Super Expensive Bankruptcy: Lehman Brothers Inc.
The investment firm Lehman Brothers Inc. is expected to be one of most expensive bankruptcy cases in U.S. history.
They have hired several different law firms to aid them in the Chapter 11 reorganization and bankruptcy case. Experts are estimating the cost at $800 million to $1.4 billion, the New York Times reported.
So far they have paid their lawyers $402.9 million since the business collapsed in Sept 2008. The company hired attorney Kenneth Feinberg to set up a committee to review all the fees they have paid their attorneys thus far in their chapter 11 bankruptcy case. They want to determine if all the fees are fair and plausible.
Feinberg is familiar with high profile cases involving lots of cash. His credentials include setting up funds for September 11 victims and their families. He was then later hired by the U.S Treasury Department to review and monitor companies that received compensation from federal bailout money.
Lehman brothers is paying several law firms to handle their business. They hired Alvarez and Marsal to handle their contracts and help oversee operations during the reorganization of the business. The law firm said they needed 175 employees to work on the Lehman brother’s case during the reorganization. They were paid a total $169.3 million for their services, according to the Wall Street Journal.
Lehman’s bankruptcy firm Weil, Gotshal, & Manges charged $98.6 million in fees and expenses for their services. They work for $ 950 per hour. The firm Lehman Brothers hired to manage the unsecured creditors committee was paid $29.2 million for their services.
At this point, Feinberg’s committee found most of the fees charged by Lehman Brothers attorneys are legitimate. According to reports filed in court there has been only $223, 262 in inappropriate fees through January 2009. A small amount considering the millions upon millions in fees levied in the case so far.
Despite the large fees, there are some rules in place to limit the charges and fees attorneys are racking up, including:
- No car service for attorneys is allowed before 8pm
- Only $20 per person for working meals
- Written explanation for any workday billing more than 18 hours
With millions of dollars at stake and teams of lawyer at work $20 here and there adds up. It seems it takes a team of lawyers to monitor a team of lawyers.
Learn more about filing Chapter 7 bankruptcy, and what kind of work a lawyer may do for you and your case.