OPINION OF THE COURT BY NAKAMURA, J.

These consolidated appeals concern attorneys' fees awarded by the Circuit Court of the First Circuit after the entry of judgments against the State of Hawaii, its Department of Social Services and Housing, and the Director of the Department, Defendants-appellants (hereafter referred to collectively as the State), in three class actions brought by recipients of financial assistance under the Aid to Families with Dependent Children program (hereafter AFDC). The State asserts attorneys' fees should not have been awarded because HRS § 346-33 renders public assistance payments inalienable. Assuming arguendo that the awards of attorneys' fees are not statutorily precluded, the State maintains the circuit court nevertheless abused its discretion in determining the amounts. Plaintiffs-appellees counter with a proposition that the State lacks standing to appeal as it was not aggrieved by the circuit court's orders. We agree with the State that it has standing to appeal from the orders awarding fees and with Plaintiffs-appellees that HRS § 346-33 does not inhibit the circuit court's power to award fees in the situations involved. We conclude, however, that the circuit court erred in fixing the awarded amounts, and remand the cases for redeterminations of the fees.

I.

AFDC is a program established by Title IV of the Social Security Act, 42 U.S.C. §§ 601-613, and "designed to provide financial assistance to needy dependent children and the parents or relatives who live with and care for them," Shea v. Vialpando, 416 U.S. 251, 253 (1974). It "is based on a scheme of cooperative federalism," King v. Smith, 392 U.S. 309, 316 (1968), "financed in large measure by the Federal Government on a matching-fund basis, . . . [where] participating States must submit AFDC plans in conformity with the Act and the regulations promulgated thereunder." Shea v. Vialpando, supra, at 253. Although the States are given broad discretion in administering the program, noncompliance with federal requirements can result in a cut-off of matching funds. Rosado v. Wyman, 397 U.S. 397, 420-23 (1970). Each complaint here alleged the State was out of compliance in some respect with applicable provisions of the governing statutes and regulations.

The plaintiffs in Arbas v. Chang, Civil No. 49483, acting on their own behalf as well as for all other recipients of public assistance similarly situated, challenged the State's practice of regarding federal and state tax refunds as "income" for AFDC purposes, a procedure which afforded a recipient the unenviable choice of a forfeiture to the State of all or part of the refunds or a reduction, suspension, or termination of AFDC benefits. The circuit court certified the plaintiff class, and subsequently entered a partial summary judgment against the State.

The named plaintiffs in Von Hiram v. Chang, Civil No. 50943, another class action, alleged the State was out of conformity with 42 U.S.C. § 602(a)(7) and related federal regulations because it did not permit recipients of assistance to deduct from income all expenses reasonably attributable to employment in determining eligibility for assistance payments under AFDC. They claimed Shea v. Vialpando, supra, had previously invalidated the State's practice of only allowing standardized deductions of $33 and $44 as work-related expenses. Thereafter, it was stipulated by the parties that the entry of a judgment in favor of the plaintiff class was appropriate, and the State was ordered to pay each member of the class the sum he or she would have received but for the State's adoption of the illegal procedure.

In Montalvo v. Chang, Civil No. 52895, also a class suit, the representatives of the plaintiff class claimed that the State's refusal to consider child support payments payable to family units eligible for AFDC aid as unearned income for eligibility purposes and its further refusal to disregard the first $5 thereof in computing entitlement to assistance were in violation of 42 U.S.C. § 602(a)(28), related federal regulations, HRS Chapter 346, and related state regulations. Since a federal district court had previously ruled that the State had breached relevant federal statutory provisions and regulations in the foregoing respects, a stipulated judgment in favor of the plaintiff class was deemed appropriate in this case too.

Subsequent to the entry of the judgments, the circuit court awarded attorneys' fees to the attorneys representing the plaintiff classes. In each case, the fees were made payable from the common fund created by the terms of the judgment. In Montalvo v. Chang, the attorneys for the plaintiff class were awarded approximately fourteen percent of the amount recovered under the judgment as their fees; the attorneys for the plaintiff classes in Arbas v. Chang and Von Hiram v. Chang were allowed approximately twelve percent of the judgment amounts as fees. The State appealed from the orders awarding fees in all three cases. And as similar issues are posed by the appeals, they were consolidated for argument and disposition.

II.

We initially address the issue of the State's standing to appeal from the orders awarding attorneys' fees.

The State in the view of plaintiffs-appellees lacks requisite standing because it has not been "aggrieved" by the orders. In a sense they are correct, for the sums allowed their attorneys as fees are payable from funds which are no longer within the State's control and the orders apparently imposed no further liability upon the State. Yet, we have not been inclined to treat appeal rights lightly; "the policy of this court has always been to permit litigants, where possible, to appeal and hear the case on its merits." Jones v. Dieker, 39 Haw. 208, 209 (1952); Jordan v. Hamada, 62 Haw. 444, 451, 616 P.2d 1368, 1373 (1980).

HRS § 641-1(a) provides that "[a]ppeals shall be allowed in civil matters from all final judgments, orders, or decrees of circuit . . . courts . . . to the supreme court, except as otherwise provided." As the State was party to the proceedings below and the orders in question are patently final, it appears to have more than a colorable right to appeal. But by judicial fiat a party bringing an appeal must have been "aggrieved" by the trial court's final order, In re Guardianship of Ward, 42 Haw. 60, 65 (1957); Castle v. Irwin, 25 Haw. 786, 792 (1921); Hawaiian Trust Co. v. Holt, 24 Haw. 212, 215 (1918), for questions capable of judicial resolution are best "presented in an adversary context." Life of the Land v. Land Use Commission, 63 Haw. 166, 172, 623 P.2d 431, 438 (1981). And an "aggrieved party," we have held, is one who is affected or prejudiced by the appealable order. In re Guardianship of Ward, supra; Castle v. Irwin, supra; Hawaiian Trust Co. v. Holt, supra. The pertinent inquiry then is whether the State was "aggrieved" in some way by the circuit court's orders awarding attorneys' fees.

The State concedes the orders appealed from, on their faces, do not subject it to further liability. It contends, however, that they represent potentials for loss of federal matching funds if allowed to stand. At this juncture we are not prepared to state the threat is nonexistent. "When [federal] money is spent to promote the general welfare, the concept of welfare or the opposite is shaped by Congress, not the states." Helvering v. Davis, 301 U.S. 619, 645 (1937). And disputes on "whether federal funds allocated to the States are being expended in consonance with the conditions that Congress has attached to their use" are definitively settled by the Supreme Court. Rosado v. Wyman, supra, 397 U.S. at 422-23.

We find the State is an "aggrieved party" here since its interests may well be jeopardized if the fees in question were improper. A liberal application of HRS § 641-1(a) and our standing requirement in this instance is consistent with the policy "to permit litigants, where possible to appeal." Jones v. Dieker, supra, 39 Haw. at 209, and our prior decisions that have construed statutes and rules on appellate procedure liberally to uphold appeal rights. See, e.g., Jordan v. Hamada, supra, 62 Haw. at 451, 616 P.2d at 1373; Credit Associates of Maui v. Montilliano, 51 Haw. 325, 329, 460 P.2d 762, 765 (1969); Madden v. Madden, 43 Haw. 148, 153 (1959).

III.

Having disposed of the threshold question raised by Plaintiffs-appellees, we turn to the issues presented in the State's appeals.

A. I.

Litigants for whom legal services have been rendered are generally expected "to assume the burden of paying for those services," and prevailing parties ordinarily are not awarded attorneys' fees "in the absence of a statute, agreement or stipulation" authorizing their allowance. Yokochi v. Yoshimoto, 44 Haw. 297, 307, 353 P.2d 820, 826 (1960). There are no specific authorizations for fees in the instant situations. But courts have recognized "exceptions to this general rule," and where the efforts "of a member of a class have been instrumental in creating or preserving a fund to the benefit of the entire class," counsel fees have been allowed. Id. "The common fund doctrine provides that a private plaintiff, or his attorney, whose efforts create, discover, increase or preserve a fund to which others also have a claim is entitled to recover from the fund the costs of his litigation, including attorneys' fees." Vincent v. Hughes Air West, Inc., 557 F.2d 759, 769 (9th Cir. 1977). Cf. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240 (1975) (an organization acting to vindicate "important statutory rights of all citizens" was not permitted to recover its attorneys' fees from the defendant under the "private attorney general" approach).

The genesis of the "common fund" as a source of attorneys' fees may be traced to century-old landmark decisions of the Supreme Court. In the seminal case, Trustees v. Greenough, 105 U.S. 527 (1881), a bondholder, on behalf of himself and other bondholders, pursued litigation to preserve the assets of a fund created to meet interest and sinking fund payments on bonds issued by a railroad company after the fund's trustees had wasted a portion thereof and failed to make the required payments. After eleven years of litigation at his own expense, he succeeded in recapturing some of the wasted assets and securing substantial payments to the bondholders, most of whom accepted the payments. While a residue of the restored trust fund was still under the control of the court, he submitted a claim for reimbursement of his attorneys' fees, which was allowed. The Supreme Court affirmed the allowance of fees, for in its view the complainant was entitled to recover a due portion of the expenses he had incurred from the other bondholders, and "a charge upon the fund . . . [was] the most equitable way of securing such contribution." Id. at 532.

The claim against the common fund for counsel fees in Central Railroad Banking Co. v. Pettus, 113 U.S. 116 (1885), was not asserted by the litigant; it was made directly by his attorneys. The direct award of attorneys' fees and the allowance of a lien therefor upon the property brought under the trial court's control in the class action was affirmed by the Supreme Court. And the claim for fees recognized in Greenough was effectively transformed into an independent right of attorneys.

The Court subsequently expanded the concepts established by Greenough and Pettus beyond class actions in Sprague v. Ticonic National Bank, 307 U.S. 161, 166-67 (1939). By vindicating her rights to a trust, the plaintiff established similar rights in others. But she did not purport to represent them; nor was a common fund established in the traditional sense. Yet the Court found it was within the power of an equity court to award the plaintiff attorneys' fees payable from the trusts established for the benefit of the others.

2.

The State does not dispute the efficacy of the common fund doctrine in compensating attorneys whose services benefit the members of a class as well as their own clients in proper situations. But it maintains the common funds here were not under the control, constructive or otherwise, of the circuit court, for they consisted of assistance payments meant for AFDC recipients. HRS § 346-33, it claims, stands as an absolute barrier to the court's diversion of portions of the funds to attorneys for the plaintiff classes. Although a literal application of § 346-33 would support the State's position, we do not read the section to have such effect in the situations before us.

The statutory provision at issue is found in that part of the Hawaii Revised Statutes covering the Department of Social Services and Housing and its functions. The chapter evinces a general purpose to further the social welfare, and a particular provision, HRS § 346-14, mandates State cooperation with the federal government "in carrying out the purposes of the Social Security Act, and in other matters of mutual concern pertaining to public welfare, public assistance, and child welfare services." That AFDC is a program established by the Social Security Act has been noted, as has its primary purpose to aid "needy dependent children and the parents or relatives who live with and care for them." Shea v. Vialpando, supra, 416 U.S. at 253.

HRS § 346-33 provides in broad terms that assistance payments are inalienable; its obvious intent is to prevent a diminution, disposal, or divestiture of public assistance payments prior to their receipt by intended recipients. Strictly construed, it clearly precludes the allowance of attorneys' fees from common funds consisting of AFDC benefits. But to read it as prohibiting awards of fees here would hardly be consonant with its purpose of ensuring that public assistance payments reach recipients in amounts specified by law.

The existence of the common funds and the right of AFDC recipients to share in the proceeds of the class actions are attributable to the attorneys for the plaintiff classes. Without the lawyers' efforts, class members would not have received benefits in legally prescribed amounts. The work of the attorneys thus served a purpose entirely consistent with the policies and purposes of the Social Security Act and HRS Chapter 346. It would be illogical to apply a provision in the latter which is designed to prevent the diminution of assistance payments to impede the receipt of fees earned by attorneys responsible for the enhancement of assistance payments. Where the letter of the law has produced a harsh result contrary to its intendment, we have not hesitated to eschew a strict reading and to seek meaning from its policy. Hawaii Carpenters' Trust Funds v. Aloe Development Corp., 63 Haw. 566, 574, 633 P.2d 1106, 1111 (1981). For the Supreme Court teaches us:

The policy as well as the letter of the law is a guide to decision. Resort to the policy of a law may be had to ameliorate its seeming harshness or to qualify its apparent absolutes as Holy Trinity Church v. United States, 143 U.S. 457 illustrates. The process of interpretation also misses its high function if a strict reading of a law results in the emasculation or deletion of a provision which a less literal reading would preserve.

Markham v. Cabell, 326 U.S. 404, 409 (1945). Finding a "less literal reading" would serve the purpose and policy of the law, we do not read HRS § 346-33 as inhibiting the award of fees from common funds consisting of AFDC benefits in the situations at hand. And as the permissible use of class actions, formerly limited to suits in equity, has been extended to all civil litigation in the circuit courts by Rule 23 of the Hawaii Rules of Civil Procedure, Life of the Land v. Land Use Commission, supra, 63 Haw. at 179, 623 P.2d at 442, the circuit court undoubtedly was vested with power to allow the fees. Thus we proceed to the question on the sums allowed.

B. 1.

We formally acknowledged the class action's vast potential for lending speed and efficiency to the administration of justice when its use in all civil litigation in the circuit courts was authorized. But we recently issued a caveat that one of the latchkeys to its actual use was fairness to absentee class members. Id. Fairness to the class must be watchwords in a subsequent award of counsel fees too, for the class action's capacity to promote justice "is attended with equally great potential of unreasonable charges for attorneys' fees and expenses and of improper solicitation of legal representation." Manual for Complex Litigation 65 (1977).

The total sum in the common fund in Montalvo v. Chang was approximately $103,000. Claiming more than ninety hours of work had been performed on behalf of the plaintiff class, its attorneys sought a fee award amounting to fifteen percent of the fund. They were allowed fourteen and two-tenths percent of the recovery in fees and costs, both accrued and anticipated. The costs, however, constituted a minor portion of the awarded sum. The lawyers for the plaintiff classes in Arbas v. Chang and Von Hiram v. Chang claimed one hundred seventy-eight and one-half hours had been spent on behalf of class members and requested twenty percent of common funds totalling approximately $184,000 for their services. The circuit court allowed them twelve and one-tenth percent of the recovered sums as their fees. What was reasonable and fair in the court's opinion was established in all cases without evidentiary hearings. Moreover, the actual basis therefor is not articulated, and we are unable to engage in a meaningful review of fairness.

We assume for present purposes that the court followed the general guidelines for determining reasonable attorneys' fees set forth in Sharp v. Hui Wahine, Inc., 49 Haw. 241, 244-45, 413 P.2d 242, 245-46, rehearing denied, 49 Haw. 257, 414 P.2d 82 (1966). Yet these guides in our opinion, were not precise enough for the particular determinations. Rule 23, H.R.C.P., compels the circuit court to assume the role of a "protector of the rights of absent class members," Manual for Complex Litigation, supra, at 61, and demands more stringent standards.

Our views in this regard are far from unique, for courts dealing with the problem have characteristically adopted exacting, though not necessarily similar, standards to govern the allowance of fees. See Manual for Complex Litigation, supra, at 66-68; 3 H. Newberg, Class Actions §§ 6920-22c, at 1132-43 (1977). Among the noteworthy endeavors to infuse a desired fairness into the relevant awards have been the efforts of the Court of Appeals for the Third Circuit.

In Lindy Bros. Builders v. American Radiator Standard Sanitary Corp., 487 F.2d 161 (3d Cir. 1973) ("Lindy I"), a multi-district antitrust class suit, the appellate court vacated fee orders which had been entered without evidentiary hearings, purportedly on the trial court's consideration of four factors: "the percentage of a claimant's recovery awarded as attorneys' fees in other cases, the amount of the recovery from which fees were being awarded, the amount the attorneys received from their clients under private agreements, and the time spent . . . `in connection with this litigation.'" Id. at 166. The Court of Appeals found "[t]he mere listing of four factors for consideration . . . makes meaningful review difficult and gives little guidance to attorneys and claimants," id. at 166-67, and then detailed its four-step process for ensuring fair and reasonable fees.

The procedure described in "Lindy I" commences with the trial court's ascertainment of the actual services rendered to the class. In essence, the initial inquiry is "how many hours were spent in what manner by which attorneys." Id. at 167. The determination of time spent in performing services "within appropriately specific categories," id., is followed by an estimate of its worth. "The value of an attorney's time generally is reflected in his normal billing rate." Id. But it may be "necessary to use several different rates for the different attorneys" and the reasonable rate of compensation may differ "for different activities." Id. And when the hourly rate reached through the foregoing analysis is applied to the actual hours worked, a "reasonably objective basis for valuing an attorney's services" is derived. Id. The inquiry, however, does not end here, for other factors must be considered. The product of the first and second steps nevertheless serves as the "lodestar" of the ultimate fee award. Id. at 168.

The first of the factors to be considered for possible adjustment of the "lodestar" determination is "the contingent nature of success," a factor which may be of special significance where "the attorney has no private agreement that guarantees payment even if no recovery is obtained." Id. The second additional factor to be examined "is the extent, if any, to which the quality of an attorney's work mandates increasing or decreasing" the "lodestar" figure. Id. If the court decides an adjustment is justified on this basis, it "should set forth as specifically as possible the facts that support . . . [its] conclusion." Id. at 169.

The phase covering the examination of possible adjustment factors was subsequently refined through amplification in Lindy Bros. Builders v. American Radiator Standard Sanitary Corp., 540 F.2d 102 (3d Cir. 1976) ("Lindy II"). Where "Lindy I" spoke in general terms, "Lindy II" was explicit. In discussing "the contingent nature of success" in the latter, the Court of Appeals said "the . . . [trial] court should appraise the professional burden undertaken — that is, the probability or likelihood of success, viewed at the time of filing suit," and the "lodestar" figure is subject to being increased after an evaluation of the plaintiff's burden, the risks assumed in developing the case, and the delay in receipt of payment for services rendered. Id. at 117. With respect to the second adjustment factor, "the quality of an attorney's work," "Lindy II" rendered it clear that this is not a reference to an attorney's "experience, knowledge and legal talent"; the foregoing "aspect of `quality' is reflected in the `lodestar' and should not be utilized to augment or diminish the basic award under the rubric of `quality of an attorney's work.'" Id. The pertinent phrase, as the court explained, describes "the manner in which counsel discharged his or her professional responsibilities," id., and the relevant considerations include "[t]he result obtained by verdict or settlement" and "[a]n evaluation of the professional methods utilized in processing the case." Id. at 118.

The determination of "the total reasonable value of an attorney's services in securing recovery of a fund," "Lindy I", supra, 487 F.2d at 109, is followed by a decision on how the burden of payment is to be shared among the class. Generally, claimants are assessed fees in amounts proportionate to their share of the common fund. Moreover, in "Lindy II", "[p]rivate arrangements individual members of the class may have with counsel . . . [were deemed] simply irrelevant," 540 F.2d at 120.

2.

The method of calculation favored by the Third Circuit "has now been rather widely adopted." Manual for Complex Litigation, supra, at 68; see also Grunin v. International House of Pancakes, 513 F.2d 114, 128 (8th Cir.), cert. denied, 423 U.S. 864 (1975); Brandenburger v. Thompson, 494 F.2d 885, 890 n. 7 (9th Cir. 1974). We are convinced from a review of the case law in the realm of our concern that this wide acceptance is justified; the prototype offered by "Lindy I" and "Lindy II" remains among the more rational and comprehensive computational modes devised thus far. We are mindful that the "Lindy" standards have been criticized as overly rigid by those who are still partial to the more traditional and flexible approach of the Court of Appeals of the Second Circuit in Alpine Pharmacy, Inc. v. Chas. Pfizer Co., supra, 481 F.2d at 1051. See 3 H. Newberg, supra. And while we agree the ultimate criterion is "only that the final award be reasonable under the circumstances of the case," Alpine Pharmacy, Inc. v. Chas. Pfizer Co., supra, we nevertheless believe a required conformance to a known process is more likely to produce the desired result than a mere suggestion of a procedure and the reiteration of an objective. See note 19 supra. Thus, the award of attorneys' fees from common funds created by judgments in class actions should henceforth follow the guides enunciated in "Lindy I" and refined by "Lindy II".

We earlier observed the orders in question were entered without evidentiary hearings. Hence, the information from which proper "lodestar" determinations could have been made was definitely lacking. The record further manifests no consideration of either "the contingent nature of success" or "the quality of an attorney's work". Yet fees in excess of one hundred dollars per hour were allowed. We doubt that a strong case for an upward adjustment of the "lodestar" could have been made, since the judgments creating the funds were premised on prior federal court judgments. Though there may have been circumstances justifying the high fee awards, the facts are not disclosed by the record.

The orders awarding attorneys' fees are vacated, and the cases are remanded for redeterminations of the awards.