Imagine investing time in a risky project, watching the project turn into a great success, and then, when it is time for you to be compensated, having no idea whether you will receive the $17 million you requested or, say, ... $155,000?

That seems to be the way things work in the plaintiffs' securities class action world, as law firm Chimicles & Tikellis LLP can attest. In an opinion issued yesterday, the U.S. Court of Appeals for the Second Circuit affirmed the district court's ruling that the C&T firm was entitled to $155,610 for its work in the Adelphia Communications Corp. Securities & Derivative Litigation. The firm had requested $17,476,500, which was one-third of the aggregate attorneys' fees awarded in the case.

By way of background, two other law firms--Abbey Spanier Rodd & Abrams, LLP and Kirby McInerney LLP--were lead counsel in the case, which settled in 2006 for $245 million. The court awarded lead counsel $52.4 million in attorneys' fees, and these firms were then responsible for allocating portions of that amount to other firms that had worked on the matter. The Abbey and Kirby firms elected to allocate $155,610 to C&T, which compensated C&T at a "loadstar" rate (about $408/hour by my math) for the 381.1 hours it worked on the case, but provided no multiplier.

C&T, however, argued that it had introduced the only legal claims into the case that survived a motion to dismiss, and that "but for the claims it had raised, a settlement would not have been reached." C&T argued that it was therefore entitled to one third of the fees, i.e., over $17 million.

On appeal, the Second Circuit stated that "although Abbey and Kirby were no doubt on the stingy side when it came to compensating their brethren, we have not been convinced that the District Court abused its discretion in approving class counsel's allocation." The Second Circuit added that the lower court had recognized that C&T provided a substantial benefit to the class, and approved what it considered to be a reasonable allocation of $155,610 as compensation. The Court noted that C&T's request for $17 million equated to $45,000/hour, which "seems to us to be quite high regardless of a lawyer's talent, ability, or contribution to a common fund."