Lawyers Set to Gain on Lehman

Lehman Brothers Holdings Inc., which has established a record for the largest company to file for protection against bankruptcy, is poised to divest one of the biggest bonanzas for lawyers.

New York-based Weil, Gotshal & Manges LLP earlier this week asked a federal judge in New York to sign a $ 55.1 million for the payment of its work, representing Lehman.

This marks the largest quarterly fee request by lawyers representing a company in bankruptcy, according to Lynn Lopuck, a law professor at the University of California, Los Angeles, which manages a database of costs of bankruptcy. Dr. Weil believes that Lopuck stands at 200 million dollars in taxes by the end of the case. This exceeds the debtor the next board of higher fees, $ 159 million that Weil earned during the bankruptcy of Enron.

Weil A spokesman did not respond to a request for comment.

The application fee payment, filed Monday in Bankruptcy Court of the United States for the Southern District of New York in Manhattan, part of labor lawyers and other staff Weil say they have made between the 15 September and the end of January. The company says it has worked for more than 100,000 billable hours during this period. Lead lawyer Harvey Miller needed to be paid $ 950 for each of the nearly 795 hours he worked during the period.

An expenditure that the application has also filed Monday Weil includes more than $ 200,000 for business meals, $ 439,000 for the composition and "other" research, $ 115,000 on $ 287,000 in transportation costs and the duplication , at 10 cents per page.

"As employees of Lehman rushed to the offices of Lehman with boxes and suitcases filled with their belongings, [Weil] lawyers rushed in" the filing reads. "Literally overnight, WGM mobilized its resources in the world wide, including more than 490 lawyers. "

Weil has approximately 1,300 lawyers in the world.

Nearly a dozen other law firms have already submitted applications in the cost of Lehman question, requesting a total of 27 million. If the total cost of court-approved - to lawyers, financial advisers, restructuring consultants and others - could top $ 900 million, Mr. Lopuck estimates.

Lehman's Chapter 11 filing is one of the most complex in American history. The firm's petition for bankruptcy on September 15 marked one of the biggest shocks of the credit crisis that engulfed Wall Street last summer and continued throughout the fall. At the time of filing, Lehman had $ 613 billion of debt.

In these matters, lawyers are paid before creditors. Federal bankruptcy law requires a judge to approve payments for the debtor counsel. A hearing on the request is scheduled for May 13. Lehman creditors have until May 6 to file objections.

The United States Trustee's office, which oversees the bankruptcy, declined to comment. The main lawyer for the unsecured creditors committee, Dennis Dunne at Milbank, Tweed, Hadley & McCloy LLP in New York, did not return a request for comment.

Some bankruptcy experts say the fee clearly a fundamental flaw in the process by which advisers are paid, because there are few resources to check the cost of a business. Mr. Lopuck, often critical of the bankruptcy process, said companies, representing a group involved in a bankruptcy are often reluctant to challenge other companies to their charges.

John Marquis, the president of Legal Cost Control Inc., New Jersey-based accounts of legal fees, said that sometimes lead to bankruptcy, a law firm shed excess people out of a case. "Bankruptcies are, by their nature" Oh my God, situations and sometimes the lawyers will say: "Let what we have to make sure we can get this company to bankruptcy." "Companies at later agreed to cut their costs, he said.

Most lawyers and bankruptcy experts, while surprised by the size of Weil at the request, ceased to call it excessive short. David Skeels, a bankruptcy law professor at the University of Pennsylvania, said the fees paid to Weil and other companies are often the results they provide. "Weil has done an excellent job in Enron," he says. "It began in chaos, but in the end, the creditors have a good recovery. They sold assets at decent prices and pulled back money from banks. "

The recent wave of filings has led to huge payday for some businesses, particularly those such as Weil and Kirkland & Ellis LLP, with a strong bankruptcy practice. But some firms in difficulty, including a handful of traders, chose to liquidate rather than to continue restructuring, mainly because of poor market conditions and a lack of debt financing.