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Lehman attorneys will mint money

Source: PTI
October 10, 2008 20:04 IST
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The largest bankruptcy case in American history could prove to be a windfall for attorneys and advisors representing the beleaguered Lehman Brothers, who are demanding a fee up to $ 950 per hour.

According to court documents filed this week, law firm Weil, Gotshal & Manges is seeking up to $ 950 an hour to represent Lehman while restructuring specialist Alvarez & Marsal is requesting hourly billing rates of up to $ 850.

A few weeks backs, Lehman had filed for bankruptcy protection after being battered by the US subprime crisis, making it one of the Wall Street titans to collapse in the ongoing financial turmoil.

The Financial Times reported Friday that Weil Gotshal, a top tier firm has been involved in many high-profile bankruptcy cases, such as WorldCom, Enron and Global Grossing. The firm said that its relationship with Lehman dates back to 1984.

'The documents filed by Lehman in court seeking to retain the firm Weil Gotshal listed its customary hourly rates in the US as $ 650 to $ 950 for members and counsel, $ 355 to $ 595 for associates and $ 155 to $ 290 for paraprofessionals,' the UK daily said.

Quoting Daniel J Moore Professor of Law at Seton Hall University School of Law Stephen Lubben, the report said, 'Even by big case bankruptcy standards, these are high rates, but not unexpected, especially for a case of this complexity.'

Professional costs are paid after secured creditors, but before the claims of unsecured creditors, Lubben was quoted as saying.

Bondholders are already anticipating losses of more than $ 100 billion based on current market prices.

Alvarez & Marsal is seeking an $ 850 hourly rate for Bryan Marsal to serve as chief restructuring officer.

Other rates range from $ 550 to $ 850 for managing directors to $ 175 to $ 300 for administration and analysts, the Financial Times noted.

In mid-September, Lehman Brothers, the fourth-largest investment bank in the US, filed for Chapter 11, listing assets of $ 639 billion and debts of $ 613 billion. Those amounts easily surpassed the blockbuster bankruptcies of WorldCom and Enron in the earlier decade.

Quoting Lynn LoPucki, a law professor at UCLA School of law and Harvard Law School, the report said the estimated total fees and expenses in the case will reach about $ 900 million. The cost would top fees and expenses of about $ 757 million for Enron and $ 628 million for WorldCom.

"It is the largest total in history because it is the largest case in history," LoPucki was quoted as saying.

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