence regarding the time spent on the litigation, Grunin, supra, at 126, and after the district court elucidates the factors upon which the award is based and relates those factors to the facts and figures submitted by plaintiffs’ counsel. Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974). While counsel are entitled to adequate attorneys’ fees to “compensate the attorney for the reasonable value of services benefiting the [class],” Lindy Bros. Builders, Inc. v. American Radiator and Standard Sanitary Corporation, 487 F.2d 161, 167 (3d Cir. 1973), the district court must act with jealous regard to the rights of those who are interested in the fund and must not only avoid awarding “windfall fees” but avoid every appearance of having done so. See City of Detroit v. Grinnell Corporation, 495 F.2d 448, 469 (2d Cir. 1974) (“Grinnell I”). The purposes behind an award of reasonable attorneys’ fees have been accurately stated as follows: “The guiding principles in determining awards of attorneys’ fees should be to provide compensation sufficient to stimulate the motive for representation of classes and to ensure that the fees awarded are consistent with the degree of benefits bestowed upon the class insofar as the bestowing of those benefits can be shown to be the product of the lawyers’ work.” Manual for Complex Litigation (Tent. Draft of the 4th Revision, July 21, 1976). On the other hand the evils attendant to awards of excessive or “windfall” fees are obvious. First, such awards naturally decrease the amount of recovery to the members of the class. Second, the award of excessive fees to counsel for a class may provoke severe public criticism and stimulate efforts to repeal or restrict the salutory aspects of Rule 23. Fortunately, in determining the amount of attorneys’ fees that is reasonable, this Court is not without some judicial guidelines. Although the guidelines for determining reasonable fees in class actions of this type are still in the process of evolution and clarification, a number of recent decisions have delineated certain factors to be considered in arriving at allowances to counsel. See, e. g., City of Detroit v. Grinnell Corporation, Nos. 76-7252, 76-7253, 76-7254, 560 F.2d 1093 (2d Cir., filed August 30, 1977) (“Grinnell II”); Lindy Bros. Builders, Inc. v. American Radiator and Standard Sanitary Corporation, 540 F.2d 102 (3d Cir. 1976) (“Lindy II”); Grunin v. International House of Pancakes, 513 F.2d 114 (8th Cir. 1975); Merola v. Atlantic Richfield Co., 493 F.2d 292 (3d Cir. 1974) (“Merola I”); 515 F.2d 165 (3d Cir. 1975) (“Merola II”); City of Detroit v. Grinnell Corporation, 495 F.2d 448 (2d Cir. 1974) (“Grinnell I”); Brandenburger v. Thompson, 494 F.2d 885 (9th Cir. 1974) ; Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974); Lindy Bros. Builders, Inc. v. American Radiator and Standard Sanitary Corporation, 487 F.2d 161 (3d Cir. 1973) (“Lindy I”); Liebman v. Petersen Coal & Oil Co., 63 F.R.D. 684 (N.D.Ill.1974). These eases stand not only as an aid to the court, but as notice to counsel of the standards to be met by any fee application. All these decisions lead to the inevitable determination that the fee should be “reasonable.” Until recently, many courts awarding fees in class actions fixed the fees as a percentage of the recovery or settlement fund. See, e. g., Brown Co. Securities Litigation, 355 F.Supp. 574, 592-93 (S.D.N.Y. 1975) (25% of settlement fund); Feder v. Harrington, 58 F.R.D. 171, 177 (S.D.N.Y. 1972) (24% of settlement fund). This Court expressly rejects such an approach as being arbitrary and inconsistent with both the purpose of awarding attorneys’ fees and the concerns about awarding excessive attorneys’ fees. Although some courts have analyzed numerous factors in passing upon the reasonableness of an application for attorneys’ fees, it appears to this Court upon careful reading of the opinions that the factors employed are merely components of the four factors stated in the seminal case of Lindy Bros. Builders, Inc. v. American Radiator and Standard Sanitary Corporation, 487 F.2d 161 (3d Cir. 1973) (“Lindy I”). The four relevant factors stated in Lindy I are (a) the hours spent by the attorneys, (b) the hourly rate of compensation, (c) the risk borne by the attorneys, and (d) the quality of the attorneys’ work. These four factors have been considered by this Court in making the fee awards that follow; however, as indicated above, the Court believes these four factors subsume consideration of many other factors which have been stated by numerous courts. Thus, (d) above is evidenced by the work observed by the court, the novelty and complexity of the issues, the monetary amount involved and the results obtained, and the standing of counsel at the bar. Factor (c) above is a factor of the contingent nature of the case, reflecting the likelihood that hours were invested and expenses incurred without assurance of compensation. Additionally, reflected in (c) is the availability of a prior judgment or decree in a related ease brought by the government. Factor (b) above encompasses consideration of the preclusion of other employment by the attorney due to acceptance of the case and the customary fee for similar work in the community. Factor (a) requires a judge, in addition to reviewing time records submitted by counsel, to weigh the hours claimed against his own knowledge, experience, and expertise of the time required to complete similar activities. Also, under (a), the possibility of duplication of effort among counsel should be scrutinized. Not only did Lindy I identify the relevant factors to be considered, but it also presented a reasoned process for calculating the fee award: First calculate the number of hours worked, then multiply by the hourly rate to determine a base fee. This base fee was described by the Court in Lindy I as the “lodestar” of the Court’s fee determination. Only after the base fee or “lodestar”, is fixed, can the Court consider such intangibles as risk and quality. Lindy I, supra, 487 F.2d at 167-69. This process is used by this Court in making the awards that follow. Finally, three additional factors, originally suggested in the Manual for Complex Litigation, should be remembered in assessing any fee application and have been considered by this Court: “ . . . (1) that in seeking and accepting employment as counsel for a judicially determined class an element of public service is involved; (2) the representation of the class by counsel is not a result of private enterprise but results from provision of an opportunity to represent the class by a judicial determination; and (3) the policy of the law in class actions, including antitrust actions, is to provide a motive to private counsel to represent consumers and to enforce the laws.” V. THE REASONABLE FEES FOR COUNSEL IN THIS LITIGATION As indicated in the preceding section of this Opinion, this Court rejects the percentage or lump sum approach to awarding fees in litigation of this type. Instead, the Court will apply the four factors stated in Lindy I and consider the components of these factors, as stated above. Prior to analyzing the specific applications of each counsel, it is appropriate to discuss and decide some general issues which permeate the entire application process, and thereby, each application. The resolution of these issues will be helpful in analyzing the specific applications of counsel. A. Time Spent The cases discussed above establish the basic principle that “multiplying attorney’s hours and typical, hourly fees is the only legitimate starting point for analysis.” City of Detroit v. Grinnell Corporation, 495 F.2d 448, 471 (2d Cir. 1974). Cases such as Lindy I and Grinnell I establish the obligation on applicant-counsel to adequately demonstrate and substantiate the time spent and the services rendered on behalf of the class. The burden is clearly on counsel to file adequately-documented applications for fees and those who fail to meet that burden do so at their own risk. These cases further indicate that the Court, in passing upon the reasonableness of the fees requested, must weigh the hours claimed against its own knowledge, experience, and expertise of the time required to complete similar activities. Additionally, duplication of effort, if any, should be determined and discounted. Certain of the objectors in this case cautioned that courts must be careful when leaving the percentage formula for awarding fees and adopting the Lindy and Grinnell approach that “hours do not become the name of the game.” The Court agrees that counsel in this type of case should not be compensated for every hour spent if it appears that wasteful and duplicative efforts were expended in an attempt to unnecessarily enlarge the ultimate fee request. Two controls, however, will be applied to prevent this phenomenon: First, as a matter of human nature, counsel will not expend exorbitant amounts of time, for which there is no guarantee of reimbursement, in litigation of a substantially risky nature. Second, as a more important check in preventing such unwarranted behavior, every Court has the obligation to carefully scrutinize the hours spent and the tasks performed and, as indicated above, weigh the hours claimed against its own knowledge, experience, and expertise of the time required to complete similar activities. Although it is counsel and not the Court who must be charged with the obligation of making tactical decisions regarding the prosecution of litigation, a Court must not hesitate to reduce the lodestar computed when the result obtained is the product of an unnecessarily extended proceeding. See Lindy II, supra, 540 F.2d at 118. In the vast majority of the present applications before the Court, counsel, pursuant to the February 2 Order of the Court, have filed complete and accurate time records in support of their requested fees. Additionally, most applicants have provided the Court with a breakdown of the hours spent into various recognized categories, namely partner, associate, and paralegal. Thus, the applications have been subject to effective scrutiny by the members of the class and the Court. In those applications as indicated below, in which counsel have failed to adequately support the fee requested with contemporaneously maintained time records, the Court must, and will, make reductions in the fee requested. See Grunin v. International House of Pancakes, 513 F.2d 114, 127-128 (8th Cir. 1974). The magnitude of this litigation makes it a possible paradigm case for duplicative and overlapping efforts by counsel. As previously indicated in this Opinion, such efforts in the initial stages of these proceedings were an unavoidable by-product of the magnitude of the case and the lack of consolidation. The Court, and the class, must accept this; however, once consolidation and coordination occurred, there existed little justification for duplicative and overlapping efforts. In analyzing the present applications, the Court will make reductions in the fee requested when such efforts are discerned. See Liebman v. J. W. Petersen Coal and Oil Co., 63 F.R.D. 684, 690 (N.D.Ill.1974). Finally, reductions in certain requests for fees must be made because the effort expended by counsel falls into a third identifiable category. This category consists of work performed which may have been of substantial benefit to the individual client, but was of no, or insubstantial, benefit to members of the class. Pursuant to the case authority discussed previously, the Court is of the opinion that the class members may only be required to pay for those services which were of some benefit to them. Thus, where the Court discerns that counsel’s efforts were expended for the exclusive, or primary, benefit of an individual, private client, reductions in the fee requested must be made. Certain objectors, most notably counsel for plaintiff Stanley Ferber, have urged the Court to make substantial reductions in the fees requested by Plaintiffs’ Liaison Counsel, Mr. Marshall Grossman, and Co-Chairman of Plaintiffs’ Steering Committee, Mr. Jack Corinblit, because “[a] substantial portion of Messrs. Gross-man and Corinblit’s efforts were limited to reviewing and editing pleadings drafted by others, coordinating and consulting on discovery matters being handled by others, and applying ideas and concepts originated by others.” Objections of Plaintiff Stanley Ferber, p. 22. Even assuming this to be true, since the Court was primarily responsible for assigning such tasks to these counsel, it is now constrained to award them reasonable compensation for the services rendered. There is no doubt that the efforts in coordinating and directing the activities of co-counsel were essential to the effective prosecution of the litigation and beneficial to the members of the class. On the other hand, many counsel who were not on the Plaintiffs’ Steering Committee and who were not active in the prosecution of this litigation seek compensation for substantial number of hours expended in “reviewing” pleadings, transcripts, and records from these proceedings. The need for every plaintiffs’ attorney to “review” every single document that passed his desk was obviated by the furnishing of regular status reports, from the Steering Committee, to all plaintiffs’ counsel informing them of the progress of the litigation and all related legal proceedings. The “review” work of plaintiffs’ counsel should legitimately be limited and compensated for when it had a direct bearing upon the responsibility being undertaken by such counsel during the course of these proceedings. Clearly, since the Plaintiffs’ Steering Committee was charged with, and fulfilled, the responsibility of prosecuting this action on behalf of the class members, any “review” work which does not bear a reasonable relationship to responsibility undertaken on behalf of the Committee is subject to close scrutiny. Such efforts may have been duplicative and for the sole benefit of counsel’s individual client. If so, as previously indicated, reductions in the fees requested must be made. With these general observations in mind, the Court will carefully scrutinize the time expended by counsel in this litigation. B. The Hourly Rate of Compensation In analyzing each application below, once careful scrutiny of the time spent has occurred, the Court will compute the value of the services by multiplying the number of hours by the hourly amount to which attorneys of like skill in the area should be entitled for the given type of work on the basis of an hourly rate of compensation. City of Detroit v. Grinnell Corporation, 495 F.2d 448, 471 (2d Cir. 1974). In computing the hourly rates to be applied to these applications, the Court is additionally mindful of the fact that acceptance of this case may have resulted in the preclusion of other employment by many of these counsel. As the Summary of Attorneys’ Fees on pages 15 and 16 of this Opinion indicates, various hourly rates have been requested by the petitioners. Partners involved in the case seek hourly fees ranging from $60 to $250 per hour, while the requested hourly rate for associates ranges from $40 to $100. Such variations are understandable in a case such as this which involvés counsel from firms of varying size and experience and from various geographical locations in the country. In fact, the Court would be remiss in its duty of examining each individual application if it applied a single rate for all partners and another for all associates. The objectors to the fee applications raise numerous issues with respect to the hourly rates of compensation in this case. These issues must be addressed at this point in the Opinion. Certain of the objectors to the fee petitions argue that each petitioner must break down the hours spent by the type of task performed because this Court should apply differing hourly rates according to the type of task. They contend that less important tasks, for example, administrative work— should be compensated for at a lower rate than more important tasks. The Court agrees that the various types of tasks performed must be scrutinized by the Court; however, it is impossible for the Court to award various hourly rates for numerous counsel who performed hundreds of tasks during the last four years. Furthermore, the Court is unable to judge whether time spent on oral argument is more, or less, important than time spent in preparing, through research and drafting, for the argument. Finally, the Court believes that prominent defense counsel charge the same hourly fee for the various tasks which are necessary to litigate any case. The Court does, however, have a duty to analyze the tasks performed, to assure the class that the various tasks are being performed by individuals with the appropriate skills. For example, paralegal tasks should not be undertaken by senior partners who seek compensation for their time at premium rates. Additionally, the Court agrees with the objectors insofar as they assert that post-settlement claims administration and time spent preparing for application should not be compensated for at the same rate as other time expended in the litigation. In the Court’s view, because such activities occur after the litigation has been settled, it is unreasonable to multiply the hourly rate requested by any contingency factor. The Court is, however, unable to conclude that such tasks are worth less than the normal hourly rate charged by counsel. The objectors also argue that paralegal time should be compensated for as out-of-pocket costs or wages, and that counsel who utilize such trained personnel in an effort to minimize attorneys’ time, should not recover the normal hourly rates at which such paralegal time is billed or any multiplier of those hourly rates. The case law appears to be a state of flux on this issue. Compare City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974) (“Grinnell I”) with In re Gypsum Cases, 386 F.Supp. 959 (N.D.Cal. 1974) and Oppenlander v. Standard Oil Company, 64 F.R.D. 597 (D.C.Colo.1974). Although this Court agrees with the Court in Oppenlander that “[t]he use of paralegals is to be encouraged in complex litigation,” Oppenlander v. Standard Oil Company, supra, at 613, and believes that such time should be compensated for at the normal hourly rate billed, the Court finds it unreasonable to multiply the hourly rate requested by any contingency factor. Although they provide a valuable service, for which compensation should be given, paralegals are not members of the bar and do not share in the attorneys’ risk of litigation. The final major argument raised by the objectors relating to the hourly rate of compensation raises the issue of whether the Court should apply “historical hourly rates” to the tasks performed by partners and associates, or whether the Court should calculate the value of the services rendered on the basis of counsel’s present hourly rate. There are persuasive considerations on both sides of the issue. The objectors argue that, at least, every applicant should be required to disclose his historic rates to satisfy the Court that on the eve of submitting a fee application, counsel’s rate hasn’t been increased. The Court agrees with this position. The objectors then argue that the only reasonable method of valuing the services rendered is for the Court to apply the historical hourly rates in effect at the time the tasks were performed to the hours expended in performing those tasks. They further posit that any contingency factor used to increase the lodestar necessarily includes consideration of the delay in receipt of payment for services rendered. Plaintiffs’ Liaison Counsel, and other applicants, agree that historical rates should be disclosed to the Court; however, the applicants vociferously object to the use of those historical rates in awarding compensation for tasks performed over the four-year period. Their major argument is that such a procedure ignores the fact that the attorneys have been without the use of money during the lengthy pendency of this action. Thus, they argue that the application of the current hourly rates in determining the “lodestar” rate merely reasonably compensates the attorney for having waited as long as four years for payment for services rendered. Although no case appears to have specifically addressed and resolved this issue, the Court finds that the better view is to apply the hourly rates in effect at the time the services were rendered. It is clear from cases such as Lindy that at least a portion of any contingency multiplier includes consideration of the fact that counsel have suffered a delay in the payment for services rendered. Recently, the Third Circuit in Lindy Bros. Builders, Inc. v. American Radiator and Standard Sanitary Corp., 540 F.2d 102 (3d Cir: 1976), reaffirmed this principle as follows: “The court may increase the amount established in the computation of the ‘lodestar’ as a reasonable fee on the basis of a careful evaluation of the following factors: 3. The delay in receipt of payment for services rendered.” 540 F.2d at 117. This substantially undercuts the argument pressed by the applicants. The Court will, therefore, use historic hourly rates in establishing the appropriate “lodestar” for counsel in this case. C. The Contingency Factor Consideration of a contingency factor is central to the fee determination in class actions of this type because virtually all of them are contingent in nature. The Court in Grinnell I emphasized the importance of this factor as follows: “Perhaps the foremost of these factors is the attorney’s ‘risk of litigation,’ i. e., the fact that, despite the most vigorous and competent of efforts, success is never guaranteed. The greater the probability of success, of either ultimate victory on the merits or of settlement, the less this consideration should serve to amplify the basic hourly fee. The tangible factors ■ which comprise the ‘risk of litigation’ might be determined by asking the following questions: has a relevant government action been instituted or, perhaps, even successfully concluded against the defendants; have related civil actions already been instituted by others; and, are the issues novel and complex or straightforward and well worn? Thus determined, the litigation risk factor might well be translated into mathematical terms.” City of Detroit v. Grinnell Corporation, 495 F.2d 448, 471 (2d Cir. 1974). As previously indicated in this Opinion, numerous factors may be considered in determining the attorney’s risk of litigation. The attorney’s risk of litigation is a factor of the contingent nature of the case, reflecting the likelihood that hours were invested and expenses incurred without assurance of compensation. The risk of litigation is also affected by the availability of a prior judgment or decree in a related case brought by the government or a governmental agency. Perhaps the most concrete expression of the criteria for evaluating the contingency factor is. stated in the Lindy II decision. The Court in Lindy II stated: “Under the rubric of ‘the contingent nature of success’ the district court should appraise the professional burden undertaken — that is, the probability or likelihood of success, viewed at the time of filing suit. The court may increase the amount established in the computation of the ‘lodestar’ as a reasonable fee on the basis of a careful evaluation of the following factors: 1. Analysis of plaintiff’s burden. Subsumed in this category are the following considerations: (a) the complexity of the case — legally and factually; (b) the probability of defendant’s liability,— whether it is clear or dubious; whether it has been previously suggested by other civil or criminal proceedings; whether it is asserted under existing case law or statutory interpretation, or is advanced as a novel theory; (c) an evaluation of damages, — whether the claims would be difficult or easy to prove. 2. Risks assumed in developing the case. This category subsumes consideration of: (a) the number of hours of labor risked without guarantee of remuneration; (b) the amount of out-of-pocket expenses advanced for processing motions, taking depositions, etc.; (c) the development of prior expertise in the particular type of litigation; recognizing that counsel sometimes develop, without compensation, special legal skills which may assist the court in efficient conduct of the litigation, or which may aid the court in articulating legal precepts and implementing sound public policy. 3. The delay in receipt of payment for services rendered. If, having considered the foregoing or other relevant criteria, the district court desires to increase the ‘lodestar’ award, it should identify those factors supporting its conclusion, state the specific amount by which the basic fee should be increased due to the contingency of success, and give a brief statement of reasons therefor. We reiterate that any such increment in the ‘lodestar’ award is to be considered and applied apart from the evaluation of the quality of services rendered in the particular proceedings.” Lindy II, 540 F.2d at p. 117. The contingent nature of this litigation has been the subject of substantial dispute between the applicants and the objectors, and even among various of the applicants. Two major issues appear to have emerged in the pleadings and oral arguments of counsel. First, considering the nature of the risk involved in this case, what are appropriate contingency mulipliers to be applied to the lodestar fees of counsel? Second, whether a “sliding scale” contingency factor, which takes into account both the different risks inherent in different tasks and the possibility that the risk diminished as the litigation proceeded, should be applied to the lodestar fees of counsel? As to the first issue, Plaintiffs’ Liaison Counsel, Marshall Grossman, and Co-Chairman of Plaintiffs’ Steering Committee, Jack Corinblit, contend that the litigation has involved “substantial risk” from inception through the date of receipt of the defendants’ signatures on the settlement documents. Their assessment of the risk involved in this case is evidenced in their request that a multiple of five (5) be applied to the lodestar fee computed in their application. They submit that their assessment is supported by numerous facts contained in the record, including (a) the deliberate decision of counsel for numerous institutional plaintiffs with immense losses in EFCA securities, including Morgan Guaranty Trust Company and the Ford Foundation, two major objectors in these proceedings, not to actively prosecute their claims; (b) the deliberate decision by these same institutional plaintiffs not to “opt out” of the settlement, gather the massive discovery produced, and litigate their claims; (c) the issuance of decision after decision of the Ninth Circuit and the United States Supreme Court eroding the rights of plaintiffs and classes under the securities laws; (d) the divergent positions of numerous defendants and their insurance companies; and (e) the plethora of novel and complex issues raised by the magnitude of every aspect of this litigation. The position of the major objectors is that “the risk of nonrecovery in the present case was negligible.” They admit that there was some risk involved, but contend that the risk was minimal; therefore, they assert that only a minimal, if any, risk multiple should be applied to the lodestar fees requested by counsel. In support of their position, they point to several facts contained in the record of this case, including (a) the fact that the existence of a massive fraud at EFCA and the complicity of a major EFCA insurance subsidiary, EFLIC, have been matters of widespread public comment and analysis since April of 1973; (b) the fact that numerous EFCA defendants, including three individuals who were principally responsible for the EFCA audits, were convicted in related criminal securities fraud proceedings; and (c) the assistance either rendered by or available-from numerous third parties, including the EFCA Trustee in reorganization, the United States Attorney for the Central District of California, the Special Committee on Equity Funding of American Institute of Certified Public Accountants, and the Illinois Director of Insurance. A position somewhere in the mean was taken by Mr. David Gold, Co-Chairman (with Mr. Corinblit) of the Plaintiffs’ Steering Committee. He asserts plainly that “[t]his case was not one of overwhelming risk.” In support of his position, he relies upon the factors enunciated by the objectors and listed above. He does, however, believe that “[a] fair multiple recognizing the contingent nature of the litigation, the benefit conferred, and a particular petitioning counsel’s responsibilities and efficiency of performance in this litigation should be recognized by the Court.” The Court assumes Mr. Gold supports a multiple of three (3) , at least as to some counsel, because that is the basis upon which his fee request is made. A review of prior judicial precedent discloses the use of multipliers of from one to five times the normal hourly rates charged. Most cases have, however, applied multipliers of less than five (5). In Lindy II, a multiplier of two (2) was approved. In Grinnell I, a multiplier of three (3) was used for most of the time expended with multipliers of two (2) applied to efforts expended in administering the settlement proceeds and one (1) applied to time spent in preparing the fee applications. In Liebman v. J. W. Peterson Co., 63 F.R.D. 684 (N.D.Ill.1974), the Court applied a multiplier of one in cases where the court found duplication and waste among the group of plaintiffs. Finally, the court in Arenson v. Board of Trade of City of Chicago, 372 F.Supp. 1349 (N.D.Ill.1974), applied a multiplier of four (4) to the petitioning attorneys’ normal hourly rate. This Court agrees with the position of Chief Judge Lord stated in In re Penn Central Securities Litigation, 416 F.Supp. 907, 914 (E.D.Pa.1976), that “the relevant issue is the contingent nature of the particular case involved, and not the risk factor in class actions generally.” It has, therefore, been the responsibility of the Court to carefully examine the record of this case to determine what an informed lawyer would consider the risk element involved in this case. Based upon a careful examination of the record, it is clear that the “lodestar” computed for many of the counsel in this case should be adjusted upward because of the contingent nature of success involved. The burden assumed by many plaintiffs’ counsel throughout this litigation was a heavy one. The efforts expended prior to transfer and consolidation of the cases by the JPML as well as the efforts expended by many counsel during the proceedings before the JPML were of a high risk nature. The great uncertainty as to the procedural posture of this massive litigation caused many counsel to decide not to actively prosecute the claims of their clients. Those counsel who did take up the laboring oar in or