In Re: Appraisal of Dell Inc. ( 2016 )


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  •        IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
    IN RE: APPRAISAL OF DELL INC.              )   Consol. C.A. No. 9322-VCL
    MEMORANDUM OPINION
    Date Submitted: September 2, 2016
    Date Decided: October 17, 2016
    Stuart Grant, Michael J. Barry, Christine Mackintosh, GRANT & EISENHOFER P.A.,
    Wilmington, Delaware; Lead Counsel for the Appraisal Class and Counsel for Petitioner
    Morgan Stanley Defined Contribution Trust.
    Samuel T. Hirzel, II, Melissa N. Donimirski, PROCTOR HEYMAN ENERIO LLP,
    Wilmington, Delaware; Lawrence M. Rolnick, Steven M. Hecht, LOWENSTEIN
    SANDLER LLP, New York, New York; Counsel for Petitioners Magnetar Capital
    Master Fund Ltd., Magnetar Global Event Driven Master Fund Ltd., Spectrum
    Opportunities Master Fund Ltd., and Blackwell Partners LLC.
    Samuel T. Hirzel, II, PROCTOR HEYMAN ENERIO LLP, Wilmington, Delaware;
    Counsel for Petitioners Global Continuum Fund, Ltd. and Wakefield Partners LP.
    Gregory P. Williams, John D. Hendershot, Susan M. Hannigan, Andrew J. Peach,
    RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; John L. Latham,
    Susan E. Hurd, ALSTON & BIRD LLP, Atlanta, Georgia; Gidon M. Caine, ALSTON &
    BIRD LLP, East Palo Alto, California; Charles W. Cox, ALSTON & BIRD LLP, Los
    Angeles, California; Counsel for Respondent Dell Inc.
    LASTER, V.C.
    In 2013, Dell Inc. completed a going-private merger in which each publicly held
    share of Dell common stock was converted into the right to receive $13.75 per share in
    cash, subject to the owner’s right to seek appraisal. Holders of 38,765,130 shares
    demanded appraisal. Holders of 36,704,337 of those shares filed a total of thirteen
    different appraisal petitions.
    The law firm of Grant & Eisenhofer P.A. (“G&E”) represented the claimants in
    ten of the petitions. G&E’s clients included a group of entities affiliated with T. Rowe
    Price & Associates, Inc. (collectively, “T. Rowe”), which together sought appraisal for
    the largest single block of shares. G&E represented its clients pursuant to a written
    contingency fee agreement. Under its terms, G&E advanced the expenses necessary to
    litigate the case, and its clients agreed that G&E would be reimbursed for its expenses
    and receive an attorneys’ fee equal to the amount by which the client’s recovery exceeded
    the merger consideration, with the percentage depending on the magnitude of the
    recovery and how far the litigation progressed.
    G&E moved to consolidate the thirteen appraisal proceedings and to be appointed
    lead counsel. After the court granted the motion, G&E litigated the case through trial. In a
    post-trial decision, the court held that the fair value of Dell common stock at the effective
    time of the merger was $3.87 per share more than the merger price. In a separate post-
    trial decision, the court held that T. Rowe lacked standing to seek appraisal.
    The appraisal statute authorizes a party that has incurred expenses litigating an
    appraisal to have its expenses, including reasonable attorneys’ fees, allocated pro rata
    among the shares comprising the appraisal class. Morgan Stanley Defined Contribution
    1
    Trust, a G&E client whose shares remain part of the appraisal class, has moved to have
    G&E’s expenses reimbursed from the aggregate appraisal award. Morgan Stanley also
    seeks an award of attorneys’ fees for G&E equal to the percentage of the aggregate
    appraisal award that G&E would receive under the terms of its contingency fee
    agreement. G&E is the real party in interest, so this decision treats G&E as the movant.
    Two groups of appraisal claimants oppose the motion. They argue that G&E must
    have incurred significant expenses defending T. Rowe’s entitlement to seek appraisal,
    and they believe those amounts should be excluded from any award. They also argue T.
    Rowe was a member of the appraisal class until after trial, so T. Rowe should bear a
    portion of the expenses incurred litigating the valuation issues. They further contend that
    G&E’s fees should be reduced because, after T. Rowe was dismissed from the case, G&E
    secured a settlement for T. Rowe and earned a fee for its efforts. Finally, they assert that
    any award is premature because a final order has not yet been entered.
    This decision awards the requested amount of fees and expenses. The amounts are
    reasonable and will be allocated pro rata among the appraisal class. That result will be
    achieved by deducting the fees and expenses from the aggregate amount received by the
    appraisal class before the remaining amount is distributed pro rata to the class members.
    2
    I.      FACTUAL BACKGROUND
    This is a post-trial application. The facts are drawn from the trial record and the
    parties’ submissions, which include discovery conducted in connection with the motion.
    A.     Thirteen Appraisal Cases
    On February 5, 2013, Dell announced that it had entered into a merger agreement
    with entities affiliated with its eponymous founder, Michael Dell, and Silver Lake, a
    private equity firm. As subsequently amended, the merger agreement provided for each
    publicly traded share of Dell common stock to be converted into the right to receive
    $13.75 per share in cash, subject to the holder’s right to seek appraisal. The merger
    closed on October 29, 2013.
    Holders of 38,765,130 shares of Dell common stock initially demanded appraisal.
    Dkt. 5, Ex. A. After the merger closed, former holders of 36,704,337 of those shares filed
    a total of thirteen different appraisal petitions.
    G&E represented the claimants who filed ten of the petitions. Those claimants
    collectively held 32,012,405 shares, representing 83% of the shares for which appraisal
    was sought and 87% of the shares held by claimants who filed petitions. G&E’s clients
    included T. Rowe, which alone sought appraisal for 26,732,930 shares. Id.
    Three of the thirteen petitions were filed by claimants that G&E did not represent.
    Entities affiliated with Magnetar Capital Master Fund Ltd. (collectively, “Magnetar”)
    sought appraisal for 3,865,820 shares. They are currently represented by Lowenstein
    Sandler LLP and Proctor Heyman LLP. Global Continuum Fund, Ltd. and Wakefield
    Partners, L.P. (jointly, “Global”) sought appraisal for 826,012 shares. They retained
    3
    Proctor Heyman. Cavaan Partners, L.P. sought for appraisal for 100 shares. Cavaan
    retained Fish & Richardson, P.C.
    B.     The Consolidation Order
    In April 2014, the petitioners represented by G&E moved to consolidate the
    appraisal proceedings and to have G&E appointed as lead counsel. G&E proposed a form
    of order that would have granted G&E broad authority to litigate on behalf of the
    appraisal class, but which would not have required G&E to advocate for any appraisal
    claimant whose right to seek appraisal was challenged other than its own clients.
    Magnetar and Global did not oppose having G&E serve as lead counsel, but they
    objected to the proposed terms. See C.A. No. 9254, Dkt. 13. They wanted the
    consolidation order to include provisions stating that:
          All petitioners and their counsel would have access to the discovery record.
          All petitioners and their counsel could participate meaningfully in the
    preparation of any expert reports and review drafts of any documents
    submitted to the court.
          All petitioners could participate in any settlement discussions.
          All petitioners could participate in any settlement negotiated by G&E.
          Any petitioners that did not participate in a settlement negotiated by G&E
    could continue to pursue appraisal and would have option to use any
    experts retained by G&E.
          No petitioner would be “double billed” for fees.
    Magnetar’s opposition explained that the concept of “no double-billing” meant that
    “[e]ach Petitioner solely is responsible for the fees payable to such Petitioner’s counsel,
    and G&E’s current clients solely are responsible for the fees payable to G&E, which
    4
    includes the fees payable to G&E as lead counsel.” Dkt. 76, at 6. Alternatively, Magnetar
    asked for its lawyers to be appointed as co-lead counsel. Id. at 6–7.
    After holding a hearing on G&E’s motion, the court consolidated the action and
    appointed G&E as lead counsel. The court rejected the “no double-billing” concept and
    ruled as follows:
    To take another easy one, I am not going to adopt [Magnetar and Global’s]
    fee proposal. [Section] 262(j) actually addresses this issue, and it says that
    you can tax and allocate costs and expenses pro rata across the entire
    appraisal class. That’s in the statute. That makes sense. If Mr. Grant does a
    lot of work that benefits everybody, including not only people who have
    filed but even people who haven’t filed—because, remember, part of what
    you do when you are an appraisal claimant is you take on a fiduciary role . .
    . to the people who didn’t file because there are members of the appraisal
    class who haven’t filed petitions, and they’re entitled to rely on the actions
    of those who did file.
    The fees and expenses at the end under 262(j) can be taxed against the
    entire appraisal class pro rata because that’s what’s fair. It’s a classic
    application of common-fund principles . . . .
    Dkt. 88, at 7-8. The court entered a modified consolidation order that addressed many of
    Magnetar and Global’s other concerns:
          Paragraph 7: “Other Counsel shall remain counsel of record for the Other
    Claimants and shall receive copies of all court filings.”
          Paragraph 8: “Subject to the terms of a customary confidentiality order, the
    Other Counsel and Other Claimants shall have access to document
    discovery, may attend and participate in depositions, and may ask non-
    duplicative questions.”
          Paragraph 9: “To the extent reasonably practicable, G&E shall circulate
    near-final drafts of briefs and other significant submissions to Other
    Counsel for review and comment before filing with the court. Other
    Counsel may file non-duplicative submissions . . . . Other Counsel may
    make non-duplicative arguments at hearings.”
    5
          Paragraph 10: “As contemplated by 8 Del. C. § 262(k), no appraisal
    claimant may settle its appraisal claim except with court approval, which
    may be conditioned upon such terms as the court deems just. If the G&E
    Claimants settle or dismiss their claims, then the remaining appraisal
    claimants shall be ‘given notice . . . and an opportunity to intervene’ to
    continue the appraisal suit. Edgerly v. Hechinger, 
    1998 WL 671241
    , at *4
    (Del. Ch. Aug. 27, 1998).”
          Paragraph 11: “As contemplated by 8 Del. C. § 262(j), at an appropriate
    stage of the proceeding, G&E may seek to have its fees and expenses
    charged pro rata against the value of all the shares entitled to an appraisal.”
    In defining G&E’s authority and obligations, the consolidation order distinguished
    between G&E’s role as lead counsel for the appraisal class and the firm’s role as counsel
    for its clients. Paragraph 6 stated:
    G&E is hereby appointed Lead Counsel in the Consolidated Action for the
    purpose of prosecuting the appraisal on behalf of the Appraisal Class. In
    connection with the Entitlement Hearing, G&E only shall be responsible
    for (i) asserting the entitlement to appraisal rights of the G&E Claimants,
    (ii) addressing any arguments common to all appraisal claimants, and (iii)
    addressing any defenses raised by Respondent that would affect all
    appraisal claimants. G&E shall not otherwise have responsibility for
    asserting the entitlement to appraisal rights of the Other Claimants and the
    Non-Petitioning Claimants, who are otherwise responsible for establishing
    their own entitlement to appraisal rights in connection with the Entitlement
    Hearing. If one of the Other Claimants or a Non-Petitioning Claimant is
    determined not to be entitled to appraisal rights, then that claimant shall not
    be a member of the Appraisal Class and G&E shall have no further
    obligation or responsibility to pursue appraisal on behalf of that claimant. If
    a G&E Claimant is determined not to be entitled to appraisal rights, then
    that claimant shall not be a member of the Appraisal Class, and G&E’s
    continuing obligation (if any) to that claimant shall be determined by the
    terms of its engagement of G&E.
    Dkt. 77, ¶ 6. This provision required that G&E act as lead counsel wherever an issue
    arose that was common to the entire appraisal class. Otherwise, G&E was not obligated
    to represent any particular appraisal claimants other than its clients. Any appraisal
    6
    claimants who faced unique objections or defenses would have to retain their own
    counsel or proceed pro se.
    C.     The Litigation Effort
    The consolidated litigation proceeded along two tracks. One track involved
    disputes over entitlement issues. The other involved the ultimate dispute over fair value.
    On the entitlement track, the court issued a series of rulings holding that various
    claimants were not entitled to seek appraisal. Most were relatively small holders who
    were not clients of G&E and who did not retain their own counsel. On June 27, 2014, the
    court granted an order dismissing nine claimants who had withdrawn their appraisal
    demands with Dell’s consent. They held a total of 25,954 shares. See Dkt. 110. On
    September 10, the court granted a similar order for a claimant who held 50 shares. See
    Dkt. 119. On May 11, 2015, the court held a hearing on the remaining entitlement issues.
    On May 13, the court issued orders holding that the following claimants were not entitled
    to appraisal: (i) twenty-two claimants whose demands were not signed by the stockholder
    of record, Dkts. 254 & 258; (ii) eleven claimants who had sold or re-titled their shares
    after demanding appraisal, Dkt. 255; (iii) 104 claimants who had tendered their shares
    and accepted the merger consideration, Dkt. 256; and (iv) three claimants who had made
    untimely or duplicative demands, Dkt. 257. Collectively, these orders removed an
    additional 828,652 shares from the appraisal class.
    G&E represented five large appraisal claimants who re-titled their shares after
    demanding appraisal. On July 13, 2015, the court issued an opinion holding that the five
    claimants lost their appraisal rights. In re Appraisal of Dell Inc., 
    2015 WL 4313206
     (Del.
    7
    Ch. July 13, 2015). That ruling eliminated another 1,675,666 shares from the appraisal
    class.
    Dell separately challenged T. Rowe’s entitlement to seek appraisal on the grounds
    that T. Rowe had voted in favor of the merger. Although Dell moved for summary
    judgment on this issue, the parties agreed to defer disposition of the issue until after trial
    because of factual disputes.
    On the valuation track, G&E pursued written discovery, including both document
    requests and interrogatories, and obtained, processed, and hosted a total of 478.4
    gigabytes of documents on its e-discovery platform. After completing written discovery,
    G&E took or defended seventeen depositions. During the expert phase of the case, G&E
    retained three experts, pursued expert discovery from Dell’s two experts, and defended its
    own experts. These efforts led up to a four-day trial in October 2015. During that
    proceeding, the parties introduced over 1,200 exhibits and presented seven fact witnesses
    and five experts. The pre-trial order contained 542 paragraphs, and the pre- and post-trial
    briefing totaled 369 pages. In March 2016, G&E presented post-trial argument.
    D.       The Post-Trial Rulings
    On May 11, 2016, this court held that T. Rowe was not entitled to an appraisal
    because T. Rowe voted in favor of the merger. In re Appraisal of Dell Inc., 
    143 A.3d 20
    (Del. Ch. 2016) (the “T. Rowe Ruling”). The T. Rowe Ruling eliminated 30,730,930
    shares from the appraisal class. In total, the entitlement rulings had eliminated 33,261,252
    8
    shares from the appraisal class, reducing it from 38,765,130 shares to 5,505,730 shares.1
    Magnetar became the largest appraisal claimant, with just over 70% of the remaining
    shares. Morgan Stanley was the only remaining G&E client, with 357,500 shares.
    Three weeks later, on May 31, 2016, this court held that the fair value of Dell at
    the effective time was $17.62 per share, or $3.87 per share more than the merger
    consideration. In re Appraisal of Dell Inc., 
    2016 WL 3186538
     (Del. Ch. May 31, 2016)
    (the “Fair Value Opinion”). The court awarded interest on the award at the default rate
    provided by the appraisal statute, which states that the “interest from the effective date of
    the merger through the date of payment of the judgment shall be compounded quarterly
    and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge)
    as established from time to time during the period between the effective date of the
    merger and the date of payment of the judgment.” 8 Del. C. § 262(h).
    E.     The Fee Application
    On June 2, 2016, G&E sought an award of $3,964,125.60 in attorneys’ fees and
    reimbursement of expenses in the amount of $4,035,787.18. G&E based its fee request on
    its written contingency fee agreement with T. Rowe. G&E had agreed to the same terms
    with its other appraisal clients, including Morgan Stanley.
    G&E’s fee agreement contemplated that G&E would receive as its fee an
    increasing percentage of the client’s recovery according to the following chart:
    1
    The court later held that pro se petitioner William Martin was entitled to seek
    appraisal for 4,943 shares, increasing his share count by 1,852. Dkt. 447. This was the
    only instance of shares being added to the appraisal class.
    9
    RECOVERY            PRIOR TO FILING           AFTER PETITION       ONCE TRIAL HAS
    RANGE                 PETITION                AND BEFORE             BEGUN
    TRIAL
    $13.75 - $15.75              10%                    13%                     15%
    $15.76 - $17.75              12%                    15%                     17%
    $17.76 - $19.75              14%                    17%                     19%
    $19.76 and above              15%                    18%                     20%
    Dkt. 444, Ex. A, at 1. The fee percentage thus increased with the size of the award and
    the stage of the case. The fee agreement provided an example of the resulting calculation:
    “If the appraisal award was $19.00 after petition and before trial, the fee would be 13% of
    the first $2 over $13.75, 15% of the next $2 over $15.75, and 17% of the next $1.25 over
    $17.75.” Id. The agreement provided that an “award of interest will follow principle
    [sic],” meaning G&E would receive a similar percentage of the interest accruing on the
    amount exceeding $13.75. Id. at 2.
    The difference between the court’s fair value determination and the merger price
    was $3.87 per share. The difference generated a total benefit of $21,307,175.10 for the
    5,505,730 shares in the appraisal class, and it was obtained in a post-trial adjudication.
    The terms of the contingent fee agreement therefore called for a fee of $3,401,990.57
    before interest, comprising (i) 15% of first $2 recovery up to $15.75, or $1,651,719, plus
    (ii) 17% of the next $1.87, or $1,750,271.57. For purposes of its fee application, G&E
    calculated the amount of interest through May 31, 2016, as being $3,423,961.99. G&E’s
    fee from the interest component, derived using the same formula, was $562.135.03. As of
    May 31, G&E’s total fee award under the contingent fee agreement was $3,964,125.60.
    G&E sought this amount from the appraisal class.
    10
    G&E also sought reimbursement of $4,035,787.18 in expenses. G&E broke the
    expenses down into fourteen categories:
    Expert witness fees                             $3,393,353.02
    Filing fees                                        $21,267.78
    Meeting Expenses                                    $1,884.70
    Outside Counsel Expenses                              $787.34
    Travel                                             $37,880.53
    Case-Related Publication                               $32.00
    Duplication Services                              $265,864.33
    Postage and Delivery                                $3,351.32
    Service Fees                                           $39.99
    Telephone                                           $1,269.45
    Transcription Services                             $42,807.45
    Case-Related Services                              $20,729.37
    E-Discovery Related Processing Services            $55,954.95
    E-Discovery Data Hosting Services                 $190,564.95
    G&E only sought to have its fees and expenses allocated pro rata across the
    appraisal class. G&E did not contemplate that T. Rowe would bear any of the fees or
    expenses.
    F.    The T. Rowe Settlement
    On June 24, 2016, T. Rowe and Dell reached a settlement. Dell agreed to pay T.
    Rowe the merger consideration plus $28 million in interest (the “T. Rowe Settlement”).
    G&E received a fee equal to 15% of the $28 million, or $4.2 million.
    This court approved the T. Rowe Settlement on June 29, 2016. The court
    determined that “there was no risk that T. Rowe was ‘abandoning the prosecution of the
    [action] to the detriment of the [appraisal class].’” Dkt. 423, ¶ 2 (quoting Ala. By-Prods.
    Corp. v. Cede & Co., 
    657 A.2d 254
    , 260 (Del. 1995)). Because it would have been
    irrational for members of the appraisal class to accept the terms of the T. Rowe
    11
    Settlement, the court held that Dell was not obligated to extend the same offer to the
    remaining members of the appraisal class. 
    Id.
     (citing Lutz v. A.L. Garber Co., 
    357 A.2d 746
    , 751 (Del. Ch. 1976)).
    G.     Magnetar And Global Oppose G&E’s Application.
    Magnetar and Global have opposed G&E’s fee application. They raised several
    objections, which stem primarily from T. Rowe’s late exit from the case and subsequent
    settlement with Dell.
    According to Magnetar and Global, the appraisal class should not have to pay for
    any fees or expenses that G&E incurred litigating its clients’ entitlement issues. Magnetar
    and Global argue that T. Rowe instead should bear some of the fees and expenses that
    G&E incurred litigating the valuation issues. According to Magnetar and Global, T.
    Rowe leveraged the Fair Value Opinion and the prospect of an appeal from the T. Rowe
    Ruling when negotiating the T. Rowe Settlement. Magnetar and Global also contend that
    their own share of the fees and expenses allocated to the appraisal class should be
    reduced by the attorneys’ fees and expenses that they spent for lawyers to represent their
    own interests, and that they cannot be held to the contingency fee structure that was
    negotiated between T. Rowe and G&E. Finally, Magnetar and Global argue that any
    award of fees and expenses is premature because a final judgment has not yet been
    entered and an appeal is likely.
    G&E responded to Magnetar and Global’s oppositions by deducting from its
    application any expenses reasonably relating to G&E’s litigation of its clients’
    entitlement issues. G&E now seeks expenses in the amount of $4,007,462.08.
    12
    II.     LEGAL ANALYSIS
    “An appraisal proceeding is a limited legislative remedy intended to provide
    shareholders dissenting from a merger on grounds of inadequacy of the offering price
    with a judicial determination of the intrinsic worth (fair value) of their shareholdings.”
    Cede & Co. v. Technicolor, Inc., 
    542 A.2d 1182
    , 1186 (Del. 1988). Section 262(j) of the
    Delaware General Corporation Law provides in pertinent part as follows:
    Upon application of a stockholder, the Court may order all or a portion of
    the expenses incurred by any stockholder in connection with the appraisal
    proceeding, including, without limitation, reasonable attorney’s fees and
    the fees and expenses of experts, to be charged pro rata against the value of
    all the shares entitled to an appraisal.2
    Under this provision, G&E seeks to have the expenses it incurred in the appraisal
    proceeding, including reasonable attorneys’ fees, charged “pro rata against the value of
    the shares entitled to appraisal.”
    In the Shell decision, this court addressed the principles to be used when awarding
    fees and expenses under the second sentence of Section 262(j). In re Appraisal of Shell
    Oil Co., 
    1992 WL 321250
     (Del. Ch. Oct. 30, 1992). After reviewing the origins of
    2
    8 Del. C. § 262(j). The prior sentence in Section 262(j) states, “The costs of the
    proceeding may be determined by the Court and taxed upon the parties as the Court
    deems equitable in the circumstances. Id. This language does not govern G&E’s
    application; it deals with the taxing of “costs . . . upon the parties.” It thus addresses the
    allocation of costs in an appraisal proceeding between the petitioners and the respondent.
    See Jesse A. Finkelstein & John D. Hendershot, Appraisal Rights in Mergers &
    Consolidations, 38–5th C.P.S. § IV(G)(2), at A-25 & n.131 (BNA) [hereinafter Appraisal
    Rights]); id. § VI(P), at A-92a to A-94. “Court costs . . . ordinarily are taxed against the
    respondent corporation in the absence of a showing of bad faith on the part of the
    dissenting stockholders.” Id. § VI(P), at A-93 (collecting authorities).
    13
    Section 262(j) and related case law, the court held that “[t]he standards governing the
    award of attorneys’ fees in an appraisal class action . . . are identical to those in other
    types of shareholder benefit litigation.” Id. at *3.
    The underlying principle that allows a successful litigant in a shareholder
    action to recover his expenses from other shareholders, as one of the
    exceptions to the general rule that each litigant must defray the costs of his
    own counsel, is the equitable fund doctrine. Under the equitable fund
    doctrine, when a litigant creates or preserves a common fund for the benefit
    of a class, equity demands that those who share in the benefit share in the
    burden of the prosecution.
    Id. (citations omitted). The court concluded that Section 262(j) makes the equitable fund
    doctrine applicable to appraisal actions. Id.
    The Shell decision explained that “[a] prerequisite for the applicability of the
    equitable fund doctrine is the creation of a benefit for a class.” Id. Under Section 262(j),
    this means that the appraisal proceeding must generate a fair value determination that
    exceeds the merger price. Id. at *5. If an appraisal petitioner does not obtain a fair value
    determination that exceeds the merger price, then Section 262(j) does not “authorize any
    pro rata assessment of attorneys fees among the appraisal class.” Id. If the appraisal
    proceeding has generated a fair value determination that exceeds the merger price, then
    “the value of the benefit produced by the litigation can best be ascertained by measuring
    the difference between the amount of the appraisal award and the amount that a
    shareholder would have received had he accepted the merger and not sought an
    appraisal.” Id. at *6.
    The Shell court wrestled with the degree to which it should include interest when
    determining the size of the benefit. Id. at *7. At the time Shell was decided, the appraisal
    14
    statute did not provide for a default rate of interest, and the appropriate rate of interest
    was the subject of intense litigation activity. The Shell court recognized that under that
    system, “[t]he success of counsel in an appraisal action in obtaining the best possible rate
    of interest for the client is obviously of critical importance in determining the benefit
    achieved given the protracted nature of appraisal proceedings,” and hence “[t]he Court
    therefore must, on a case by case basis, attempt to ascribe an estimated value of the
    benefit, if any, that accrues from the award of interest.” Id. When sizing the benefit, the
    Shell court included both interest awarded on the base amount of the merger
    consideration and interest awarded on the fair value award in excess of the merger
    consideration. The court declined to exclude interest on the base amount “because the
    award of interest in an appraisal action represents damages for the delay in payment and
    compensation for the use of [the] petitioners’ money.” Id. After considering various
    factors, the court incorporated 25% of the total amount of interest into its benefit
    calculation.
    The appraisal statute currently provides for a default rate of interest:
    Unless the Court in its discretion determines otherwise for good cause
    shown, . . . interest from the effective date of the merger through the date of
    payment of the judgment shall be compounded quarterly and shall accrue at
    5% over the Federal Reserve discount rate (including any surcharge) as
    established from time to time during the period between the effective date
    of the merger and the date of payment of the judgment.
    8 Del. C. § 262(h). The default rate represents a legislative determination by the General
    Assembly as to an interest rate that both sufficiently compensates the petitioners for their
    loss of an equity investment and compels the respondent corporation to disgorge a
    15
    sufficient portion of the benefit it obtained by using the petitioners’ capital. 3 Under our
    current interest rate regime, I approach the inclusion of interest in the amount of the
    benefit differently than the Shell court.
    “In essence, an interest award is the Court’s attempt to put both parties in the
    position most closely approximating their respective positions had the fair value of the
    dissenting shareholder’s stock been paid on the date of the merger.” Gonsalves v. Straight
    Arrow Publ’rs, Inc., 
    2002 WL 31057465
    , at *9 (Del. Ch. Sept. 10, 2002). The statutory
    default rate embodies a legislative determination as to the presumptively correct rate to
    accomplish this purpose. Given this principle, the interest that accrues on the original
    merger consideration should not be treated as part of the benefit conferred, because that
    amount of interest is necessary to keep the petitioners in the same position as if they had
    received fair value on the date of the merger. Conversely, the interest that accrues on the
    incremental amount awarded over the merger consideration should be treated as part of
    the benefit conferred, because that amount is necessary to bring the value of the
    incremental benefit forward to the present date. A fee award pays counsel in current
    dollars based on the amount the petitioners receive today. The benefit for purposes of the
    fee award therefore should include the interest component on the incremental amount;
    3
    For insightful and refreshingly balanced commentary on the statutory rate of
    interest in appraisal proceedings, see Charles Korsmo & Minor Myers, Interest in
    Appraisal, 42 J. CORP. L. (forthcoming 2016), available at http://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=2748363.
    16
    otherwise, a fee award would pay counsel using historical dollars (in this case 2013
    dollars). G&E’s engagement letter with T. Rowe followed this approach.4
    In this case, G&E’s litigation efforts generated a benefit for the appraisal class.
    This court determined that the fair value of Dell’s common stock at the time of the
    merger was $3.87 per share more than the merger consideration. Multiplied by the
    5,505,730 shares remaining in the appraisal class, the litigation conferred an initial
    benefit of $21,307,175.10. There has been no application to depart from the statutory
    default rate, and having presided over this proceeding from the outset, I am unaware of
    any grounds for doing so. As of September 30, 2016, interest on that amount,
    compounded quarterly from the effective date of the merger, totals $3,917,969.98. The
    aggregate benefit as of September 30 is therefore $25,225,145.08. This decision uses this
    amount when analyzing the application for an award of fees and expenses.
    A.    Expense Reimbursement
    G&E’s request has two components: fees and expenses. This decision addresses
    the expenses first because, on the facts presented, I believe it is appropriate to deduct
    them from the total amount of the benefit conferred before determining an amount that
    4
    This decision need not consider whether different considerations would apply if a
    court were to depart from the default rate. Under Shell, parties might argue that if the
    court departed from the statutory default rate, then the interest on the underlying merger
    consideration should be factored into the benefit, whether for better or for worse. The
    answer might depend on why the court departed from the statutory rate. If the court
    determined that a case-specific rate was necessary to achieve the same goals served by
    the default rate, then that would favor the approach taken in this case. See Korsmo and
    Myers, supra, at 20–21.
    17
    would constitute a reasonable attorneys’ fee. The expenses-first approach is not an
    absolute rule, but in my view it makes sense when a party has litigated a case through
    trial and incurred significant out-of-pocket expenses.
    Court of Chancery decisions have taken a case-by-case approach to the treatment
    of expenses. When a case settles early and the expenses are limited, as happened
    routinely during the era of ritualized disclosure-only and Cox Communications
    settlements, this court has expressed a preference for an all-in award. See, e.g.,
    Brinckerhoff v. Texas E. Prods. Pipeline Co., LLC, 
    986 A.2d 370
    , 395 (Del. Ch. 2010).
    An all-in award is more straightforward for the court, facilitates comparisons across
    cases, and incentivizes counsel to be efficient. See In re Celera Corp. S’holder Litig.,
    
    2012 WL 1020471
    , at *33 & n.248 (Del. Ch. Mar. 23, 2012), aff’d in part, rev’d in part
    on other grounds, 
    59 A.3d 418
     (Del. 2012); In re Telecorp PCS, Inc. S’holders Litig.,
    C.A. No. 19260, at 101 (Del. Ch. Nov. 19, 2003) (TRANSCRIPT) (Strine, V.C.).
    When a case goes to trial or settles late in the litigation process, particularly after
    the parties have incurred fees for experts, the all-in approach can have the deleterious
    effect of significantly reducing the net percentage of the award that counsel receives. For
    example, in the Rural Metro litigation, counsel settled with all but one defendant on the
    eve of trial, achieving a gross settlement fund of $11.6 million. See In re Rural/Metro
    Corp. S’holders Litig., 
    102 A.3d 205
    , 215–18 (Del. Ch. 2014), aff’d sub nom RBC
    Capital Mkts., LLC v. Jervis, 
    129 A.2d 816
     (Del. 2015). The out-of-pocket costs required
    to create that settlement fund were approximately $1.29 million, or over 11% of the total
    fund. If plaintiff’s counsel absorbed the out-of-pocket costs, then an all-in award of 30%
    18
    of the gross settlement fund ($3.48 million) would equate after subtracting expenses to an
    effective fee award of only 18.9%. Although counsel might be able to absorb the
    expenses in a large case, the all-in approach creates a disincentive for counsel to invest
    significantly in smaller to medium-sized cases.
    Recognizing this problem, some decisions have awarded a fee to counsel based on
    the total benefit conferred, then awarded expenses on top of the fee award.5 This
    approach creates a problem of its own, in that it forces the class to internalize all of the
    expenses out of its share of the recovery. This increases the total percentage received by
    counsel, reduces the share of the recovery received by the class, and in an extreme case
    could wipe out the class recovery altogether. Just as it seems unfair to force counsel to
    internalize all of the expenses, so too it is unfair to impose all of the expenses on the
    class.
    In resolving this dilemma, some federal courts have deducted expenses first, then
    awarded a percentage-based fee using the “net award to the class.” In re Immunex Sec.
    Litig., 
    864 F. Supp. 142
    , 145 (W.D. Wash. 1994) (quoting Morganstein v. Esber, 
    768 F. 5
    See, e.g., In re TD Banknorth S’holders Litig., Cons. C.A. No. 2557, at 5 (Del.
    Ch. June 25, 2009) (ORDER) (awarding 27.5% of common fund in fees plus $964,086.61
    in expenses); Ryan v. Gifford, 
    2009 WL 18143
    , at *13–14 (Del. Ch. Jan. 2, 2009)
    (awarding one-third of the monetary portion of the settlement in fees plus $398,100.79 in
    expenses); In re Chaparral Res., Inc. S’holders Litig., Cons. C.A. No. 2001, at 4 (Del.
    Ch. Mar. 13, 2008) (ORDER) (awarding one-third of common fund in fees plus expenses
    of $1,089,298.10); In re TeleCommunications, Inc. S’holders Litig., Cons. C.A. No.
    16470, at 9, 13 (Del. Ch. Feb. 1, 2007) (TRANSCRIPT) (awarding 30% of the common
    fund in fees plus $827,658.91 in expenses); In re Berkshire Realty Co., Inc. S’holder
    Litig., 
    2004 WL 5174889
     (Del. Ch. Aug. 10, 2004) (ORDER) (awarding 30% of the
    common fund in fees plus $577,787.61 in expenses).
    19
    Supp. 725, 727–28 (C.D. Cal. 1991)); see also Lachance v. Harrington, 
    965 F. Supp. 630
    , 648 (E.D. Pa. 1997). This approach treats counsel’s fee percentage as a carried
    interest in the net recovery, with counsel participating pari passu with the class. It treats
    the expenses as a higher priority debt claim, representing out-of-pocket costs necessary to
    generate the residual return. The approach “encourages diligence in controlling expenses”
    because “the lawyer and the client share the goal of maximizing the net recovery.”
    Immunex, 
    864 F. Supp. at 145
    .
    In my view, in a case where counsel have incurred significant out-of-pocket
    expenses, the approach that best balances the interests of the attorneys and the class is to
    deduct reimbursable expenses first, then award a fee based on the net benefit achieved. I
    therefore use that method here.
    1.     The Reasonableness Of The Expenses
    G&E originally requested $4,035,787.18 in expenses. In response, Magnetar and
    Global raised the valid objection that the appraisal class should not have to reimburse
    G&E for amounts incurred litigating entitlement issues that were unique to its clients and
    not common to the appraisal class. G&E conceded the point and reviewed its expenses to
    identify those amounts. G&E identified and excluded from its request an invoice for
    $20,475.00 from an expert who was retained solely in connection with the entitlement
    issues. The fees of $3,372,878.02 for the remaining experts were incurred solely in
    connection with valuation issues.
    For the remaining $642,434.25 in expenses, G&E identified the following
    categories and amounts as involving valuation issues rather than entitlement issues:
    20
         Travel expenses of $37,880.53: There were no depositions or out-of-town
    meetings devoted solely to entitlement issues. The only deposition
    involving entitlement issues was a one-day deposition of a T. Rowe
    representative, which took place in Baltimore, involved de minimis travel
    costs, and was noticed before the entitlement issue arose. The bulk of the
    questioning related to T. Rowe’s analysis of the value of Dell.
         Transcription services of $42,807.45: These expenses were for deposition
    transcripts, so the reasoning for the allocation parallels the explanation for
    travel expenses.
         Meeting expenses of $1,884.70: These charges were for refreshments
    provided to counsel at the depositions of Dell board member Alex Mandl
    and at the depositions of petitioners’ experts.
         A case-related publication that cost $32.00: This charge was incurred to
    purchase an article entitled “Management Buyouts and Earnings
    Management” published in the Journal of Accounting, Auditing & Finance.
         Outside counsel fees in the amount of $787.34: This amount was paid to
    Clark, Hunt, Ahern, & Embry to serve a subpoena on Bain & Company in
    Massachusetts. This subpoena sought information relating to work Bain did
    to assist Dell in implementing its transformational strategy; it thus was a
    valuation-related expense.
    Dkt. 449, at 9 & nn.9–13.
    For the other categories of expenses, G&E conceded that some small amount
    likely related to entitlement issues. G&E incurred $246,519.90 in expenses for e-
    Discovery Data Processing and e-Discovery Hosting Services. A total of 478.4 gigabytes
    of documents were processed and hosted on G&E’s e-Discovery platform throughout the
    duration of the appraisal action. Of these documents, only 4.9 gigabytes (1% of the total)
    comprised the small productions made in June 2015, July 2015, October 2015, and
    November 2015 to address the entitlement issues involving T. Rowe. G&E therefore
    deducted 1% of its e-discovery expenses.
    21
    G&E spent $21,267.78 on filing fees. Of these fees, $531.60 related to the
    entitlement issues, comprising $495.25 for a summary judgment brief in January 2016
    and $36.35 for a summary judgment brief in April 2016. G&E deducted these amounts.
    G&E incurred other miscellaneous expenses consisting of (i) $265,864.33 in
    duplication services, (ii) $20,729.37 in case-related research, (iii) $3,351.32 in postage
    and delivery, (iv) $1,269.45 in telephone expenses, and (v) $39.99 in service fees. The
    entitlement issues arose in October 27, 2014, so G&E concluded that expenses in these
    categories incurred before that date were legitimate. For later expenses, G&E could not
    make a precise allocation. G&E therefore deducted 2% of the post-October 27, 2014,
    expenses in these categories, noting that a 2% rate was comparable to the expense rate
    that G&E used for categories where a specific allocation was possible (i.e., 0% of the
    travel expenses, 0% of the transcription expenses, 0% of the meeting expenses, 0% of the
    outside counsel expenses, 1% of the e-Discovery Charges, and 2.5% of the filing fees).
    This resulted in a deduction of $5,617.09 from the miscellaneous expenses.
    Having considered the parties’ submissions, I find that G&E’s approach to the
    entitlement expenses is reasonable. Magnetar and Global were given the opportunity to
    conduct discovery into the expenses that G&E incurred. After discovery disputes arose,
    the court directed G&E to provide additional information about its expenses. G&E
    produced 537 pages of backup documentation detailing its expenses. Magnetar and
    Global did not identify any problems with G&E’s expenses. Accordingly, G&E has
    established the legitimacy of the following $4,007,462.08 in out-of-pocket expenses
    incurred in litigating the fair value of Dell:
    22
    Expenses Category      Total Amount          Valuation           Entitlement
    Allocation          Allocation
    Experts                $3,372,878.02        $3,372,878.02             $0
    Filing Fees              $21,267.78          $20,736.18            $531.60
    Meeting Expense          $1,884.70            $1,884.70               $0
    Outside Counsel           $787.43              $787.43                $0
    Travel                   $37,880.53          $37,880.53               $0
    Case-Related               $32.00              $32.00                 $0
    Publication
    Duplication             $265,864.33          $260,595.22          $5,269.11
    Services
    Postage & Delivery       $3,351.32            $3,293.75             $57.57
    Service Fees               $39.99              $39.99                 $0
    Telephone                $1,269.45            $1,257.09             $12.36
    Transcription            $42,807.45          $42,807.45               $0
    Services
    Case-Related             $20,729.37          $20,451.32            $278.05
    Research
    E-Discovery Data         $55,954.95          $55,753.45            $201.50
    Processing Services
    E-Discovery Data        $190,564.95          $189,064.95            $1,500
    Hosting Services
    Total Expenses                              $4,007,462.08
    Dkt. 449, at 14–15.
    Magnetar and Global’s only remaining objection to the expense amount is generic
    discomfort with the size of the bill. But “[w]ith their often complex valuation
    methodologies and the necessary utilization of financial experts, appraisal proceedings
    tend to be expensive.” Donald J. Wolfe, Jr. & Michael A. Pittenger, Corporate and
    Commercial Practice in the Delaware Court of Chancery § 8.10[e], at 8-234 (2012). The
    23
    vast majority of G&E’s expenses were for experts. G&E took the (to date) relatively
    unusual step of retaining a highly qualified expert to address Dell’s sale process and
    respond to the respondent’s position that the merger price should be regarded as the most
    persuasive evidence of fair value. The expert’s testimony was helpful to the court, but it
    added an extra layer of expense beyond the typical cost of a valuation expert. G&E also
    retained a tax expert, apparently at Magnetar’s suggestion. That expert’s testimony was
    also helpful, but it too added an extra layer of expense.
    In support of their size-based objection, Magnetar and Global point out that the
    appraisal class ended up containing 5,505,730 shares, a reduction of approximately 86%
    from the 38,765,130 shares that appeared originally on the verified list. Magnetar and
    Global suggest that a smaller appraisal class warranted a lesser investment in expenses.
    But the expenses of appraisal litigation do not scale proportionately with the size of the
    appraisal class. Dismissing some of the claimants did not, for example, lessen the need to
    retain experts on valuation, tax, and sale-process issues. Nor did it reduce the need to
    conduct discovery, file documents with the court, and try the case.
    At best one might posit that expenses would rise or fall along a step function, with
    counsel spending somewhat less in a small appraisal case, pursuing additional discovery
    and perhaps hiring a more expensive expert in a larger case, and committing the most
    resources in the largest of cases. In my view, even with the reduced number of shares,
    this was a case that required the highest level of investment. Facing skilled defense
    counsel who retained eminent experts of their own, G&E had to hire similarly high
    caliber experts and expend the resources necessary to achieve a successful outcome.
    24
    Ultimately, the amount of expenses that G&E incurred is proportionate to the
    benefit achieved. The total amount of reimbursable expenses was $4,007,462.08, which
    represents 15.89% of the aggregate benefit of $25,225,145.08. In my judgment, that is a
    reasonable level of investment in reimbursable expenses.
    2.     Shifting A Portion Of The Expenses To T. Rowe
    Magnetar and Global contend that T. Rowe should share in any expenses incurred
    by G&E. According to Magnetar and Global, “the value of the [T. Rowe Settlement] was
    the elimination of the risk that the [T. Rowe Ruling] would be reversed and the [Fair
    Value Opinion] would apply to the T. Rowe Petitioners’ shares, with interest continuing
    to run during such an appeal.” Dkt. 444, at 6. Magnetar and Global argue that G&E’s
    work in the appraisal action gave T. Rowe the leverage reach a settlement, so T. Rowe
    should share in the costs of the litigation.
    As a threshold matter, the appraisal statute does not permit the court to allocate
    expenses to former stockholders that were not entitled to seek appraisal and are not part
    of the appraisal class. Section 262(j) permits the court to “order all or a portion of the
    expenses incurred by any stockholder in connection with the appraisal proceeding . . . to
    be charged pro rata against the value of all the shares entitled to an appraisal.” 8 Del. C.
    § 262(j) (emphasis added). T. Rowe’s shares were not “entitled to an appraisal” and
    hence fall outside the scope of Section 262(j).
    That said, in this case, the court could achieve the same functional result simply by
    reducing the total amount of expenses that it awards to G&E, because a reduced award
    would force G&E to bear those expenses in the first instance and likely seek
    25
    reimbursement from T. Rowe. Magnetar and Global’s proposed expense calculations
    make it clear that their allocation argument is really an effort to reduce their share of the
    expenses. They propose to allocate to T. Rowe so many expenses that Magnetar’s share
    would fall eight-fold and Global’s ten-fold. See Dkt. 444, at 9; Dkt. 430, at 15. This
    decision already has held that the amount of G&E’s expenses is reasonable and
    proportionate to the outcome achieved for the appraisal class. On the facts presented, a
    further reduction is not warranted.
    B.     The Fee Award
    As the Shell court held, “[t]he standards governing the award of attorneys’ fees in
    an appraisal class action . . . are identical to those in other types of shareholder benefit
    litigation.” 
    1992 WL 321250
    , at *3. G&E seeks an award of $3,964.125.60 in attorneys’
    fees, plus interest accruing at the legal rate on this amount since May 31, 2016. This
    amount is reasonable.
    The controlling authority governing fee awards in common fund or benefit
    situations is Sugarland Industries, Inc. v. Thomas, 
    420 A.2d 142
     (Del. 1980). The
    Sugarland decision identifies factors for this court to consider when awarding fees for the
    creation of a common fund or benefit, but the factors appear diffusely throughout the
    opinion. See 
    id.
     at 149–50. More recently, the Delaware Supreme Court has summarized
    the relevant factors concisely as follows: “1) the results achieved; 2) the time and effort
    of counsel; 3) the relative complexities of the litigation; 4) any contingency factor; and 5)
    the standing and ability of counsel involved.” Ams. Mining Corp. v. Theriault, 
    51 A.3d 1213
    , 1254 (Del. 2012). “In determining the size of an award of attorney’s fees, courts
    26
    assign the greatest weight to the benefit achieved,” taking into account the nature of the
    claims and the likelihood of success on the merits. Franklin Balance Sheet Inv. Fund v.
    Crowley, 
    2007 WL 2495018
    , at *8 (Del. Ch. Aug.30, 2007). “Secondary factors include
    the complexity of the litigation, the standing and skill of counsel, and the contingent
    nature of the fee arrangement together with the level of contingency risk actually
    involved in the case.” Olson v. EV3, Inc., 
    2011 WL 704409
    , at *8 (Del. Ch. Feb. 21,
    2011). “Hours worked are considered as a crosscheck to guard against windfall awards,
    particularly in therapeutic benefit cases.” 
    Id.
     “Precedent awards from similar cases may
    be considered for the obvious reason that like cases should be treated alike.” 
    Id.
    If the benefit achieved is quantifiable, then “Sugarland calls for an award of
    attorneys’ fees based upon a percentage of the benefit.” Ams. Mining, 51 A.3d at 1259. In
    Americas Mining, after surveying a range of precedent, the Delaware Supreme Court
    observed that “Delaware case law supports a wide range of reasonable percentages for
    attorneys’ fees, but 33% is the very top of the range of percentages.” Id. (internal
    quotation marks and citation omitted). The Delaware Supreme Court then provided
    guidance on how this court should approach the percentage-of-benefit analysis by noting
    with approval that this court “has a history of awarding lower percentages of the benefit
    where cases have settled before trial.” Id. The high court grouped the percentages into
    categories based on the stage at which the litigation settled.
    When a case settles early, the Court of Chancery tends to award 10–15% of
    the monetary benefit conferred. When a case settles after the plaintiffs have
    engaged in meaningful litigation efforts, typically including multiple
    depositions and some level of motion practice, fee awards in the Court of
    Chancery range from 15–25% of the monetary benefits conferred. . . .
    27
    Higher percentages are warranted when cases progress to a post-trial
    adjudication.
    Id. at 1259–60 (internal quotation marks and citations omitted). Selecting an appropriate
    percentage requires an exercise of judicial discretion. Id. at 1261. The test is not a
    mechanical one, but the use of guideline ranges helps promote consistent awards so that
    similar cases are treated similarly.
    1.     The Results Achieved
    In this case, G&E generated an obvious and self-pricing benefit in the form of a
    gross monetary recovery of $25,225,145.08, calculated as of September 30, 2016. Net of
    expenses, the recovery is $21,217,683. G&E litigated the case through trial and obtained
    a post-trial adjudication, which would support an award of 33% of this benefit. The first
    and most important factor under the Sugarland analysis therefore would support a fee
    award of up to $7,072,561.
    G&E is not seeking an award equal to this amount, but rather has sought an award
    of $3,964,125.60, plus interest. As of September 30, 2016, that proposed award is worth
    $4,043,705.42, representing 19.06% of the net benefit. Compared to the fee award that
    the net benefit could support, G&E’s requested amount is facially reasonable.
    Strangely, Magnetar and Global take issue with G&E’s willingness to live by the
    contingency fee agreement it signed with its clients. Magnetar and Global contend that
    they rejected G&E’s fee structure when G&E offered to represent them and that they
    should not be forced to bear that fee structure now. Dkt. 430, at 16–17. This objection
    28
    misses the point. The court is not imposing a contractual fee arrangement on Magnetar
    and Global. It is determining whether the fee that G&E has requested is reasonable.
    This court can consider G&E’s contingency fee agreement with T. Rowe when
    determining a reasonable fee.
    [A]lthough not specifically listed as [a] factor in our [Sugarland] analysis,
    the terms of a fee arrangement between the law firm and its client are
    appropriate for the Court to consider. Fee arrangements cannot absolve the
    Court of its duty to determine a reasonable fee; on the other hand, an arm’s-
    length agreement, particularly with a sophisticated client, as in this
    instance, can provide an initial “rough cut” of a commercially reasonable
    fee.
    Wisconsin Inv. Bd. v. Bartlett, 
    2002 WL 568417
    , at *6 (Del. Ch. Aprt. 9, 2002), aff’d,
    
    808 A.2d 1205
     (Del. 2002); see Danenberg v. Fitracks, Inc., 
    58 A.3d 991
    , 997 (Del. Ch.
    2012). A series of federal decisions have approved using private fee agreements as a
    basis for determining an appropriate fee award in a common fund case.6
    6
    The United States Court of Appeals for the Seventh Circuit has held that lead
    counsel in a class action should receive a fee award consistent with “the contingent fee
    that the class would have negotiated with the class counsel at the outset had negotiations
    with clients having a real stake been feasible.” In re Trans Union Corp. Privacy Litig.,
    
    629 F.3d 741
    , 744 (7th Cir. 2011); accord In re Synthroid Mktg. Litig., 
    264 F.3d 712
    , 718
    (7th Cir. 2001) (“We have held repeatedly that, when deciding on appropriate fee levels
    in common-fund cases, courts must do their best to award counsel the market price for
    legal services, in light of the risk of nonpayment and the normal rate of compensation in
    the market at the time.”). Several district courts outside that circuit have used a similar
    methodology. E.g., Allapattah Servs., Inc. v. Exxon Corp., 
    454 F. Supp. 2d 1185
    , 1211
    (S.D. Fla. 2006) (“[T]he more appropriate measure of a reasonable percentage is the
    market rate for a contingent fee in commercial cases.”); Nilsen v. York Cty., 
    400 F. Supp. 2d 266
    , 277-78 (D. Maine 2005) (examining various methods for measuring the
    reasonableness of a common fund attorneys’ fee and concluding that “the methodology of
    the Seventh Circuit” is the most attractive). The United States Court of Appeals for the
    Third Circuit has held that for purposes of fee awards under the PLSRA, “courts should
    accord a presumption of reasonableness to any fee request submitted pursuant to a
    29
    These authorities provide strong support for the reasonableness of the fee that
    G&E has requested. The alternative would be to discard the contingent fee arrangement
    entirely and allow G&E to seek a much higher fee. The agreed-upon fee percentage is
    below the level that precedent would support, giving Magnetar and Global no grounds to
    object.
    2.    The Time And Effort Of Counsel
    “The time and effort expended by counsel serves a cross-check on the
    reasonableness of a fee award. This factor has two separate but related components: (i)
    time and (ii) effort.” In re Sauer-Danfoss Inc. S’holders Litig., 
    65 A.3d 1116
    , 1138 (Del.
    Ch. 2011) (citation omitted). G&E attorneys spent 17,138.70 hours litigating this case.
    According to G&E, the value of the time incurred at customary rates would be
    $7,776,899. The amount that G&E seeks is just over half its lodestar. The hourly cross-
    check supports the reasonableness of the award.
    retainer agreement that was entered into between a properly-selected lead plaintiff and a
    properly-selected lead counsel.” In re Cendant Corp. Litig., 
    264 F.3d 201
    , 282-84 (3d
    Cir. 2001; see also In re AT&T Corp., 
    455 F.3d 160
    , 163 (3d Cir. 2006). See generally
    Charles Silver, Unloading the Lodestar: Toward a New Fee Award Procedure, 70 TEX.
    L. REV. 865, 869 (1992) (advocating the replacement of “the lodestar method in all fee-
    shifting cases, regardless of the kind of relief sought,” with an award system “base[d] . . .
    on fee agreements plaintiffs enter into with their lawyers”); Charles Silver, A
    Restitutionary Theory of Attorneys’ Fees in Class Actions, 76 CORNELL L. REV. 656,
    700–01, 702–03 (1991) (“Unjust enrichment occurs in class actions because absent
    plaintiffs enjoy the fruits of an attorney’s labor without purchasing the right to do so. The
    remedy should therefore require absent plaintiffs to pay an amount which, if offered in
    advance, an attorney would willingly accept. The best guess at that amount is an
    attorney’s usual and customary rate. . . . In cases waged by contingent fee practitioners, it
    is inappropriate to focus on effective hourly rates ex post; . . . What is important . . . is to
    pay attorneys on terms they would probably accept in an ex ante bargain . . . .”).
    30
    “The more important aspect is effort, as in what plaintiffs’ counsel actually did.”
    Id. at 1139. “When an entrepreneurial plaintiffs’ firm engages in adversarial discovery,
    obtains documents from third parties, pursues motions to compel, and litigates merits-
    oriented issues, they are likely representing the interests of the class.” Id. The outcome
    here resulted from significant effort. G&E litigated the case over a three year period.
    G&E pursued fact discovery, including document production requests, interrogatories,
    and depositions. G&E obtained, processed, and hosted a total of 473.5 gigabytes of
    valuation-related documents and took or defended seventeen depositions. G&E also
    retained three experts and pursued expert discovery from Dell’s two experts. The
    litigation culminated in a four-day trial during which the parties introduced over 1,200
    exhibits and presented live testimony from seven fact witnesses and five experts. This
    level of effort supports the award that G&E seeks.
    Under this factor, Magnetar and Global contend that any award to G&E should be
    reduced because G&E performed work litigating T. Rowe’s entitlement issues. When
    counsel has created a common fund, “[t]he common fund is itself the measure of
    success.” Ams. Mining, 51 A.3d at 1259. If the court were awarding fees based on G&E’s
    lodestar, then it would examine G&E’s time records and deduct amounts devoted to the
    entitlement issues. But when a fee award is based on the benefit conferred, and
    particularly where the benefit takes the form of a common fund, it does not matter that
    G&E devoted some portion of its efforts to the entitlement issues. G&E is being paid for
    the benefit it generated, not for the other work that it did.
    31
    In a related argument, Magnetar and Global contend that any fee award to G&E
    should be reduced because G&E already received $4.2 million in fees for the T. Rowe
    Settlement:
    [N]ow that the T. Rowe Petitioners have enjoyed a substantial recovery by
    virtue of their $28 million settlement – resulting in a 15% fee to G&E of
    $4.2 million according to their discovery responses – the T. Rowe
    Petitioners should naturally be included among those petitioners who are
    required to contribute toward lead counsel’s fees. Indeed, the $4.2 million
    fee to G&E is greater than the fee being sought in their Fee & Expense
    Petition, raising the question as to whether any additional fees should even
    be due to G&E.
    Id. at 10–11. Once T. Rowe’s shares were no longer part of the appraisal class, any
    compensation that T. Rowe paid to G&E became a private matter. G&E’s fee award in
    this case is not based on any benefits that G&E obtained for T. Rowe. It is based on the
    common fund that G&E generated for the appraisal class.
    G&E generated a monetary benefit for the appraisal class. Magnetar and Global
    must bear their full pro rata share of that benefit. Otherwise they would be “unjustly
    enriched at the successful litigant’s expense.” Goodrich v. E.F. Hutton Gp., Inc., 
    681 A.2d 1039
    , 1044 (Del. 1996) (quoting Boeing Co. v. Van Gemert, 
    44 U.S. 472
    , 478
    (1980)).
    3.      The Complexity Of The Litigation
    “One of the secondary Sugarland factors is the complexity of the litigation. All
    else equal, litigation that is challenging and complex supports a higher fee award.” In re
    Activision Blizzard, Inc. S’holder Litig., 
    124 A.3d 1025
    , 1072 (Del. Ch. 2015).
    32
    This litigation was relatively complex. Although appraisal actions nominally have
    a “narrow focus” on the question of fair value, that issue itself involves “complex
    valuation methodologies and the necessary utilization of financial experts.” Wolfe &
    Pittenger, supra, at 8-227, 8-234. In this case, the parties fought over the proper valuation
    inputs, such the appropriate tax rates, adjustments for overseas cash, the weighted
    average cost of capital, and the terminal growth rate. G&E consulted two different
    experts to sort through the valuation factors.
    In recent years, appraisal actions have become more complex as respondents have
    relied on the deal price and the process that generated the underlying transaction as
    evidence of fair value. In five decisions before this one, the Court of Chancery found the
    deal price to be the most reliable indicator of the company’s fair value, particularly when
    other evidence of fair value was weak.7 In this case, Dell relied heavily on its sale process
    and the resulting merger price. To respond to Dell’s arguments, G&E had to conduct
    discovery into the sale process and develop well-supported arguments as to why the
    process fell short for purposes of price discovery. That complex task added significantly
    to the challenging nature of the case.
    7
    See Merion Capital LP v. BMC Software, Inc., 
    2015 WL 6164771
     (Del. Ch. Oct.
    21, 2015); LongPath Capital, LLC v. Ramtron Int’l Corp., 
    2015 WL 4540443
     (Del. Ch.
    June 30, 2015); Merlin P’rs LP v. AutoInfo, Inc., 
    2015 WL 2069417
     (Del. Ch. Apr. 30,
    2015); In re Appraisal of Ancestry.com, Inc., 
    2015 WL 399726
     (Del. Ch. Jan. 30, 2015);
    Huff Fund Inv. P’ship v. CKx, Inc., 
    2013 WL 5878807
     (Del. Ch. Nov. 1, 2013).
    33
    The complicated factual issues and the need for extensive discovery made this
    case more complex than most. This factor would support an award at the higher end of
    the range. It validates the reasonableness of the percentage award that G&E is seeking.
    4.     Any Contingency Factor
    “Another secondary Sugarland factor is the contingent nature of the
    representation.” Activision, 124 A.3d at 1073. It is the “public policy of Delaware to
    reward risk-taking in the interests of shareholders.” In re Plains Res. Inc., 
    2005 WL 332811
    , at *6 (Del. Ch. Feb. 4, 2005). “Not all contingent cases involve the same level of
    contingency risk.” Activision, 124 A.3d at 1073.
    G&E faced legitimate contingency risk in pursuing this action. G&E did not enter
    the case with a ready-made exit or obvious settlement opportunity. There was some
    possibility of a fair value award below the deal price. There was a serious possibility that
    the fair value award would equal the deal price. Although G&E prevailed at trial, the case
    could have turned out differently, and G&E could have ended up with nothing. It remains
    possible that as the result of an appeal, which seems likely, the Delaware Supreme Court
    could disagree with this court’s rulings and G&E still could receive zero.
    This case involved true contingency risk. This factor would support an award at
    the higher end of the range. It also validates the reasonableness of the percentage award
    that G&E is seeking.
    5.     The Standing And Ability Of Counsel
    “Law firms establish a track record over time, and they ‘build (and sometimes
    burn) reputational capital.’” In re Del Monte Foods Co. S’holders Litig., 
    2010 WL 34
    5550677, at *9 (quoting In re Revlon, Inc. S’holders Litig., 
    990 A.2d 940
    , 956 (Del. Ch.
    2010)). Six years ago, this court wrote that “G&E’s track record stands out.” 
    Id.
     That
    comment remains true today. In my view, few litigation teams could have achieved the
    same result against the well-represented adversary that G&E faced. This factor supports
    the reasonableness of the percentage award that G&E is seeking.
    6.     The Overall Conclusion
    The Delaware Supreme Court has held that “the Court of Chancery must make an
    independent determination of reasonableness on behalf of the common fund's
    beneficiaries, before making or approving an attorney's fee award.” Goodrich v. E.F.
    Hutton Gp., Inc., 
    681 A.2d 1039
    , 1044 (Del. 1996). As this court has observed, E.F.
    Hutton “unequivocally” requires that “where plaintiffs and defendants agree upon fees in
    settlement of a class action lawsuit, a trial court must make an independent determination
    of reasonableness of the agreed to fees.” In re Nat’l City Corp. S'holders Litig., 
    2009 WL 2425389
    , at *5 (Del. Ch. July 31, 2009) (internal quotation marks omitted), aff’d, 
    998 A.2d 851
     (Del. 2010). Having considered the Sugarland factors, the fee award that G&E
    has requested is materially below what this court might award independently as a
    reasonable fee. It easily satisfies the test of reasonableness.
    C.     The Proposed Dollar-For-Dollar Reduction
    Magnetar and Global argue that their share of any fees awarded to G&E should be
    reduced dollar-for-dollar by what Magnetar and Global paid for their own lawyers. Dkt.
    430, at 18. According to Magnetar and Global, they “needed their own counsel to protect
    their interests.” Dkt. 431, at 7; accord Dkt. 430, at 19.
    35
    The T. Rowe Petitioners had the benefit of their own counsel, who also
    happened to be lead counsel, which was looking out for their unique
    interests – including entitlement related issues – throughout this
    proceeding. The Magnetar Funds did not enjoy the same such protection
    from lead counsel. Rather, they were required to engage their own counsel,
    in large part to address the same unique entitlement issue that threatened
    the viability of the T. Rowe Petitioners’ appraisal claim.
    Dkt. 444, at 9–10. Additionally, Magnetar asserts that “the Magnetar Funds provided
    meaningful assistance and advice in respect of the tax issues that ultimately proved to be
    a substantial component of the valuation uplift” by “actively push[ing] Lead Counsel to
    engage a tax expert, comment[ing] substantially on [Dell’s] tax expert report and also
    participat[ing] in the deposition of [Dell’s] tax expert . . . .” Dkt. 431, at 8.
    This court held when it issued the consolidation order that it would follow Section
    262(j) and not permit departures for particular claimants. See Dkt. 77. “[T]he doctrine of
    law of the case normally requires that matters previously ruled upon by the same court be
    put to rest.” Frank G.W. v. Carol M.W., 
    457 A.2d 715
    , 718 (Del. 1983). See also Zirn v.
    VLI Corp., 
    1994 WL 548938
    , at *2 (Del. Ch. Sept. 23, 1994) (Allen, C.) (“Once a matter
    has been addressed in a procedurally appropriate way by a court, it is generally held to be
    the law of that case and will not be disturbed by that court unless compelling reason to do
    so appears.”). The consolidation order distinguished between individual issues, such as a
    particular claimant’s entitlement to appraisal, and issues that were common to the
    appraisal class, such as the fair value of Dell’s common stock. Dkt. 77, ¶ 6. The
    consolidation order held that G&E could recover fees and expenses for work on common
    issues but not individual issues. The same principles apply to other counsel. Magnetar
    36
    and Global have not advanced any compelling reason to depart from the distinction
    drawn in the consolidation order.
    Magnetar and Global’s request fails for another reason as well. If they could offset
    their individual fees expenses against what the appraisal class owes G&E, then the
    resulting award under Section 262(j) would not be pro rata. Instead, the award would
    burden other class members disproportionately by forcing them to bear the additional
    portion of G&E’s fees and expenses that Magnetar and Global would avoid.8 That is
    inconsistent with both the equitable fund doctrine and the appraisal statute.
    Most importantly, Magnetar and Global did not hire separate counsel for the
    purposes of providing a benefit for the appraisal class as a whole. Rather, they hired
    “their own counsel to protect their interests.” Dkt. 431, at 7; Dkt. 430, at 19. They are
    8
    Magnetar currently holds 3,865,820 eligible shares, or about 70% of the
    5,505,730 shares remaining in the appraisal class. Magnetar is currently on the hook for
    70% of G&E’s fee, or $2,783,390.40 of the $3,964,125.60 in attorneys’ fees that G&E
    has requested. This amounts to 16% of the $17,363,996.15 that Magnetar gained from
    G&E’s efforts. The non-Magnetar class members who own 30% of the shares are on the
    hook for 30% of the fee, which at $1,180,735.20 represents about 16% of the
    $7,365,938.12 benefit that they gained.
    Suppose this court were to hold that Magnetar could offset its portion of the fee
    award by what it has paid its private counsel—say, $1,000,000. At that point, Magnetar
    would be on the hook for $1,783,390.40, or 45% of G&E’s fee. That amount would
    represent only 10% of the $17,363,996.15 that Magnetar gained. Meanwhile, the
    remaining 30% of the class would become responsible for the balance of $2,180,735.20,
    or 55% of G&E’s proposed fee, which would represent 30% of the $7,365,938.12 that
    they gained. Requiring 30% of the shares in the appraisal class to bear 55% of the
    expenses is not a pro rata allocation. Nor is it proportionate to allow one set of claimants
    to keep 90% of their recovery, while permitting another set of claimants to keep only
    70%.
    37
    therefore not entitled to recover their fees and expenses, whether from the appraisal class
    or as an offset.
    Magnetar and Global have suggested that their private counsel may have
    contributed to the success of the litigation by consulting on tax issues and other matters.
    Were that so, then Magnetar and Global could have filed a fee petition of their own.
    Section 262(j) permits “any stockholder” who incurred expenses “in connection with the
    appraisal proceeding” for the benefit of the appraisal class to apply for reimbursement
    from the appraisal class. At this point, it is too late for that type of request, and
    particularly so when Magnetar and Global have emphasized that they hired their own
    counsel to “protect their interests.” Dkt. 431, at 7; accord Dkt. 430, at 19.
    D.     An Award Of Fees And Expenses Is Not Premature.
    Magnetar and Global raise a final objection: They argue that an award of fees and
    expenses is premature because neither the valuation nor the entitlement issues have been
    adjudicated through a final judgment and potential appeal.
    Magnetar and Global have it backwards. The Delaware Supreme Court
    “consistently has held that a judgment on the merits is not final until an outstanding
    related application for an award of attorneys fees has been decided.” 9 If this court were to
    9
    Del. Bay Surgical Servs., P.A. v. Swier, 
    869 A.2d 327
     (Del. 2005) (TABLE); see
    also Scion Breckenridge Managing Member, LLC v. ASB Allegiance Real Estate Fund,
    
    68 A.3d 665
    , 686 (Del. 2013) (“[W]e draw a distinction between attorneys’ fees and costs
    when determining a judgment’s finality: we have consistently held that a judgment is not
    final until attorneys’ fees are awarded, but a judgment is final where only costs remain to
    be awarded.”).
    38
    decline to rule on G&E’s fee application, then a final order could not be entered and the
    case would be stuck in limbo. The fee application is ripe and its adjudication is necessary
    to achieve a final order. Lipson v. Lipson, 
    799 A.2d 345
    , 348 (Del. 2001).
    The court anticipated entering final judgment after issuing its valuation opinion. In
    letters dated June 14, 2016, counsel for the parties identified four issues that remained to
    be decided: (i) a determination as to the number of shares held by one claimant, (ii) a
    motion to modify the Fair Value Opinion, (iii) G&E’s fee application, and (iv)
    Magnetar’s renewed motion for appointment as co-lead petitioner. Dkts. 411, 412. The
    fee application is all that remains.10 This decision has addressed it.
    III.      CONCLUSION
    G&E’s fee application is granted. G&E’s efforts benefitted the appraisal class to
    the tune of $25,225,145.08, plus any additional interest accruing at the legal rate of
    interest since September 30, 2016.
    G&E is entitled to be reimbursed for up to $4,007,462.08 in expenses. The
    appraisal class will be entitled to costs because the petitioners were the prevailing parties.
    “Except when express provision therefor is made either in a statute or in these Rules,
    costs shall be allowed as of course to the prevailing party unless the Court directs
    otherwise.” Ct. Ch. R. 54(d). Section 262(j) of the appraisal statute permits “[t]he costs of
    10
    See Dkt. 414 (Order Denying Motion to Amend or Alter the Judgment and
    Motion for Reargument); Dkt. 447 (Order Granting Motion for Reconsideration
    (determining claimant Martin’s share count)); Dkt. 452 (Order Denying Renewed Motion
    for Appointment as Co-Lead Petitioners and for Appointment of Co-Lead Counsel).
    39
    the proceeding [to] be determined by the Court and taxed upon the parties as the Court
    deems equitable in the circumstances.” 8 Del. C. § 262(j). “Customarily, it is the rule of
    this Court to assess all costs not specifically allocated by the statute against the surviving
    corporation, unless there is a showing of bad faith on the part of the dissenting
    shareholders.” Charlip v. Lear Siegler, Inc., 
    1985 WL 11565
    , at *5 (Del. Ch. July 2,
    1985). See, e.g., Owen v. Cannon, 
    2015 WL 3819204
    , at *33 (Del. Ch. June 17, 2015)
    (awarding costs as a matter of course); Taylor v. Am. Specialty Retailing Gp., Inc., 
    2003 WL 21753752
    , at *14 (Del. Ch. July 25, 2003) (same).
    Petitioners obtained an award of fair value that was higher than the merger
    consideration. This case was not brought in bad faith. Nor is there any indication that
    petitioners racked up excessive costs. Therefore, any costs to which the petitioners are
    entitled as the prevailing parties will be paid by Dell. The parties shall confer on the
    amount. If they cannot agree, the court will address the issue in due course. Dell’s
    obligation to pay costs may reduce to some degree the expenses for which G&E is
    entitled to reimbursement from the appraisal class.
    After the deduction of G&E’s net expenses, up to a maximum of $4,007,462.08,
    G&E is entitled to an award of attorneys’ fees equal to 19.06% of the remaining amount
    that otherwise would go to the appraisal class. The final award shall provide for the
    balance to be distributed pro rata to the appraisal class, less reasonable administrative
    expenses necessary to accomplish the distribution.
    The parties shall submit a form of final order implementing these rulings.
    40