Dolores J. Copeland, Individually and on Behalf of the Class of All Others Similarly Situated v. F. Ray Marshall, Secretary of Labor

WILKEY, Circuit Judge,

joined by TAMM, Circuit Judge, dissenting:

In our colleagues’ “lodestar” opinion, the path of attorney’s fees in Title VII litigation is easy to discern. It is Up, Up, and Away! It is Per Cálculos Ad Astra. 1

Before going to the extraordinary cálculos of the majority opinion, it would be well to point out the areas in which we have no disagreement and what precisely we think the issue is. We have no quarrel, of course, with the findings of the trial court, reiterated in exquisite detail by the majority opinion, regarding the labors of the young attorneys who worked for the plaintiff on this case. We have no quarrel with the regular hourly rates charged by this distinguished law firm to its regular corporate clients for the labors of its senior partners, its junior associates, or these particular junior associates. The issue is not whether they shall be paid; as attorneys for the prevailing party, they are rightly entitled to be paid. The issue is not, on this appellate level, even how much they shall be paid. The issue here is only-but unfortunately not simply-the formula by which these attorney’s fees should be calculated by the trial court.

This question has required much time and effort on the part of this court to attempt to resolve. All members should have come to grips with the obvious fact, as we analyzed and dissected this particular case, that *909 previous precedents in the field, even in our own circuit, rested on contradictory, overlapping, disharmonious, even spurious and irrelevant “factors.” This incoherent melange provides no consistent rationale for a conscientious trial judge to apply, at least in a case in which the Government is the paying defendant; the effort to do so here has highlighted the inadequacies and inapplicability of previous precedents.

Judge McGowan’s opinion for the majority is the most strenuous effort so far to pull a basically incoherent rationale (even if of some service in the private sector) together, to smooth putty into the visibly widening cracks of logic and to cover with the lacquer of a polished style. We in the dissent cannot buy the product. Over many months of pondering the arguments for importing the market value hourly rate fee into government Title VII litigation-this is the first case in this circuit-we are more than ever convinced that the market value concept is unworkable where there is no true market, that the effort to apply it inevitably leads to distortions and excesses, far away from the “reasonable attorney’s fee” which was Congress’s only avowed standard and intent.

First we delineate the differences which, on thoughtful analysis, are necessarily implicit in the setting of a “reasonable attorney’s fee” according to the statute, where the Government as contrasted with a private party is the paying defendant and no true market exists. Next we take up the obvious flaws in the applicability of the majority’s private sector theory to this case of the Government as defendant-the redundant contingency factor, the care and feeding of lawyers rather than injured plaintiffs, and the evasion of testing the majority formula in this case. Finally we describe the actual cost plus a reasonable and controllable profit method of determining a “reasonable attorney’s fee.”

Outline of Opinion

Page

I. Differences in the Role of the Government and Private Parties as Defendants in Title VII Litigation________________________909

Outline of Opinion

Page

A. Past Precedents in This Circuit_______909

B. Result When Past Precedents Applied to Copeland______________________910

C. How the Attorney’s Fee Incentive Operates in Government Litigation______911

D. Failure of Attorney’s Fees to Deter Discrimination by the Government ______912

E. “Reasonable” Private and Government Attorney’s Fees in Government Litigation _____________________________912

F. The Majority’s “Market Value” Fee Where No Market Exists ___________913

G. The Statute and the Legislative History -------------- 915

II. The Majority Opinion Formula — Faulty Analysis Produces Skewed Results____________917

A. The Redundant Contingency Factor___917

B. Encouraging Injured Plaintiffs or Encouraging Lawyers?________________920

C. Quality of Representation___________921

D. Majority Failure to Apply New Formula to this Case ______________________922

III. “A Reasonable Attorney’s Fee” — Actual Cost Plus a Reasonable and Controllable Profit __ 923

A. The Need for Additional Guidelines for the District Court _________________923

B. Rationale ________________________924

C. Application_______________________925

D. Substantive Inequities Feared from the New Method _____________________926

1. Special Problems with Small Firms and Solo Practitioners

2. Similar Problems for the Public Interest and Civil Rights Bar

3. Contingent Fees

4. Class Action Practitioners

5. Counsel Representing Poor Clients Generally

6. Counsel Who Work Long Hours

7. Requirement of Public Disclosure of Financial Information

E. Fear of Deterring Representation in Title VII Cases ___________________928

I. DIFFERENCES IN THE ROLE OF THE GOVERNMENT AND PRIVATE PARTIES AS DEFENDANTS IN TITLE VII LITIGATION

A. Past Precedents in This Circuit

The proper method for determination of attorney’s fees awards is a recent and developing area of the law, in which courts are still grasping for exact standards consistent with congressional intent. Over the past half dozen years this court has ad *910 dressed the attorney’s fees issue in several eases, each successive case attempting to systematize and sometimes modify the previous precedents.

In Evans v. Sheraton Park Hotel 2 we listed twelve factors that should be included in a district court determination of appropriate attorney’s fees in Title VII cases. The twelve factors were taken from the Fifth Circuit’s decision in Johnson v. Georgia Highway Express, Inc. 3 which had in turn drawn the standards from guidelines recommended by the American Bar Association’s Code of Professional Responsibility, Ethical Consideration 2-18 and Disciplinary Rule 2-106.

In Kiser v. Huge 4 we endorsed these same standards taken from the Code of Professional Responsibility as well as the Manual for Complex Litigation, section 1.47. 5 And in Pete v. United Mine Workers 6 we incorporated the attorney’s fees section of the panel opinion in Kiser.

Our opinion in National Treasury Employees Union v. Nixon, summarizing the analysis of Pete and Huge, listed the primary factors for consideration: hourly rate multiplied by hours, adjusted upward if there is a risk of noncompensation or partial compensation, and adjusted upward or downward on the basis of the quality of work performed as judged by the district court. 7

B. Result When Past Precedents Applied to Copeland

In any developing area of the law such as this, courts setting forth general principles must attempt to design them to produce just results in various fact situations to which they will logically apply in the future. The specific situations which arise in future cases will sometimes bring to light deficiencies in the general rules laid down in the past, and will thus require greater elaboration or modification of the standards. The present ease illustrates how a mechanical application of the hourly rate times hours formula, which appeared advisable as a general rule in past cases,- can actually lead to unreasonable fees entirely out of line with what would happen in private litigation. 8

The litigation effort in this case concerned a claim of sex discrimination brought by approximately twenty-four females employed in branches of the Directorate of Data Automation in the Department of Labor. The extensive discovery and numerous pretrial motions in the case were directed at the issue whether the Department of Labor had discriminated in the past against the plaintiff class in assignments, training, performance evaluations, promotions, and working conditions. In compensation for the effects of discrimination found in this case, the Department of Labor paid a sum total of $31,345 in back pay for thirteen of the plaintiffs. In contrast, the legal fee requested by plaintiffs’ attorneys was $206,000, and the amount awarded by the district court was $160,000. Plaintiffs’ attorneys spent 3,602 hours on the case.

Whether this gross disproportion between the monetary stake of plaintiffs’ claim and *911 the cost of litigating that claim is justified by the amount of equitable relief awarded, as the majority apparently believes, does not resolve the problem presented by these facts. It is true that some of the plaintiffs received promotions and prospective future promotions, and that the Department agreed to adopt an affirmative action plan for female employees in positions requiring knowledge of data processing. But the fact remains that this Title VII suit involved only twenty-four class members in a very limited sector of a government agency, and concerned acts of discrimination whose sum total monetary value over a several year period was $31,345; yet plaintiffs managed to throw such resources into the legal battle that they could claim a legal fee of $206,000 and receive from the district court a fee of $160,000. Even if the equitable relief here was worth five times the monetary award, the total amount of relief would never make a $160,000 fee appear reasonable in private litigation. When fees of this magnitude begin to appear in suits against the Government, it is time to ask some serious questions about the reasonableness of the attorney’s fees judges are awarding.

This case illustrates the potential result when a large private firm, with high rates customarily charged to wealthy corporate clients, brings a suit against a Government defendant with an unlimited deep pocket, and then proceeds to engage in extensive discovery and numerous pretrial motions, while being assured from the outset that all hours spent on the case will be reimbursed at the firm’s customary rate so long as its efforts are relevant to issues on which it ultimately prevails. It is of little use to quibble over whether the amount of equitable relief involved in this particular case can possibly justify the high fee, because the situation in this ease foreshadows and points the way toward far greater potential abuses in the future, if the hourly rate times hours formula continues to be mechanically applied.

Though past cases in this area, including those on which we ourselves have sat, have not given specific attention to these potential abuses, it is clearly time to do so now. The reason perhaps why those earlier cases did not consider the great potential for abuse is that they did not involve the Government in Title VII litigation and did not anticipate the possible effect when the resources of a large private law firm are brought to bear against the Government in an employment discrimination suit. We have that case for the first time now. It illustrates how these suits can diverge drastically from the commonly known patterns of private litigation.

C. How the Attorney’s Fee Incentive Operates in Government Litigation

When a large firm knows that eventual success will bring it compensation at its customary rate for all relevant hours of work, the firm has a tremendous incentive to expand the pretrial stages of the case to the point where it becomes overwhelmingly in the Government’s interest to settle, whether the Government is in the wrong or not. In private litigation the incentive to expand the discovery and pretrial motion stages is counterbalanced by the high cost that this will inflict on the client, because victory does not normally bring a recovery of the litigant’s own attorney’s fees from the other side. Not so in a case of this sort against the Government, where the law deliberately encourages the litigation by holding out the carrot of attorney’s fees-but only to successful plaintiffs.

Furthermore, in private litigation the high cost of extensive discovery serves as an incentive for both sides to settle. But in Title VII cases against the Government, the incentives become entirely lopsided, because expanded litigation costs for plaintiff not only increase his chance of winning, but also greatly increase the sum his lawyer stands to gain if he does win. At the same time, each expansion of the litigation effort will pose a risk of higher and higher liability for the Government. The end result is that the Government faces overwhelming incentives to give in to claims, however unjust, before expanded litigation doubles or triples or quadruples the size of eventual Government liability. When attorney’s fee *912 levels come to dwarf the actual monetary amount in controversy, as in the present case, the structure of these incentives is magnified further. In deciding whether to settle a case like this one, the Government is not primarily considering whether its case is strong enough that it should risk an eventual $31,345 judgment to plaintiffs; instead, if Government attorneys are rational they must primarily consider whether their case is strong enough to risk the much greater possibility of a $200,000 plus eventual attorney’s fee award.

D. Failure of Attorney’s Fees to Deter Discrimination by the Government

Attorney’s fees are meant to serve some purpose of deterring discrimination. They doubtless do in the private sector.® But when attorney’s fees come straight out of the United States Treasury, as in the present case, they exert no deterrent effect whatsoever against the persons responsible for the discrimination. In the private sector there is a justifiable punitive element. Attorney’s fees impact on the profit picture of the corporation; the same executive management which is responsible for tolerating or encouraging discrimination are the same executives who are responsible for the profit of the corporation, so they are penalized in the pocketbook. No such deterrence applies to the Government, i. e., the Labor Department budget was never touched, will never be touched, by the award of Judge Gesell in this case. Both the back pay and the attorney’s fee come out of the general taxpayer contributed funds of the U. S. Treasury. By their strict analogy to the private sector, the majority has validated deterrent or punitive action against the U. S. taxpayer.

E. “Reasonable" Private and Government Attorney’s Fees in Government Litigation

The Government operates in a universe of attorney’s fees lower than that prevailing in the world of wealthy corporate clients. If the Government were pressing the Title VII case rather than defending, its legal costs would not approximate private “market value.” Government legal counsel, whether on the plaintiff or defendant side, traditionally simply have never been compensated at the same scale as in private practice. The young associate makes slightly more than the young Government attorney; the margin becomes really vast when partner status in a prestigious law firm is compared even with the Attorney General of the United States. Since the Government willy-nilly is financing these Title VII suits both by plaintiffs who succeed and do not succeed (giving effect to a contingency factor), Government counsel defending and plaintiffs’ counsel bringing the suits should have compensation of roughly the same amplitude.

There is a logical symmetry in this principle. When the Government as a defendant prevails, it has asked for and received only its actual costs, the salaries of the attorneys working on the case plus overhead costs attributable to their work-not the market value going hourly rate of the private sector. 9

10 It is undeniably the same litigation, vindicating the rights of employees discri *913 minated against, whether the Government wins or loses. The work on the facts and the legal issues is of the same complexity on both sides. Indeed, if the Government were not the defendant employer, the private attorneys would not be bringing a pro bono publico lawsuit as private attorneys general. What the private attorneys are doing is essentially Government legal work. Recognizing this, why should the private attorneys be compensated on a scale other than actual costs (salary and overhead) plus a reasonable profit to encourage them to continue accepting employment in this type of litigation? The purpose of Title VII attorney’s fees would be fully vindicated by such a policy.

F. The Majority’s “Market Value” Fee Where No Market Exists

With reference to attorney’s fees in Title VII litigation against the Government, the fundamental verities overlooked by our colleagues are these: first, there is no market in which fees are set by market value forces; second, whatever fee-paying mechanism there is exists as the total creation of the Government itself.

To the latter point, we must remember that the Government need not consent to be sued by its own employees or anyone else. No lawsuit, no lawyer’s fee. In almost any other country in the world government employee complaints are adjudicated through the administrative process, as indeed was thought perfectly proper in the United States until 1972, when Congress decided it was more just to give government employees the same rights in court as private employees. Our role is not to choose between administrative or judicial relief; it is to give effect to that selected by Congress. And so we point out that if the majority’s pathway to the stars formula for attorney’s fees is applied often enough, there may be a popular demand to take government employee Title VII litigation out of the court system altogether and limit employees to administrative relief as previously.

As matters stand now, the Government as defendant pays the cost of its own lawyers in court, the Government pays attorney’s fees for those plaintiffs who prevail, and the Government-because it pays not only the true cost of the specific suit but also a contingent factor for attorney’s costs in other suits in which the plaintiff does not prevail-pays attorney’s fees indirectly for plaintiff lawyers who lose. The Government-the American taxpayer-is financing BOTH sides of ALL Title VII litigation against the Government. This is the chosen mechanism; the court’s role is to determine how the fees are to be calculated.

So we now return to the first point above: the Government is financing this litigation under circumstances in which there are no market value forces to restrict or to set “reasonable attorney’s fees”; fundamentally, because there is no market. We all recognize that the government employees who become plaintiffs in Title VII cases do not have the financial resources to bid in the marketplace for attorney’s services. Copeland and fellow plaintiffs could never have contemplated this litigation, resulting in a suggested fee of $206,600, and an award of $160,000 plus $12,000 expenses. To vindicate the rights of persons discriminated against, Congress has realistically appraised the situation and recognized that attorney’s fees must be taxed to the losing defendant, if there is to be any Title VII litigation brought by the injured persons. We in dissent obviously have no quarrel with this whatsoever; we realistically recognize, however, as our colleagues do not, that here there is no market, and that necessarily there must be a different method of setting a “reasonable attorney’s fee” if there are no market forces to determine a “market value” fee.

Whatever the usual merit of “market value,” it is anomalous where Congress has specifically sought to complement the market for legal services in Title VII cases with an alternative mechanism for allocating attorney’s fees. Rather than relying on the parties in privity-the client and his or her lawyer- to agree among themselves to the value of the services to be rendered, Congress has provided that a trial court, in its *914 discretion, may assign the burden of legal expenses incurred by the winner to the loser.

The emphasized points in this last sentence should underscore the substantial incongruity between market and judicial determinations of the cost of legal services. Furthermore, the market works so well because it works invisibly, almost effortlessly; even the most astute of judges can only mock the market concept when the judge seeks to replicate market results where none exist. Emulating the market, effective as it is, is worthless to the extent that market factors-supply and demand, agreement among market-makers, prospective not retrospective assessments of marginal utility-are more conjectural then real.

So it is plain, then, that attorney’s fees in the Title VII context cannot be assigned according to market values because there are quite simply no buyers for the services rendered. Without clients who agree to pay at certain (bargained for) rates, there can be no market. There is missing an a priori pecuniary relation between the legal services undertaken and the willingness of any beneficiary to pay for them. Therefore, charging a losing defendant for the prevailing party’s legal expenses at “market” rates which no one would ever have voluntarily assumed is to destroy the market concept by purporting to respect it.

Another inconsistency of the majority’s “market value” approach when compared with bona fide markets is with regard to risk. In a market, i. e., a real market, risk is a negative factor which diminishes the “expected value” of the beneficiary’s lawsuit to the client. A rational client, the beneficiary of legal services, would pay less to pursue relatively riskier litigation because his anticipated recovery must be discounted for that risk. Naturally, lawyers who will be paid only upon the contingency of success would appreciate and demand a risk premium for their services. Only a true market, of course, could allocate the burden of risk accurately between lawyer and client. This the private sector does every day. In Title VII litigation against the Government we have placed this burden on the judge.

This is indeed a situation which, if recognized in its true proportions, is so completely different from private litigation that it is obvious that the same concepts of market value fees cannot be employed. Instead of the free play of the market of private clients we have the Government consenting to be sued, financing all successful litigation against itself, and also financing all unsuccessful litigation against itself by enlarged fees on a contingent basis. If this is what is to be done, and it is what is to be done by both the majority’s concept and ours, then the Government is entitled to put down some rules and regulations on the cost of the legal services, which by the system designed by statute the Government is going to finance in totality. If the Government is going to finance the whole mechanism in totality, then the concept of actual cost plus a reasonable profit to the attorneys is about the only concept that can hold attorney’s fees down to a reasonable level.

The tendency toward abusively high fees in this sort of case is real, yet the majority opinion offers absolutely nothing to cope with this problem. We believe there are indeed ways by which we can try to solve this problem, rather than throw up our hands and permit attorney’s fees in Title VII cases to continue up to the stars. Two of these factors can be found listed in the Evans case: (1) limiting fees to a level commensurate with awards in similar cases, and (2) limiting fees to a level commensurate with the amount in controversy and results obtained. 11 Significantly, the majority opinion makes no mention of these limiting factors from our precedents; apparently the majority actually prefers to encourage legal fees upward toward the stars. We submit that “lodestar” fees were fa¿ from the Congressional gaze when Congress specified “a reasonable attorney’s *915 fee,” 12 so we now turn briefly to what is available in the legislative history.

G. The Statute and the Legislative History

The majority asserts that the “cost-plus” formula is “fundamentally inconsistent with Congress’s purpose in providing for statutory fee-shifting.” 13 The majority further contends that Congress intended that a fee should be based on the market value of the services rendered. 14 Neither the language of the statute nor the legislative history underlying the attorney’s fee provision evinces a congressional mandate to use the market value approach in calculating a reasonable attorney’s fee award.

The purpose underlying the attorney’s fee provision is to encourage deserving litigants to seek judicial relief. To effectuate this purpose, Congress intended that the attorney’s fee awards be sufficient to attract competent counsel, but not so unreasonably high as to produce a windfall for the attorney. It is our position, quite simply, that the market value approach is inappropriate at least in cases in which the Government is the losing defendant because, as will be demonstrated in our analysis of the practical flaws in the majority theory in Part II below, it presents the likelihood that the attorney indeed will reap a bonanza. The “cost-plus” formula, on the other hand, will provide adequate compensation to enable litigants to obtain competent counsel without providing a windfall to the attorney.

We begin by looking to the language of the statute. The attorney’s fee section provides that “the court, in its discretion, may allow the prevailing party ... a reasonable attorney’s fee -as part of the costs, and the .. . United States shall be liable for costs the same as the private person.” 15 The language of the statute surely does not mandate a market value approach; it specifies not at all the method of computing the fee, but instead only generally directs that the attorney’s fee should be reasonable.

The majority asserts, however, that the language “the United States shall be liable for costs the same as a private person” plainly indicates that the method of calculation of the attorney’s fee should not vary with the identity of the losing defendant. To prove that this is wrong we need not advocate a clear dichotomy between the method of calculating fees in the case in which the losing defendant is a private company and in the case in which the losing defendant is the Government. The case before us is one in which the losing defendant is the Government, and we think that it well illustrates how the market value approach leads to an unreasonable result in this type of case. It may be, however, that the market value approach would not be inappropriate in cases in which a private concern is the losing defendant, another case which we do not have before us.

Apart from that caveat, our response to the majority’s contention is that we take the language of the statute to mean only that the United States shall also bear the burden of “a reasonable attorney’s fee” when it is the losing defendant. The statutory language does not indicate that the identical method of calculation shall be used in computing this fee-what may be a reasonable method of calculating an attorney’s fee award in the situation in which a private entity is the defendant may be a totally unreasonable method when the Government is the losing defendant.

*916 We also note that the attorney’s fee provision quoted above has been a part of Title VII since the enactment of the statute in 1964. At that time, as the majority indicates in a footnote, Title VII did not permit employment discrimination suits against the United States. Thus attorney’s fees were awarded against the Government only when the Government was a losing plaintiff. It was not until 1972 that a new provision was added to Title VII to allow suits against the Government. The language of the attorney’s fee section was not changed; rather, the new section providing for suits against the federal government indicated that the attorney’s fee provision would also be applicable to claims made by federal employees. 16 A fair reading of this sequence of events is that Congress did not contemplate at all whether the method of calculating a reasonable fee should be the same as the ease in which the losing defendant was a private entity; instead, it appears that Congress only intended to make clear that the United States also would be assessed for costs when it was a losing defendant.

Turning to the policies and purposes of the attorney’s fee provision set forth in Title VII, we find nothing which would dictate a market value approach. As the Supreme Court indicated in Newman v. Piggie Park Enterprises, Inc., 17 the provision for counsel fees in intended “to encourage individuals injured by . . . discrimination to seek judicial relief,” by enabling these individuals to obtain adequate counsel. 18 Nothing in the legislative history of the provision indicates that Congress intended the attorney’s fee to be computed according to the market value of the services rendered by the attorney: indeed, nothing in the legislative history indicates that Congress even addressed itself to the details of the method of calculating an award.

In regard to the Civil Rights Attorney’s Fee Award Act of 1976, 19 an Act similar in design and principle to the attorney’s fee provisions set forth in Title VII, the policy underlying the attorney’s fee provisions in civil rights cases is elucidated more fully: “[Ajwarding counsel fees to prevailing plaintiffs in [civil rights] litigation is particularly important and necessary if Federal civil and constitutional rights are to be adequately protected.” 20 To accomplish this goal, reasonable fees must be awarded “to attract competent counsel ... while avoiding windfalls to attorneys.” 21 The majority correctly asserts that both the House and Senate Reports to the 1976 Civil Rights Attorney’s Fee Award Act cite with approval Title VII cases in which the attorney’s fee was calculated according to a market value formula. But Congress found that in those cases cited the “fees [were] adequate to attract competent counsel, but [did] not produce windfalls to [the] attorneys.” 22

We do not think therefore that Congress intended the market value of the services rendered to be the basis for an award of attorney’s fees when that technique would produce a windfall or unreasonable fee. As the court explained in Johnson v. Georgia Highway Express, Inc., 23 one of the cases Congress cited with approval:

The statute was not passed for the benefit of attorneys but to enable litigants to obtain competent counsel worthy of a contest with the caliber of counsel available to their opposition and to fairly place *917 the economical burden of Title VII litigation. 24

We think applying the market value approach in cases in which the Government is a defendant, as will be shown below, likely will lead to the award of clearly un reasonable fees, in direct contradiction to congressional intent. To the contrary, the cost-plus formula will best promote the congressional policy of encouraging deserving litigants to bring Title VII suits, without making the attorney’s position so lucrative as to ridicule the whole notion of a “reasonable attorney’s fee.”

II. THE MAJORITY OPINION FORMULA-FAULTY ANALYSIS PRODUCES SKEWED RESULTS

In its rigid interpretation of the statute as calling for precisely the same method of calculating attorney’s fees in both the public and private sectors the majority errs, and then compounds that error by applying its own formula in a way which precludes ascertaining the congressionally directed “reasonable attorney’s fee.” Both errors stem from the majority’s failure to appreciate the inapplicability of fee setting, as done by the market in private practice, to fixing a reasonable fee in the very different situation when the Government is the defendant. We now turn to specific examples of the extraordinary skewed results which will be the inevitable consequences of the majority’s faulty fundamental analysis.

A. The Redundant Contingency Factor

We ourselves in our previous panel opinions recognized the desirability, and indeed necessity where public interest law firms were concerned, of applying a contingency factor to the basic fee awarded. However, (1) we did this to a basic fee calculated on actual cost, and (2) the contingency factor was to be part of the reasonable profit, varied and controlled by the trial judge on his appraisal of several factors, including the contingency nature of the firm’s practice and the particular lawsuit. When the contingency factor is applied to the market hourly rate, as the majority would do, the results are confusing and can lead to excessive awards.

Per Cálculos, the majority’s method, if allowed to stand, will take these and other Title VII attorney’s fees Ad Astra. As applied to the total of 3,602 hours of work in this case, the weighted hourly rate of $57.17 results in a calculation of $205,916.50, close to the $206,000 fee “suggested” by the law firm to the court. This is designated by the majority opinion as the “lodestar” or “market value” 25 from which all other “adjustments” are to be made. 26 It is absolutely vital to see what this $57.17 hourly fee already includes. The regular hourly rates of the law firm, for each lawyer, are necessarily designed to cover the lawyer’s individual salary or equivalent partnership pay, his appropriate share of the firm’s overhead in every respect, a profit above the actual cost to the firm of his work (which makes up the total firm profit for the partners), and -this must be recognized and kept clearly in mind-an amount necessary for each hour which is billed to cover the numerous hours which for one reason or another cannot be billed, or must be billed at a more modest rate. The firm can never calculate its hourly charge for an attorney on the fallacious theory that every hour of work is going to be productive. There are hours which simply cannot be billed regular paying clients because the are redundant, or too numerous for the character of the task to which they are devoted; and in those instances in which the representation in litigation is on a contingent basis (/. e., as defined by the majority opinion, compensation only if the firm’s side prevails), hours may not be compensable at all.

It is basic common sense that the bill for legal services in successful litigation may have a more comfortable margin than that for a losing effort. That margin, a sort of bonus for winning, acknowledges that liti *918 gators adjust their fees in accordance with each fluctuation in their win-loss record. Even in purely private suits, where law firms recover their fees from their own clients, fees and the underlying hourly rates on which they are computed are adapted to the particular circumstances. In the market, a request for fees or hourly rates not conforming to the results of litigation would be outrageous.

The fatal flaw is that our colleagues have taken a standard of values from the marketplace, indeed have referred to their “lodestar” fee at times as a “market value” fee, which it is, and have applied it in the Government sector where there is no real market. What our colleagues fail to realize is that the “market value” fee they have taken as a “lodestar,” the starting point to be adjusted for contingencies, already has a substantial contingency factor built into the fee.

This is what a market is for. A market is to place value on commodities or services considering all of the contingencies. 27 As we pointed out above, it is absolutely necessary for every private law firm to fix an hourly rate that takes care of the salary of the attorney and overhead attributable to him, provides a profit for the partnership, and also takes care of the contingency of those many hours for which there is no monetary compensation at all (one of the reasons for which is the contingency of not winning the case and not collecting a fee), or for which the firm must make a pragmatic, prudential decision to charge the client at a lower rate because the firm was not successful in litigation and could not rationally expect to recover as large a profit from the case as it might have had it won.

While in the practice of law the fixing of fees and establishment of customary rates is not as volatile as the New York Stock Exchange, the distinguished private firm involved in this litigation is, as our colleagues have rightfully recognized, in a marketplace of sorts. The regular hourly rates fixed by this and other firms reflect in every possible way the contingencies of the marketplace, including the contingency of failure in a litigated case (or the failure of its client in the marketplace, i. e., bankruptcy) and of the receipt of no fee at all, as could have occurred in this Title VII litigation. And so their fee in the marketplace is truly a fee calculated on the “market value” of their services. The majority opinion has thus pointed in numerous places to “market value” as the fairest and most useful starting part for the calculation of the plaintiff’s fees in this successful Title VII suit against the Government. Our colleagues have then erroneously specified that this fee be adjusted upward in every case to take care of “contingencies,” the primary contingency being that of failure to prevail in some lawsuits and thus the contingency of failure to receive any fee at all. 28 Since the “market value” fee in com *919 mercial private practice already includes the contingency of failure and receipt of a lower fee than otherwise obtainable, our colleagues create a danger of duplication when they add this contingency factor to the already generous market value regular hourly rate.

The majority appears to recognize that market rates already include a substantial contingency factor, when it acknowledges the possibility that “an hourly rate underlying the ‘lodestar fee’ itself comprehends an allowance for the contingent nature of the availability of fees in Title VII litigation against the Government ....” 29 This is more than just a vague possibility. As we have seen, adjustments for contingency can be expected to be commonplace, given the general nature of law firm billing practices. Consequently, allowances for contingency will generally be comprehended in the hourly rate, and the amount of contingency allowance may well be substantial.

To alleviate this problem, the majority suggests that “[t]he district judge has ample powers of inquiry into the makeup of hourly rates to assure that the Government will not suffer from any such duplication . ...” 30 If the majority is serious about weeding out redundant contingency allowances, these judicial powers of inquiry will always have to come into play. 31 Given the serious possibility that any hourly rate may contain a contingency factor, the district judge will always have to inquire whether in fact it does contain such a factor. And if it does, he must inquire into its magnitude.

Determining the existence and amount of the contingency factor in any hourly rate is a difficult task, and the majority does not suggest how it is to be done. Although there may be several possible ways to do this, the most obvious one is to break down the putative hourly rate into its constituent parts in order to identify that component which reflects the contingency factor. The contingency factor would be that component of the fee in addition to the amount needed to cover costs and to provide the firm with its normally expected overall profit rate. In other words, it would be the amount needed to ensure that in the long run the firm earns its desired profit, after taking account of the proportion of hours spent on a case that must be billed at a lower rate if at all due to lack of success in litigation. It may very well be that a law firm’s desired profit is an “unreasonable” one. In the marketplace this is no problem: “reasonable” is whatever the market will bear. Here, with hourly rates applied artificially in a nonmarket context, the potential for unreasonably high desired profits compounds the difficulty of isolating the contingency component.

But the most striking aspect of any technique employed, pursuant to the majority’s approach, to identify the contingency factor, is that the elimination of built-in con *920 tingency allowances could be achieved more simply from the outset by employing the cost-plus method. Cost-plus provides a base figure that is free of any contingency factor; from that base figure the appropriate adjustments could then be made to reflect contingency of nonsuccess in the case at hand, as well as exceptional quality of work, without duplicating any built-in contingency factor already included in the fee.

Starting from actual cost of services is a far more direct approach than starting with an hourly fee and trying to weed out any built-in contingency allowances. Starting from the hourly rate simply invites confusion and duplication of contingency allowances. Unless district judges are especially diligent in weeding out any built-in contingency allowances, there is no way in which the market value regular hourly rate, the “lodestar” fee, can be taken as the starting point, and a contingency factor for failure applied to that market value fee without totally distorting and exaggerating the compensation awarded to successful plaintiffs’ attorneys. We think that an evaluation of the contingency factor is necessary in Title VII cases, in all fairness to the attorneys who bring these suits-sometimes successfully, sometimes unsuccessfully. But the contingency factor can only be applied if the actual cost of services -salary and overhead-/s taken as the starting point.

Actual cost of services has no contingency factor built in, as does the regular commercial hourly rate, which is fixed by the customary market, and which is truly a market value fee. Where the Government is the purchaser of services, actual cost plus is a fair and reasonable basis on which to compensate anyone, lawyer or layman. Actual cost of service is a true starting base, to which the factors relevant to Government litigation (and not necessarily relevant in private litigation) can be properly applied. What our colleagues have done here is a horrendous example of miscalculation and inflation of fees chargeable to the Government and to the taxpayer, without even realizing the economics of the marketplace on which they purport to rely.

B. Encouraging Injured Plaintiffs or Encouraging Lawyers?

Aside from the extraordinary financial results from the majority’s theory, we have a fundamental disagreement with our colleagues as to the philosophy underlying the award of attorney’s fees to prevailing litigants.

It is plain that our nation’s policy-both legislative and judicial-is to promote the efforts of so-called “private attorneys general” who vindicate our civil rights laws by seeking legal redress for Title VII plaintiffs’ injuries. It is necessary, then, that litigation expenses constitute no barrier that discourages these private plaintiffs from bringing their grievances before the courts. Eliminating the barrier of attorney’s fees encourages plaintiffs to assert their legal and civil rights.

But encouraging injured plaintiffs is a goal distinct from that of encouraging lawyers with the lure of attorney’s fees bonanzas. 32 The majority’s philosophy appears to be solicitous of the “sellers” of legal services beyond the needs of the “buyers” of these services. The majority appears to believe that its “market value” formula must award attorney’s fees which match the petitioning lawyers’ highest opportunity costs. Neither lawyers nor other purveyors of products and services operate on the *921 basis of achieving highest opportunity costs most of the time; by definition, the usual- and entirely satisfactory — reward is less. It seems clear that the mandated encouragement to plaintiffs is achieved by granting the lawyers a sum reflecting their actual cost plus a reasonable profit, as opposed to an award which reflects the highest rates of return that alternative applications of legal manpower and resources could command.

It is simply not invidious to conclude that the fee schedule acceptable to General Motors when confronting a possible billion dollar liability is not necessarily applicable in Title VII attorney’s fees determinations. Our “cost-plus” method brooks no disservice to Title VII “private attorneys general.” On the other hand, overcoming the legal expense barrier for these private plaintiffs requires no windfall for lawyers-only that it be worth their lawyers’ while. 33 This is what our view of attorney’s fees awards accomplishes: service for the plaintiffs without the need for lawyers to sacrifice. 34 The inevitable existence of some other opportunities for lawyers to gain relatively higher remuneration does not mean that all legal services-including purported pro bono work-must be compensated at the very highest figure discoverable.

C. Quality of Representation

Under the majority’s approach, in calculating an award of attorney’s fees, the court should first multiply a reasonable hourly rate by the number of hours reasonably expended on the lawsuit, the so-called “lodestar” fee. Adjustments to this figure then may be appropriate, the majority asserts, to account for the quality of representation in the particular case and the contingent nature of success. Another logical flaw in the majority’s formula is that a consideration of the quality of representation in the particular case, like that of contingency, see Part II.A. supra, already inheres in the reasonable hourly rate, one of the two elements used in fixing the “lodestar” fee. The majority reveals this logical gap plainly, yet it does not seem to recognize it.

The majority states that a reasonable hourly rate “is the product of a multiplicity of factors. Evans itself listed several of the relevant considerations [including, inter alia] the level of skill necessary [and] the attorney’s reputation.” 35 The attorney’s reputation corresponds to a consideration of the quality of an attorney’s work in general. As the court stated in Johnson v. Georgia Highway Express, Inc., 36 (from which the factors in Evans are drawn): “Most fee scales reflect an experience differential with the more experienced attorneys receiving larger compensation. An attorney specializing in civil rights cases may enjoy a *922 higher rate for his expertise than others, providing his ability corresponds with his experience.” The level of skill necessary to perform the legal service properly also corresponds to a consideration of the quality of an attorney’s representation in the particular case before the court. In Johnson the court explained that this factor required the trial judge to “observe the attorney’s work product, his preparation, and general ability before the court.” 37 So, both the lawyer’s skill in general (reputation) and that necessary in the particular case are already accounted for in the reasonable hourly rate.

Although the skill of the lawyer in the particular case thus is already included in the calculation of the reasonable hourly rate, the majority states that “the ‘lodestar’ may be adjusted up or down to reflect ‘the quality of representation.’ ” 38 Under the majority’s approach, then, the attorney presumable will be compensated for the quality of his representation twice: once when the court calculates the “lodestar” fee and a second time when an adjustment to the “lodestar” is made.

We might add that we do not find logically persuasive the majority’s notion that a decrease in the “lodestar” may result if the quality of the representation was unusually poor. To be entitled to an award of attorney’s fees, the attorney must prevail in the lawsuit. It stands to reason that the level of proficiency displayed will always be at least adequate (indicating no adjustment to the “lodestar”) if not exceptional (indicating an upward adjustment to the “lodestar”) in cases in which the plaintiff prevails. It is thus difficult to conceive how a downward adjustment would ever be justified.

D. Majority Failure to Apply New Formula to this Case

An additional flaw of major proportions in our colleagues’ opinion is the faulty application of their new theory and model to the case at bar. They say, avowedly because of the age of the ease and the position taken by the parties on appeal, that they will not send this case back to the trial court for an examination on the basis of the revised formula they have devised, 39 even though “[i]t is readily apparent that the District Court’s fee-setting calculations do not precisely conform to the procedures identified in earlier cases and elaborated upon earlier in this opinion.” 40 This is really ducking the issue, the only issue on which this case was brought to this court.

In effect, the majority, perhaps influenced by this court’s vast administrative law experience, has drifted into rulemaking like an administrative agency; the majority has made a rule for future cases, but declined to perform its primary function as a court-to adjudicate, to apply the rule to the very case at bar. 41 We have never been aware that a court may decline to adjudicate simply because a case is long on the docket; what a convenient way of clearing crowded dockets that would be. Nor may a court announce prospective rules but decline to apply them to the litigation before it on the speculation that the district court might have reached a result compatible with the new rule.

The “lodestar” approach would be better understood and supervised if the district judge here had a chance to run through the “lodestar” and exercise his “ample powers of inquiry.” 42 In order for an accurate fee to be set, the district court should have a chance to apply the majority’s formula, *923 looking into the contingency factors in this case and the possibility of a built-in contingency allowance in the hourly rate, regardless of the procedural posture of the parties. A remand is in order so that we may have an indication of how the formula works in practice. 43

III. “A REASONABLE ATTORNEY’S FEE”-ACTUAL COST PLUS A REASONABLE AND CONTROLLABLE PROFIT

In considering how to achieve the statutory goal of “a reasonable attorney’s fee,” we have delineated the undeniable distinctions inherent in levying fees against private employers as compared to the Government, where in the latter situation there is no market and therefore no market value constraints on fees, but on the contrary the entire mechanism of affording relief to aggrieved Government employees is created by and financed by the Government on both sides. We have seen how the unthinking utilization of the “market value” fee as the “lodestar” or basic fee results in gross escalation of fee awards against the taxpayers, far from the “reasonable attorney’s fee” mandated by statute. Now we turn to outline the actual cost plus a reasonable and controllable profit method of fixing a reasonable fee, first enunciated in our panel opinion for the court, pondered and refined in the light of comment and discussion during the almost two years since our first opinion issued. We are convinced that the cost-plus formula is likely better to achieve the statutory goal then any other method yet proposed, and no case is apt better to illustrate this than the case at bar.

Returning to the specific facts of this case, putting the matter in perspective, the labors of the two young attorneys (plus some hours of partners’ time) resulted in a promotion to a higher GS level and back pay of $4,169.80 for the plaintiff Copeland. In addition, following the negotiation of a settlement, remaining members of the class secured several promotions and back pay awards totaling $27,175.71. The law firm “suggested” a fee of $206,000, plus $12,-602.59 in costs. District Judge Gesell awarded a flat $160,000 in fees and $11,-567.11 in costs.

A. The Need for Additional Guidelines for the District Court

As witness this case, the application of the existing standards led to a claim of $206,000 by a responsible law firm and an intelligent, experienced judge fixing a fee of $160,000 on a $31,345 monetary benefit to all members of the class. To state the matter this baldly is to make out at least a prima facie case that something- is wrong with the previously constructed standards-when applied to fix a fee award in a Title VII case against the Government.

Previous Title VII attorney’s fees cases before this court have involved private party defendants. While the statute provides that “the United States shall be liable for costs the same as a private person,” it is rather likely that awards of attorney’s fees against a private company, found guilty of race or sex discrimination, have contained a certain amount of a punitive element and have been scrutinized less sharply than awards against the Government (all taxpayers) should be. Hence, the panel of this court believed that it should give careful scrutiny not only to this particular award but to the standards which were to be followed subsequently in attorney’s fees cases against the Government.

In this opinion, Part I, we examined at some length the unique factors affecting attorney’s fees in Title VII litigation against the Government, an analysis which is an elaboration and development of thoughts set forth in our first panel opinion. At that time it was readily apparent that something was needed as a substitute for the commercial fee basis; hence, the court’s original opinion suggested that actual cost plus a reasonable and controllable profit be *924 substituted instead of the market value rate as the initial starting point for the district court’s calculation.

B. Rationale

We pointed out the rather surprising fact that when law firms assert the value of their work to their clients-itself a rather nebulous concept, as witness the claim here of $206,000 plus expenses versus the $31,345 in back pay plus promotions awarded-the firm “never reveals the value of the attorneys’ work to the firm, i. e., the value of the gross income brought to the firm by the attorneys in the ordinary course of business, as compared with the sums paid out to those attorney’s as personal income and to defray overhead costs attributable to the maintenance of the attorneys in the firm.” 44 It seemed only reasonable to us that where a firm is ostensibly performing a pro bono publico service, its reimbursement for that service should bear a direct relationship to the actual costs incurred by the firm and, in fact, that this was the best possible reference point, at least in the initial calculation.

We therefore stated: “Thus the trial court should give consideration to abandoning the traditionally] claimed hourly-fee starting point for its calculations in favor of a principle of reimbursement to a firm for its costs, plus a reasonable and controllable margin for profit. Such a principle can be applied through separation of the several hidden components of the usual attorney’s fee.” 45

In cases such as this, in which the Government is the alleged offending employer, the Government does not undertake the prosecution of the suit for the benefit of the aggrieved private individuals, as it can where there is a private employer involved. The individual Government employees must turn to private firms for help, and thus the private firms are in effect acting as “private attorneys general,” and, in fact, they are the only “attorneys general” who can assist the individual employees. The private law firm, in other words, is performing the same function that Government attorneys frequently perform in cases against private employers. This is a pro bono publico service, or so it is claimed to be, with the objective of bringing about fair and equitable treatment of its employees by the Government itself.

Where such a pro bono legal service is involved, what could be a better and more fair measure to the law firm than its actual “cost, plus a reasonable and controllable margin of profit”? This is the same cost-plus formula which has been applied for innumerable years in innumerable government service contracts. It is recognized as fair and equitable; the usual criticism is that it results in a greater award to the private contractor than if he had been forced to made a competitive bid and be stuck with it. Such a competitive bidding system, of course, is inapplicable for legal services and no one suggests that it should be adopted. Contrary to the rather surprising and unnecessary language of the law firm’s petition-“Lawyers and law firms are not public utilities, and cost-plus information is irrelevant to determining the reasonable value of their services in the marketplace” 46 -this cost-plus formula is a well recognized and equitable one for many various type Government service contracts.

The market rate is usually stated as so many dollars per hour, but we all known that in fixing fees in private practice this is only the beginning. Unfortunately, in fixing fees by a court it is too often both the beginning and the end, and in many cases-the instant one for example-the result is indefensible on a commercial basis. In fixing fees in private practice the hourly rate for all the hours worked is a starting point, plus a consideration of the benefit to the client, the client’s ability to pay, the previous business with that client or business hoped to be gained in the future, the rela *925 tionship of the billing lawyer with the lawyers and the clients on the other side, the alternative work on which the lawyers for whom the fee is billed could have been engaged-all these factors are taken into consideration. Not many of them are readily applicable to Title VII suits against the Government. If the market value hourly rate is not to be modified by the usual factors brought into play in a private commercial case, then it is an unsafe and unrealistic starting point. Since pro bono government legal work is involved, actual cost (salary plus overhead) should provide a more accurate starting basis, to which should be added a reasonable profit.

To the extent that the cost-plus formula and the other factors mentioned in the opinion might result in a lower than commercial fee, government legal services-and here the private law firm is acting as a private attorney general in a pro bono publico suit-have always been paid less than those in the private sector. For example, Justice Department lawyers do not start at the beginning salary paid at large law firms in Washington, D.C. The very top Justice Department lawyers do not even approach the earnings of partners in large firms such as that involved here. Government legal work has never been expected to pay the same as the top private legal work. What the law firm here and other large law firms, or public interest law firms, are doing is government legal work-on the other side of the issue in these cases from the government employer itself. 47

Our colleagues are insistent on using “market value” as the correct basic concept in fixing fair and reasonable legal fees. Very well. Our colleagues should recognize the market in which we are dealing in a Title VII case against the Government: we are dealing in a “market” created by the Government 48 we are paying lawyers to defend the Government and to sue the Government, we are dealing in the “market” for government legal services; “a reasonable attorney’s fee” must bear some relationship to the usual compensation for government legal services.

What our “cost plus a reasonable and controllable profit” guideline does is to return the actual out-of-pocket cost to the firm for its attorneys’ legal services and all overhead, plus a reasonable and controlled profit. How much more should a private law firm receive for its legal services? How much more than cost plus a reasonable profit can it be entitled to? How much more than cost plus a reasonable profit would this court be justified in awarding against the Government and its taxpayers?

C. Application

The petitioning law firm conjures up enormous difficulties of application by the court and of prying into confidential firm matters. We see absolutely none of this, if the proposed cost plus reasonable profit formula is applied on any sensible basis. If the trial court understands what it is doing, there should be no substantial additional evidentiary burden on the trial court. The basic figures are simple and simple to arrive at, as discussed below.

The three general components we identified in our opinion were salary, overhead, and profit.

1. Salary-The starting salary for young lawyers with the large firms in Washington, New York, and many other large cities is almost a matter of public record. The “going rate” for hiring is strictly competitive and well known to both the law firms and the young lawyers coming in. Furthermore, even the raises for the first few years are standardized.

And, of course, while our opinion talked in terms of the salary actually paid the individual lawyers involved in the case, it would be entirely satisfactory if the law firm merely furnished information on the average salary paid young lawyers in that firm with the same number of years’ experience. (In the instant case, both associates were assigned this matter in their first year of employment at the firm.)

*926 With regard to partners’ “salary,” our opinion deliberately put this on the basis of an extrapolation from the highest associate’s salary. We recognize that the income of partners in the same firm may vary widely, even more widely between firms, and a partner’s share may very well be thought of as confidential. Typically, in Title VII cases, the share of the fee claimed for partners’ labors is usually very small, as in the instant case.

2. Overhead-The firm knows this at least annually, or it is not computing its income tax correctly. If the firm is well managed, it should know its overhead factor quarterly or even monthly. Every firm surely makes a calculation as to the average overhead factor for its individual fee-producing lawyers.

One of the preposterous arguments, but strongly made, is that most firms now make no accounting of costs, overhead, and profit on an attorney-by-attorney basis, and that a mountain of details will be called for. This rests totally on a misinterpretation of our opinion. It is the average overhead cost per attorney to which the opinion refers. 49

It may be that partners in fact develop more overhead cost for the firm than do associates (bigger offices, more luxurious furnishings, etc.), but this could be taken care of by an average overhead figure for associates and a different figure for partners.

In any given city, there is probably no great difference in the overhead per lawyer of similar sized firms in similar practice; hence, there are no great secrets to be revealed. If there are great differences in firm overhead, the firm management claiming a higher overhead factor is out of line and should know about it.

The claim is made that since the cost-plus formula allows all overhead costs to be shifted to the losing party, this cuts down the incentive to keep overhead costs low. Unless the firm is engaged virtually exclusively in Title VII work, this would not be so at all. The overhead cost average would reflect all of the work done by all attorneys in the firm on all type cases.

3. Profit-Our opinion made no suggestion to the trial court as to what is a reasonable profit. This is a calculation involving many factors, including the attorneys’ usual profit return to the firm, the social benefits, the direct gain to the litigants, the skill demonstrated in the particular case, and the degree of contingency involved.

D. Substantive Inequities Feared from the New Method

1. Special Problems with Small Firms and Solo Practitioners

a. The argument is made that small law practices will not be able to prove expenses as high as those of better established practices or larger firms, and thus will not be able to secure equivalent fees for the same work.

This may or may not be true (small firms frequently have higher per lawyer overhead), but the question of course arises: Is there any alternate work in which such firms would have been engaged in which they would get greater fees? The answer is that these firms, perhaps composed of younger lawyers, will get just as good fees as any alternative work they could possibly *927 do, and probably better at this stage of their careers.

A more fundamental answer is that if both small and large firms obtain a full return of their actual expenses, plus a reasonable profit, there can be no inequity in the treatment of large and small firms.

b. It is alleged that the formula is inapplicable to a solo practitioner, because there are no guideposts as to his “salary” from his associate’s salary or his partner’s income.

Perhaps the solo practitioner is a case in which a fairer award can be made without using the cost-plus formula, and there is nothing in our opinion which mandates the cost-plus formula in every case. However, it would be possible to take the going salary rate of several firms for lawyers of the same years of experience, extrapolate if need be, and award the solo practitioner a fee based on that plus his overhead and a reasonable profit.

2. Similar Problems for the Public Interest and Civil Rights Bar

A similar claim is made for these specialists, alleging that the public interest and civil rights firms operate under far lower salary, overhead, and profit margins than others in private practice. The argument is made that somehow cost plus reasonable profit penalizes these firms.

The answer is the same as to a small firm or solo practitioner. They will be guaranteed a reasonable profit above their actual costs. We are not aware that public interest and civil rights firms usually receive more than this. However, the trial court could-and, in our view, should -evaluate the special skills which a public interest or civil rights firm may bring to bear among the other quality factors which the court applies to the actual cost plus reasonable profit figures. If the attorneys are specialists in Title VII cases, and thus may have been able to do the work at a high standard with a minimum of hours expended, then their “profit” in the total compensation awarded should indeed be higher than it otherwise would.

3. Contingent Fees

It is also argued that most Title VII cases are on a contingent fee basis and thus a successful Title VII case should produce a substantial reward in order to allow their practice to continue. We agree. Contingency is a factor which should be evaluated . at the time the trial judge is pondering the “reasonable profit” part of the fee to be allowed. A “reasonable profit” in a contingency fee case should be higher than where the fee is relatively certain and the only question decided by the outcome of the case is who pays it. 50

4. Class Action Practitioners

The argument is made that somehow a fully remunerative contingency fee recovery from the Government will not be had, and therefore class action claims cannot be sustained. The basis of this is obscure, for it seems readily apparent that the formula of actual cost plus a reasonable profit is in every way “fully remunerative,” especially when it is remembered that other factors are to be taken into account, as set forth above.

5. Counsel Representing Poor Clients Generally

It is claimed that counsel in this type practice usually have a very low salary overhead and profit margin. If this is true, the cost plus reasonable profit will guarantee them a return that will be at least equal to that received in their usual practice, and probably better.

6. Counsel Who Work Long Hours

It is argued that those who habitually work long hours will be disadvantaged by any formula based on the average hourly rate of return, since their average hourly return will necessarily be low. If that is true, then the return in these Title VII eases will in no way differ from the alternative work which they might be doing.

*928 The theory implicit in several of these hypothetical problems raised above is that somehow compensation for the Title VII work should be a bonanza to lawyers in these particular cases, in order that they may continue their practice in other worthwhile but relatively unremunerative type cases. We cannot see that this is a valid argument at all for fixing a fee against the Government-in fact, it virtually admits that some lawyers have been relying on Title VII work to gain relative bonanzas.

7. Requirement of Public Disclosure of Financial Information

This is the bugaboo that good firms will simply be unwilling to disclose comprehensive financial information. 51

As pointed out above, the required information is not nearly so “comprehensive” as the parties make it out to be. Unless a firm is drastically out of line in its salary scale or its overhead costs, no detailed data need be submitted to the court. An affidavit of a partner that, based on its accounting records, the average overhead per lawyer was so many dollars an hour and the average salary paid to, for example, lawyers with two years of experience, was a certain amount, should be sufficient, unless this appeared drastically in error when compared to firms similarly situated.

E. Fear of Deterring Representation in Title VII Cases

The law firm argues that for three principal reasons the cost-plus formula will deter lawyers from taking on Title VII cases: (1) lower rates of remuneration; (2) difficulty of compiling relevant data; (3) disclosure requirements. 52

As to prospective lower rates of remuneration, the question immediately arises, what kind of remuneration have these lawyers been receiving in Title VII litigation? Have they been receiving their customary salary, all overhead, plus an unreasonable profit? If the latter, it is high time the courts and the taxpayers knew about it.

If these Title VII litigators have not been receiving fees amounting to all their customary costs plus an un reasonable profit, their fears of the cost plus reasonable profit formula are groundless.

One source of these firms’ apprehension may be that they are not sure how a “reasonable profit” will be calculated. Bear in mind that, as explained above, among other factors bearing on profit a trial court should take into account: any contingent nature of the fee, and the extent to which the particular firm depends upon contin *929 gent fees; the expertise in Title VII matters which the lawyers bring to the case, which would favor public interest or civil rights firms who could validly claim a larger profit on their specialized line of practice; and the social benefits arising from a class action of this type. Conversely, another consideration, which the trial court should NOT consider as increasing the profit portion of the fee, is a large overhead cost per lawyer hour. This may reflect, and certainly might encourage, inefficiency. While both the large commercial firm and the small firm or solo practitioner devoting itself largely to poor clients should be recompensed in full for actual overhead costs, the lawyer with the larger overhead should not receive a larger profit component of the total fee because of the overhead.

Indeed, it is in the trial court’s evaluation of the “reasonable profit” component that the factors we have discussed herein and in our previous opinion come into play to modify, one way or another, the data as to the profit derived from the services of the lawyers concerned.

As to the alleged (2) difficulty of compiling relevant data and (3) disclosure of confidential data, these have been discussed above.

On analysis, the fears expressed by the appellee law firm and some amici as to any deterrence in doing pro bono work are wildly exaggerated. The Attorney General, who after all bears some responsibility for the public interest, while not receiving all he sought in the opinion of the panel, had a much more realistic appraisal in his Memorandum submitted to the court:

What was of principal concern to the Court, and what is of concern to the Attorney General, is recognition of the strong public interest that the computation of reasonable Title VII attorneys’ fees “not mechanistically set as its cornerstone the ‘customary’ and unadjusted fees charged by private attorneys in their unrelated and most highly paid lines of work.” In this regard, what the panel stated merits repetition here:

It is not our intent to establish a subclass of fees payable for Title VII litigation or to relegate, in any way, the vindication of Title VII rights to second-class status. To do so, obviously, would run counter to the very purpose for which Title VII was enacted .... But it is our intent to resist the imposition on the public sector of the highest standards of legal remuneration adopted in the private sector-standards which are out of line with the ethic of public service with which attorneys are encouraged to engage in public interest litigation, and which may even risk turning the public against the very provisions for the award of attorneys’ fees on which appellees rely in this case. [594 F.2d at 257 n.75.]

The Attorney General, who is committed to the concept of reasonable attorneys’ fees for prevailing Title VII plaintiffs, endorses this statement of the panel. 53

*930 We also agree with the Attorney General’s interpretation that “[t]he panel soundly found that the evidentiary record in this court was completely inadequate for the determination of attorney’s fees by any method.” 54 We find totally inexplicable the majority’s refusal to remand this case to the trial court on any theory-the majority’s own new formula, previous precedent, or our cost plus reasonable profit method. Not only was the evidentiary record inadequate, but there was a complete failure by the trial court to articulate a rationale on any theory. Is the award of $160,000 really defensible on any method of calculating “a reasonable attorney’s fee”?

The Attorney General concluded:

[T]he issue of attorney fee compensation for Title VII plaintiffs claiming unlawful discrimination by the federal government is new, difficult, and complex. The traditional customary approaches, as demonstrated by what has occurred in this case, may not be adequate. More refined analysis and consideration of alternatives are required. When representing a private client, attorneys must exercise billing judgment; they must consider the labor expended in view of the result to be achieved. This economic judgment is absent when the federal treasury is footing the bill. Other solutions must be explored. This is what the panel has wisely suggested. 55

We in dissent are convinced that the traditional customary commercial fee approach to billing the Government for attorneys’ fees in a Title VII case is not adequate and is likely to lead to grossly excessive fees. A new approach is necessary. We have suggested that the trial court apply an actual cost plus reasonable profit formula in this case. Our analysis, in our original opinion and herein above, indicates that this formula would provide a much more precise and equitable basis, both to the Government and the private attorneys engaged in Title VII practice, for the award of attorneys’ fees. We have not ruled out any other innovative methods which may commend themselves to the trial court. Since the trial court has yet to hold a hearing in this case, we think it should do so, and that in adducing evidence it should do so along the lines necessary to provide a foundation for the application of the actual cost plus reasonable profit formula. Then the trial court will have the opportunity to apply the actual cost plus reasonable profit formula to the established facts of a comparatively complex attorneys’ fees case. The courts and all litigants engaged in Title VII litigation will benefit.

. Not to be confused with the motto of the Royal Canadian Air Force, Per Ardua Ad Astra.

. 503 F.2d 177 (D.C.Cir.1974).

. 488 F.2d 714 (5th Cir. 1974).

. 517 F.2d 1237 (D.C.Cir.1974).

. Third edition, reprinted in C. Wright & A. Miller, Federal Practice & Procedure: Civil (Supp.1973).

. 517 F.2d 1275 , 1289-93 (D.C.Cir.1975) (en banc).

. 521 F.2d 317, 322 (D.C.Cir.1975).

. The “going hourly rate” itself is the first fiction relied on by the majority. In King v. Greenblatt, 560 F.2d 1024 (1st Cir. 1977), the court found that “[t]he ‘normal’ per hour rate in a locale is itself an artificial construct. Actual bills will frequently be lower, sometimes much lower, than that rate might indicate.” Id. at 1027 . Here the attorneys for appellees submitted a letter addressed to the Washington Lawyers’ Committee for Civil Rights Under Law as to the prevailing hourly rates of major law firms which would apply to services in connection with employment discrimination cases. App. at 143, Appendix E. Four of Washington’s major law firms were surveyed and the rates were stated to be $35-$50 per hour for associates and $50-$ 100 per hour for partners. No further information was supplied as to how these figures were arrived at.

. Our colleagues totally fail to recognize the nonapplicability of this to litigation against the Government. They blithely state: “A second policy also underlies fee awards .. . the prospect of liability for an attorney’s fee may help deter discrimination and thereby obviate the need for litigation. We do not think that the incentive for the government to refrain from discrimination should be any less than for private employers.” Maj. op. at 895. “The incentive to employers not to discriminate is reduced if diminished fee awards are assessed when discrimination is established.” Id. at 899.

. Copeland v. Martinez, 603 F.2d 981 (D.C.Cir. 1979), cert. denied, 444 U.S. 1044 , 100 S.Ct. 730 , 62 L.Ed.2d 729 (1980). Memorandum of the United States in Response to Court’s Request for Its Views on Rehearing En Banc (3 Dec. 1979), at 4 n.4: “A recent Justice Department survey, based on a workyear of 2,080 hours, revealed that the average cost (including salary and overhead) for an attorney at GS-11, step 4-a level commensurate with a first-year associate-was $27.48 per hour. The figure for a GS-14, step 4-a level commensurate with a senior associate-was $38.52. The figure for a GS-17-a level of experience and responsibility equivalent to a senior partner-was $48.28.”

. See Evans v. Sheraton Park Hotel, 503 F.2d 177, 187-88 (D.C.Cir.1974).

. Further factors we should recognize about Government Title VII suits are that the Government’s good faith and official policy against discrimination are to be presumed; that government employees are already encouraged to pursue their legal remedies by virtue of their relatively more protected employment and thus need fear retaliation less than privately employed potential plaintiffs; that Government employees have administrative remedies short of bringing a federal court action; and that consequently it is less incumbent upon courts to administer the attorney’s fees statutes with great liberality in order to encourage federally employed plaintiffs to sue.

. Maj. op. at 897.

. Id

. 42 U.S.C. § 2000e-5(k) (1976).

. Id. § 2000e-16(d).

. 390 U.S. 400 , 88 S.Ct. 964 , 19 L.Ed.2d 1263 (1968).

. Id. at 402 , 88 S.Ct. at 966 .

. 42 U.S.C. § 1988 (1976).

. H.Rep.No. 1588, 94th Cong., 2d Sess. 9 (1976).

. Id. See S.Rep.No. 1011, 94th Cong., 2d Sess. 2, 6 (1976).

. S.Rep.No. 1011, 94th Cong., 2d Sess. 6 (1976).

. 488 F.2d 714 (5th Cir. 1974).

. Id. at 719. See also Part II.C. infra.

. Maj. op. at 896.

. See id. at 890-891.

. To illustrate what we mean by the marketplace making its calculation of contingencies, the price of each stock on the New York Stock Exchange represents absolutely the most complete calculation of all contingencies, known or imagined, presently relevant to that stock at any given moment. The price of General Motors stock, for example, represents an appraisal of past dividend policy, earnings past and projected, the contingencies of increased Japanese imports, decreased Japanese imports because of voluntary restraints, decreased Japanese imports because of United States legislation, the contingency of the complete failure of Chrysler Corporation, the contingency of the construction of new automobile plants by foreign manufacturers in the United States, the contingency of a depression equal to that of the 1930’s, the contingency of war in the Middle East shutting off the fuel supplies for American automobiles, and 1,001 contingencies that the marketplace evaluates in its own way every hour of every day-not only for one stock, but for every stock as a comparative investment with every other stock.

. The majority opinion, at 893, seeks to distinguish its “contingency” notion from that common in the torts field. The attempted distinction is unavailing because in both instances the successful lawyer is being rewarded for undertaking risk.

There is a distinction, however, which the majority overlooks: in a torts case, the lawyer’s contingent fee is a fixed percentage of an amount arrived at by outsiders-i. e., the jurors. In contrast, a prevailing lawyer operating under the majority’s formula would benefit from a contingency payment not meaningfully con *919 strained by outside parties. This la wyer would have almost totally within his control the ability to claim the principal amount into which the contingency premium would be factored.

In short, the difference is as follows: in torts, the jury sets the amount of the verdict out of which the lawyer takes his cut, whereas in Title VII attorney’s fees cases the lawyer sets the number of hours worked out of which the same lawyer bases his cut.

. Maj. op. at 893.

. Id.

. Of course any such inquiry will expose some aspects of law firm fee-setting that some lawyers might prefer to keep secret. That this occurs under present standards can be seen from the following excerpts of a recent newspaper report on judicial setting of attorney’s fees:

U. S. District Judge William C. O’Kelley’s fees decision in the Atlanta chicken antitrust litigation hung on the line an amazing array of lawyers’ laundry, both dirty and clean.

The judge detailed the roles played by various plaintiffs’ lawyers, the customary hourly rates reportedly earned in non-contingent-fee cases, and the strategy used to overcome litigation obstacles....

Customary hourly rates put forward by counsel were reduced in almost all instances, based on the judge’s determination of what was “reasonable.” . ..

With the totaling of the lodestar awards at $1,935,730, the judge reached the most subjective-and perhaps the most crucial-area of his analysis, selection of multipliers.

Legal Times of Washington, 11 Aug. 1980, at 6.

. Our colleagues have noted the statement of the law firm involved here that in previous pro bono cases the firm has contributed the fee to a public interest organization “committed to furthering the kind of public interest involved in the particular litigation.” Maj. op. at 884 n.l.

This might be characterized as the Robin Hood approach, taking from rich Uncle Sam to benefit attorneys for the deserving poor, as selected by the private firm. While charity is to be commended, we thought Robin Hood’s fame rested on his romantic appeal, not his contribution to precedential jurisprudence. And, Robin Hood gave to the poor, not to their lawyers.

We suggest a more orderly and more constitutional approach would be to let Congress decide which public interest organizations are to be subsidized by taxpayer funds, not to do it indirectly and undirected through inflated attorney’s fees in Title VII cases.

. It may very well be, though admittedly it is not clear, that the majority’s “market value” formula will operate to shrink somewhat rather than swell the ranks of private plaintiffs served. The “market value” hours times hourly rate method of computation, when combined with payments only for prevailing litigants, may cause lawyers to stick unduly with a case that looks good once they have committed initial resources. “Market value” would incline lawyers to continue pumping as many hours as possible into “a winner,” possibly sacrificing the legal needs of other hopeful plaintiffs. The “cost-plus” approach entails, perhaps, a bit more internal discipline within the law firm. Lawyerly efficiency may be promoted by discounting the expected benefits of “pumping hours” into any one case. There would be a greater propensity to serve a series of plaintiffs, rather then merely the first few who were lucky in gaining counsel’s attention.

. Our colleagues say: “An award of fees provides an incentive to competent lawyers to undertake Title VII work only if the award adequately compensates attorneys for the amount of work performed.” Maj. op. at 890. (emphasis added). We think complete actual cost plus a reasonable profit “adequately compensates” any lawyer for any work, pro bono or other. We further assert that this is all Congress could have intended by calling for “a reasonable attorney’s fee” in Title VII cases, and that this meets the Supreme Court’s views expressed in Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400, 401-02 , 88 S.Ct. 964, 965-66 , 19 L.Ed.2d 1263 (1968). Obviously our colleagues have a more exalted view of what compensation is due a lawyer.

. Maj. op. at 892.

. 488 F.2d 714 , 718-19 (5th Cir. 1974).

. Id. at 718.

. Maj. op. at 893.

. See id. at 906.

. id at 901.

. As witness the fact that in this case, the court received and in some instances solicited views from some 27 parties that joined in ami cus curiae briefs. With two opinions of the court in the case at bar already published, this is remarkably similar to notice and comment rulemaking-especially as the result here is a rule prospective in effect, without any application of the rule to an adjudicatory case presently at bar.

. Maj. op. at 893.

. A remand is particularly called for in this case, so we can see how the new formula works in comparison with the old standards.

. 594 F.2d 244, 251 (D.C.Cir.1978).

. Id (emphasis added).

. See Petition of Appellee for Rehearing and Suggestion for Rehearing En Banc, at 3.

. See Part I.E. supra.

. See Part I.F. supra.

. As our second panel opinion indicated, averages are a perfectly satisfactory way of minimizing intrusion into private firms’ finances and eliminating excessive litigation on minutiae. There are, of course, a number of different methods for figuring average costs. One could utilize averages computed on the basis suggested by the second panel opinion-individual figures calculated for the salaries and overhead of first-year associates, second-year associates, etc. Alternatively, one could take the simple annual overhead costs of a firm expressed in terms of a percentage of gross income and apply it to standard rates. Since it is not unlikely that most private firms operate on an overhead percentage (including associate salaries) of somewhere between 35 and 55 percent, that percentage is a reasonably accurate expression of the amount of each dollar of fee attributable to a particular firm’s “costs.” While this is obviously not completely accurate since higher hourly rates carry a higher profit margin, it is nevertheless an accurate average.

. We have discussed contingency as applied to the cost-plus method, distinguishing it from the redundant contingency “lodestar” method of the majority’s in Part II.A. supra.

. We are also aware that a number of public interest firms have filed briefs amici curiae in this case expressing their concern about the use of the cost-plus calculation and its potential effect upon their practices. We assume that most of these organizations are tax-exempt non-profit firms pursuant to section 501(c)(3) of the Internal Revenue Code. As such, although they are prohibited from using the likelihood or probability of the award of attorney’s fees in selecting cases, they may “accept attorneys’ fees in public interest cases if such fees are paid by opposing parties and are awarded by a court. .. . ” Rev.Proc. 75-13, 1975- 1 C.B. 662 . Such organizations may defray up to fifty percent of the costs of their legal functions with such fees. Id. Again, the salary and cost figures of such organizations are well known and must be compiled yearly in connection with the tax return that even such tax-exempt groups must file.

. In their petition for rehearing en banc filed 13 December 1978, counsel for appellees send mixed signals on deterrence. On the one hand they assert that: “law firms which, like plaintiff’s counsel have the resources to handle major discrimination cases but have substantial practices in other areas may decide to forego seeking statutory fee awards or even cease representing civil rights plaintiffs altogether.” Petition of Appellee for Rehearing and Suggestion for Rehearing En Banc, at 11 (13 Dec. 1978).

However, they go on to say:

Plaintiff’s counsel take pro bono cases whether or not counsel fees may be awarded. In the majority of such cases, no fee is or can be sought. The firm has sought fees, in some pro bono cases where statutes have provided for fee awards .... In the few previous cases to date in which costs, including attorneys’ fees, have been sought and awarded, the firm has contributed the fee portion of the award to such an [public interest] organization.

Id. at 12 n.15.

The latter practice may be highly commendable, but when compared with the former statement is perplexing.

. See Memorandum of the United States in Response to Court’s Request for Views on Petition for Rehearing En Banc, at 6 (24 Apr. 1979) (footnote omitted).

The problem of exorbitant attorney’s fees is damaging to the Bar-and to the Bench, too, if it appears to approve such. In his Orison Mar-den Lecture, 18 October 1978, on “Reforms-Long Overdue,” Associate Justice Lewis F. Powell, Jr. discussed seven needed reforms. One was “Lawyers’ Fees.” Justice Powell noted that “[a] related problem is evidenced by the increasing criticism of lawyers’ fees .... [T]he justification of hourly rates that tend to price competent lawyers out of the individual and small business client market is being questioned.” 33 The Record of the Association of the Bar of the City of New York 458, 464 (1979).

Editorial comment has been frequent, and in the same vein. See, e. g., Miami Herald, 21 Nov. 1978, at 6-A, col. 1; Wall St. J., 24 Nov. 1978, at 10, col. 1; Wash. Post, 8 May 1979, at A20, coi. 1.

This reflects an unfortunate popular perception of how lawyer’s fees are arrived at, illustrated by this current example of humor: An immediately deceased lawyer arrived at the Pearly Gates to seek admittance from St. Peter. The Keeper of the Keys was surprisingly warm in his welcome: “We are so glad to see you, Mr.__We are particularly happy to have you here, not only because we get so few lawyers up here, but because you lived to the wonderful age of 165.” Mr._was a *930 bit doubtful and hesitant. “Now, St. Peter, if there’s one place I don’t want to get into under false pretenses, it’s Heaven. I really died at age 78.” St. Peter looked perplexed, frowned, and consulted the scroll in his hand. “Ah, I see where we made our mistake as to your age. We just added up your time sheets!”

It is time the courts put the calculation of attorney’s fees on a basis which can be respected.

. See Memorandum of the United States in Response to Court’s Request for Views on Petition for Rehearing En Banc, at 1 (24 Apr. 1979) (footnote omitted).

. Id. at 12 .