Legal News

Weil?s Lehman Request: $55 Million for Less Than Five Months of Work

By Ashby Jones

Lehman Bros. has already set a record as the largest company ever to file for bankruptcy. Now, it's on course to set a record as the most lucrative for lawyers, especially Harvey Miller and his merry band of lawyers at Weil Gotshal.

In the largest quarterly fee request ever made by lawyers representing a bankrupt debtor, Weil earlier this week asked Robert Peck, a federal bankruptcy judge in New York, to sign off on a $55.1 million payment for its work representing Lehman. Click here for the request.

The pace of the work during a bankruptcy is typically most intense during the case’s first several months. Still, UCLA’s Lynn LoPucki, a frequent critic of the bankruptcy process, estimates that Weil stands to bring in more than $200 million in fees by the end of the case — a figure that would dwarf the next-highest fee ever earned by a debtor counsel: the nearly $150 million earned by Weil during the Enron bankruptcy. LoPucki estimates that the total amount of court-approved fees — to lawyers, financial advisers, restructuring consultants and others — could top $900 million in the Lehman case. (Though LoPucki thinks that a $200 million payday might pale in comparison to what a General Motors bankruptcy might yield Weil.)

Some bankruptcy experts think the outsized request highlight a fundamental flaw in the process by which advisers get paid– that there’s no real system of checks and balances on fees.

Nonetheless, sources tell the Law Blog that Weil and the other firms are likely to get what they want. There's no disputing that Lehman is one of the most complex Chapter 11 filing in U.S. history. John Collen, a bankruptcy lawyer at Quarles & Brady LLP in Chicago, says that when viewed in the context of the “size, complexity and urgency” of the matter, the request “isn’t necessarily out of line.”

The fee payment request, filed on Monday, serves largely as a tally of all the work lawyers and other staff members at Weil claim to have performed between Sept. 15 and the end of January. The firm says it worked more than 100,000 billable hours during that period. Miller is asking to be paid $950 for each of the nearly 795 hours he worked during the period.

“As Lehman’s employees rushed out of Lehman’s offices with boxes and suitcases filled with their belongings, [Weil] attorneys rushed in,” reads the filing. “Literally overnight, WGM marshaled its resources the world over, which included over 490 attorneys around the world.”

A hearing on the request is set for May 13. Lehman creditors have until May 6 to file objections. The U.S. Trustee’s office, which oversees bankruptcy cases, declined to comment. The lawyer for the committee of unsecured creditors, Dennis Dunne at Milbank, did not return a request for comment.

(In related news, we have no doubt that Harvey Miller is a wonderful lawyer. But we’ll be quite interested in whether or not even he can get rid of the nearly one million pounds of uranium yellowcake the firm currently owns. Click here for an NY Post story on that oddball situation.)

Full post as published by Law Blog - WSJ.com on April 15, 2009 (boomark / email).