dissenting.
Despite the thoughtful analysis of the majority’s opinion, I am unable to agree with the conclusion it reaches. The enormous disparity between the amount of money received by defendants’ attorneys and plaintiffs’ attorney disturbs my sense of fairness. Plaintiffs won their lawsuit (though losing part of it on appeal), and yet their counsel received only one-fifteenth of what defendants’ counsel was paid for defending the suit. This, together with the summary manner in which the fee proceeding was handled, compels me to dissent.
I
In 1971 plaintiffs purchased a new automobile from defendant Ed Murphy Buick-Opel, Inc. They financed part of this purchase through a retail installment contract with defendant General Motors Acceptance Corporation.1 Later that year plaintiffs filed this action charging that defendants had committed numerous violations of the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., and two Illinois statutes regulating consumer automobile financing.2 Included in the allegations was a charge that defendants had understated the annual percentage rate by almost two percent. Defendants, while conceding that they had erroneously stated the annual percentage rate, asserted that the error resulted from a bona fide mistake and therefore they were statutorily *732exempt from liability.3 The district court disagreed and entered judgment for plaintiffs, finding seven different Truth in Lending violations as well as violations of both Illinois acts. Damages were assessed in the sum of $8,126.80, $1,000 for each violation of the Truth in Lending Act and $1,126.80 for the two state law violations. The defendants appealed and the plaintiffs cross-appealed.4
After judgment had been entered but before the case was argued on appeal, Congress amended the Truth in Lending Act by barring multiple recovery for multiple errors committed in a single disclosure statement.5 Under the amendment the most a debtor can recover in civil penalties is $1,000, regardless of the number of disclosure errors committed by a creditor in a single transaction.
On appeal we affii’med in part the judgment of the district court. Mirabal v. General Motors Acceptance Corp., 537 F.2d 871 (7th Cir. 1976).6 This court found that defendants had not met their burden of establishing that they were exempt from liability for misstating the annual percentage rate. Because the recently enacted amendment limiting recovery to $1,000 per transaction was held applicable to this pending cause, we did not consider the other six disclosure errors found by the trial court. Moreover, that part of the judgment finding liability under the two Illinois acts was reversed.
Plaintiffs also met with mixed success on their cross-appeal. While this court rejected the argument that defendants were severally liable under the Truth in Lending Act, it did agree with plaintiffs that each debtor was entitled to a separate recovery of $1,000. Because of the statutory change in the Truth in Lending Act, this court reduced the amount of judgment to $2,000 and remanded the cause for a determination of costs and attorney’s fees.
On remand plaintiffs’ attorney filed a verified petition for award of attorney’s fees and costs. In it he stated that he spent 350 hours on this case, 120 hours for trial and 230 hours on the appeal. Defendants did not answer the petition;7 they disputed neither the number of hours which counsel had expended nor that these hours were necessary to perform the legal services properly. It did become evident that defendants had paid their attorneys more than $30,000 in defending this suit.
A hearing was never held on the fee issue even though one had been requested by petitioner, plaintiffs’ attorney. Instead the district court entered a minute order awarding $2,000 in attorney’s fees and $690.10 in costs. Petitioner appeals the fee award.
II
In awarding plaintiffs’ attorney $2,000 for 350 hours of work,8 the district court said that the expenditure of this many hours on this case was “utterly unnecessary.” In the judge’s view, most of these hours were spent in advancing “excessive legal theories.” Which theories were excessive and what hours were unnecessary were not specified in the order.
*733I find it anomalous that the district court, after finding seven different Truth in Lending violations and two state disclosure violations and awarding plaintiffs over $8,000, is now able to say that plaintiffs’ counsel advanced excessive legal theories. Moreover, was it “utterly unnecessary” for plaintiffs’ counsel to defend the judgment once defendants chose to appeal? And, was it “utterly unnecessary” for plaintiffs to cross-appeal? I believe that plaintiffs not only had the right, but under Canon Seven of the Code of Professional Responsibility,9 plaintiffs’ attorney had the duty to protect the judgment he obtained.for his clients.10 Furthermore, had plaintiffs not cross-appealed, they would have recovered only $1,000 instead of the $2,000 ultimately awarded by this court.
If the district court had held a hearing as plaintiffs requested, we might now know what theories it believed were excessive and what hours were therefore unnecessary. In short, we would be informed how the court arrived at the $2,000 figure. But in the absence of such reasons, the only reasonable inference is that the fee award was matched to the judgment which plaintiffs ultimately obtained. But if it is an abuse of discretion to set fees solely on the basis of a formula applying hours spent times billing rate, Waters v. Wisconsin Steel Works, 502 F.2d 1309, 1322 (7th Cir. 1976), I believe it is equally abusive to award fees solely by the amount of recovery obtained.11
III
The conclusion reached by the majority seems to be based primarily on the belief that the granting of large attorney fee awards (regardless of the validity of such an award in a particular case) will encourage the filing of questionable claims which defendant-creditors will be forced to settle because the costs of litigation will become too prohibitive. I share this concern and believe it is an important consideration in making a fee award. My difficulty, however, is that it does not fit the facts of this case.
The record here is barren of any evidence that plaintiffs pressed questionable claims or refused to settle except on outrageous terms. If anything, the record proves the contrary. The district court found that defendants had violated two state laws and had violated the Truth in Lending Act in seven different ways. This court affirmed the violation concerning understating the annual percentage rate; it did not have to consider the merits of the other Truth in Lending violations because of the interpretation given the 1974 amendment.
Nor is this a case where the defendants were at the mercy of the plaintiffs, who typically set the perimeters of a lawsuit. At trial it was the defendants who had the burden of establishing their affirmative defense of a bona fide mistake. Furthermore, after losing on all issues, it was defendants who chose to appeal and challenge the findings of the trial court. The point is this: *734All the aces were not in plaintiffs’ hands as the defendants would suggest. Unlike the typical case, the defendants here held some of the aces. The defendants were legally justified in electing to make a militant defense; they also had the right to appeal an adverse judgment. But in deliberately choosing such a course of action, they cannot now be heard to complain that it would be unfair to require them to pay a reasonable fee to plaintiffs’ attorney.
Defendants are not without weapons to curtail, if not stop entirely, the possibility of “forced settlements.” If a plaintiff’s settlement demands are unreasonable, a defendant may make an offer of judgment pursuant to Rule 68 of the Federal Rules of Civil Procedure. Once a defendant makes such an offer, he is not liable for plaintiff’s costs and attorney’s fees if plaintiff does not ultimately recover the amount of the offer. Through such a device a defendant can place on the plaintiff much of the financial risk involved in litigation.
Finally, the policy of discouraging the filing of questionable claims must be balanced against the policy underlying the Truth in Lending Act itself. That Act embodies the national policy that economic stabilization and competition will be enhanced if consumers are given accurate and meaningful disclosure of credit. See 15 U.S.C. § 1601. Enforcement of this policy was placed primarily on the private sector through suits for civil penalties. A provision for attorney’s fees helps assure that enforcement will take place. But such a provision is rendered meaningless unless attorneys for successful parties are given reasonably adequate compensation for their services.
The need for adequate compensation is particularly important since the statutory penalty is now limited to $1,000 per transaction. If a presumption is imposed that a successful attorney is allowed only that amount recovered by his client — as apparently was done here — creditors can effectively stop the filing of all Truth in Lending actions. By refusing to negotiate even reasonable claims and by litigating every case, creditors can soon force a plaintiff to terminate the litigation, not because his claim is invalid, but because it is no longer economically feasible for his attorney to continue the case. This case is a prime example. I dare say few attorneys will handle a Truth in Lending case when they learn that they may earn only $5.71 an hour.
. The cash price for the car including service, accessories, and taxes totalled $4,497.65. The total deferred payment price which plaintiffs financed through GMAC was $2,971.80. This sum included $2,201.00 for the principal, $257.00 for mandatory physical damage insurance, and $511.80 for the finance charge.
. They were the Illinois Motor Vehicle Retail Installment Sales Act, Ill.Rev.Stat. ch. 121‘/2, §§ 561 et seq., and the Illinois Sales Finance Agency Act, Ill.Rev.Stat. ch. I21V2, §§ 401 et seq.
. 15 U.S.C. § 1640(c) provides in part:
A creditor may not be liable ... if the creditor shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such error.
. Plaintiffs cross-appealed on two issues: (1) whether the defendant-creditors were separately rather than jointly liable, and (2) whether separate recoveries were available for each plaintiff. Although plaintiffs lost the first issue on appeal, they did win the second. 537 F.2d at 880-83.
. 15 U.S.C. § 1640(g), as amended, Pub.L. No. 93-495, § 408(e), 88 Stat. 1519. This amendment became effective October 28, 1974.
. This case is discussed in Recent Developments, Truth in Lending, 11 Ind.L.Rev. 119 (1977).
. Defendants did file a petition for offsetting attorney’s fees, wherein they claimed they were entitled to $7,500 in fees for ultimately winning on the counts under the Illinois statutes.
. Neither the defendants nor the district court ever claimed that plaintiffs’ counsel did not expend 350 hours on this case.
. Canon Seven provides: “A lawyer should represent a client zealously within the bounds of the law.”
. Nor should counsel be penalized because Congress amended the Truth in Lending Act between entry of the judgment and the appeal. As this court noted in the earlier opinion, whether such a statutory change could apply to a case wherein a judgment had been entered was a question whose answer was “not particularly clear." 537 F.2d at 875. Counsel was therefore fully justified in briefing and arguing that the amendment could not be applied to this case.
. 1 too agree that petitioner is not entitled to an award of $30,000 just because defense counsel received such a sum. But I do not agree that such evidence is irrelevant. One of the factors which district courts are to consider in setting a reasonable fee is “[t]he fee customarily charged in the locality for similar legal services.” Waters, supra, 502 F.2d at 1322. What better evidence is there of this information than the fee which defendants paid their attorneys? I fully concur with the Second Circuit when it said in Taylor v. Scarborough, 66 F.2d 589, 591 (2d Cir. 1933):
While the fee paid counsel by the other side is by no means conclusive of what is a reasonable fee for the plaintiffs’ services, we do think that it is quite persuasive in the circumstances here disclosed.