Thursday, January 29, 2009

I'm still exhorbitantly priced (and worth it!), but here's a new record.

See here. It's not the billing amount per se that I'm sure everyone's going to watch, but what bang for the buck folks get for those rates.

1 comment:

Anonymous said...

Bloomberg News

Cap $1,000-an-Hour Lawyer Fees While You Are at It: Ann Woolner

Feb. 6 (Bloomberg) -- As you may have noticed, these aren’t especially happy times for those used to the good life or those who merely get by.

New York’s Rainbow Room is shutting down after 74 years as the dining room of the glamorous and the rich. U.S. President Barack Obama calls Wall Street bonuses “shameful.”

Uncle Sam passes out tourniquets to financial firms. Carmakers gasp for survival. Each week, another friend gets kicked off a payroll.

Then there are the bankruptcy lawyers. For them, these are grand times.

The business of going under is one of the few booming ones these days, and fees paid to those who guide sick or dead companies through bankruptcy are, too.

Rates broke through the $1,000-an-hour barrier for the priciest bankruptcy legal advice, running up to $1,110 at Kirkland & Ellis LLP, based in Chicago.

Circuit City’s recent liquidation sales disappointed bargain-seekers, but its bankruptcy could become a bonanza for its lawyers at Skadden, Arps, Slate, Meagher & Flom LLP. Their rates top out at $1,050 an hour. (Whether the firm actually charges that hasn’t been decided, said the lead lawyer on the bankruptcy, Gregg Galardi.)

In any case, rates like that make fees claimed for the largest bankruptcy in history, Lehman Brothers Holdings Inc., look cut-rate. Weil, Gotshal & Manges LLP is seeking as its top rate in the case a mere $950 an hour.

‘Pushing the Envelope’

“We do not believe we should be pushing the envelope at the highest edge of hourly rates,” says Harvey Miller, lead lawyer in the Lehman bankruptcy and an icon in bankruptcy law.

Somehow, they will probably muddle through.

True, most of the work done in these cases goes to lower- paid lawyers and staff.

And if creditors find the fees exorbitant, they can object to the judge, who can shave the lawyers’ requests. But in the main, the lawyers get every penny they seek.

We are talking big, big bankruptcies that lead to big, big fees. Lehman Brothers owed $613 billion when it went belly up.

“Everyone’s just sort of thinking in large numbers,” says Jay Westbrook, who teaches bankruptcy law at the University of Texas. That’s one of the reasons “fees are getting out of hand.”

Astronomical Sums

That doesn’t just go for bankruptcy lawyers. All sorts of corporate lawyers get paid astronomical sums partly because they schmooze with other people who are so paid.

“Top lawyers are having lunch with the top CEOs, who are receiving absolutely stunning amounts of money,” says Westbrook. So, the scales get skewed.

Yes, but it is one thing to represent seemingly viable companies. It is another to be pulling down $18 a minute when your client is broke, when every dollar you get is a dollar not going to creditors, who won’t get everything they are owed.

That was the prevailing thought before Congress amended the law in 1978. Until then, bankruptcy specialists took in less than when they or their counterparts represented financially healthy clients.

Congress changed that in the belief that the bankruptcy lawyer’s job is to hunt down as many assets as possible and oversee a fair dismantling or reorganization of the company. How well that’s done, especially in big, complex cases, has far-flung consequences.

Economically Important

“The decisions that they make are very important -- economically important and important to individual human beings,” says Westbrook.

So bankruptcy lawyers essentially got parity 30 years ago. And as legal fees for corporate lawyers climbed, so did theirs.

Enough is enough.

Tell the laid-off, $40,000-a-year administrative assistant trying to feed her family to cheer the awarding of $1,000 hourly fees to lawyers working the carcass of her former employer.

Don’t expect Chicago Tribune reporters who have watched their Trib-heavy retirement funds vanish and fear job loss to rejoice that their employer hired Sidley Austin LLP lawyers for as much as $1,100 an hour.

This is the same company that was shrinking its Washington bureau even as a history-making, hometown senator became president.

No doubt, lawyers with other practices, such as those who handle once-thriving corporate deal-making, are pondering what it takes to move into bankruptcy. Firms let go more than 1,500 lawyers last month alone, according to the Layoff Tracker at For every lawyer fired, one or two staff members had to go, too.

Billable Hours

The whole concept of billable hours is getting reconsidered in law firms trying to give their financially strapped clients a break. But that isn’t likely to change the bankruptcy practice any time soon.

Perhaps gearing down executive pay could have the same downward effect that its ratcheting-up had on legal fees, however indirect.

Obama proposes a $500,000 salary cap for top executives whose firms take in an especially big load of government bailout cash, although they could get more in restricted stock.

It’s a limited proposal. Too bad it can’t apply retroactively and to more companies.

As for legal fees, bringing those rates down in bankruptcy court will require outraged creditors and judges sensitive to the economic hurt that the failed companies inflict on employees, bondholders and shareholders.

Obama, himself a former lawyer at Sidley Austin, can’t order fees capped. But he could point a finger of shame.