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Kirkland & Ellis Seeks Fee of $18.50 a Minute for Bankruptcy Work

Posted Jan 28, 2009 8:09 AM CST
By Debra Cassens Weiss

Kirkland & Ellis has requested a fee of $1,110 an hour in a corporate bankruptcy, a possible record amount, according to one expert.

The hourly rate breaks down to $18.50 a minute, Bloomberg reports. The law firm is seeking the fee for its representation of titanium dioxide-maker Tronox Inc.

Two other law firms are seeking nearly as much, requesting hourly rates in excess of $1,000, according to the story. They are Sidley Austin, in the restructuring of the Tribune Co., and Skadden, Arps, Slate, Meagher & Flom, representing Circuit City.

Bankruptcy law professor Lynn LoPucki of the University of California at Los Angeles told the wire service that fees for lawyers and other professionals in bankruptcy cases are growing at four times the rate of inflation.

“As the economy gets worse, the bankruptcy lawyers are charging more,” LoPucki told Bloomberg. “It seems that each month one sets a new record for hourly billing rates. $1,110 is, to my knowledge, a record for the debtor’s bankruptcy counsel.”

Comments

1.

Jose
Jan 28, 2009 8:49 AM CST

This is why Big Law is going to die.  Corporate clients do not enjoy being raped by partners at these big mega corporations (law firms) who are only one to make as much money as they can.

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2.

B. McLeod
Jan 28, 2009 12:29 PM CST

Your Honor, my client can’t pay its bills . . .

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3.

R
Jan 28, 2009 1:23 PM CST

At first I thought $18.50 a minute was excessive. But then again, I’ll bet the rate charged to Eliot Spitzer averaged out to about $1,000 a minute.

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4.

ML
Jan 28, 2009 2:17 PM CST

R, but to be fair Spitzer was just morally bankrupt

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5.

B. McLeod
Jan 28, 2009 7:09 PM CST

Yes, very much so (in addition to the stamina issue R referenced).  I thought Spitzer actually looked like he might be quite ill during those news conferences concerning his recreational habits.  I think the young woman was quite wise to insist on normal precautions.

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6.

Jerry
Jan 29, 2009 10:39 AM CST

I want to see a big law federal bailout. Help, Senator so-and-so! Our annual caviar and toast point budget has diminished substantially! Our clients are asking us to charge *shudder* only $400 per billable hour! It’s madness! MADNESS!

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7.

Alan Sheketovits
Jan 29, 2009 3:43 PM CST

If they are billing by the minute, what happens if an associate eats Mexican food the nite before?  Will they bill for the time he spends in the can the next day?  Oy!

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8.

Ali
Jan 29, 2009 4:22 PM CST

If he is thinking about your case when he is on the can then he is likely billing.

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9.

B. McLeod
Jan 30, 2009 1:16 AM CST

Right (and I have to say, Mr. Sheketovits, that if he’s on the can, it probably is your case he’s thinking of).

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10.

Mike
Jan 30, 2009 4:58 AM CST

All those complaining about hourly rates are weak in math. It is only one factor - the other is the number of hours. If you work highly efficiently, more than $1,000 an hour can be entirely reasonable. Of course, if you let the clock run while getting your coffee, going to the loo, or other unproductive time, you are ripping clients off.

The main question is whether the actual bill is justified. Billing by the hour fosters inefficient behaviour, and invites cheating. It should be abolished.

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11.

Turd Ferguson
Jan 30, 2009 7:25 AM CST

Alan has a point guys.  Why not bill while on the can?  I do it all the time.  Those of you who do not are simply unproductive.  I hit 2100 billable hours last year.  At least 350 of those hours came from work I did while dropping the kids off at the pool.  That was mostly due to my unquenchable appetite for Ethiopian food, not Mexican food.

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12.

Cellman49
Jan 30, 2009 7:27 AM CST

You have to have a brass set of balls to charge that kind of fee.  Absolutely, shameless!

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13.

jason
Jan 30, 2009 8:43 AM CST

They were probably worth every penny.  Stop whining that your firms are not qaulified to charge what the big dogs charge.

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14.

Sean Connery
Jan 30, 2009 8:44 AM CST

Well said Turd!  Come on people, get the lead out.  Ching-ching!

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15.

Hadley V. Baxendale
Jan 30, 2009 9:13 AM CST

Re; Skadden @ Circuit City—let’s see if the fees are approved in Richmond! I went to one of the hearings and 2 of the Skadden lawyers were working hard and accomplishing a lot; their lead dog might be worth it.  But there was a lawyer there from another firm who came in from Chicago (whom I talked to the day before) sat in the back of the all day hearing, said nothing, and went home.The creditors will pay a couple grand for nothing on that one. In sum, the hourly rate sometimes measures value; sometimes not.  Just get a fee auditor in there and watch the carving begin!

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16.

Larry
Jan 30, 2009 9:35 AM CST

The senior lawyer needs 3 associates to bounce his ideas off.  The guy in the back was prob taking notes and preping the senior lawyer when he got off the stand.

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17.

Andy
Jan 30, 2009 9:46 AM CST

Quit all the whining.  A law firm should charge the highest possible fee it can….it’s called a business, which, last I checked, is incentivized to maximize its profits.  Every other business in this world does it, but somehow, you all think law firms should not be driven by the same capitalistic incentives???

And at least when a law firm goes belly up, the taxpayers aren’t asked to pony up.  You want to complain, head on down to Wall Street….and soon to also include “Main Street” when we’re asked to bailout home owners.

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18.

Big Dog
Jan 30, 2009 9:46 AM CST

Jason—just because your doing document review as a temp at a large law firm doesn’t nessecarily qualify you as a big dog.

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19.

HVB
Jan 30, 2009 10:29 AM CST

Andy, you would be right in a private transaction—let the parties pay and the market set the rate.  However, a bankruptcy case, the creditors pay the lawyers but do not, practically speaking,  have the free-market opportunity to select them.  Thus you have the fee application process where unreasonable fees can be carved back.  Time will tell on this one.

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20.

john
Jan 30, 2009 11:30 AM CST

Who cares it’s only some clueless stockholder’s money.  As far as I can tell they are the only people willing to pay these rates.  Wait I better check if my pension holds or held Tronox Inc..  Double Oy.

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21.

M
Jan 30, 2009 1:32 PM CST

I agree that $1,000 an hour is ridiculous. At the same time, Big law is a business and trying to make as much money as possible. The Executives and Board Members at the corporation are the ones that should be thrown in jail for approving that type of ridiculous fee. The creditors in this case are the ones getting screwed. Also I wonder how much “work” is going into those bills. Those bills are definately being padded due to the lack of oversight. And those lawyers that pad their bills should also be thrown in jail.

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22.

D
Jan 30, 2009 3:36 PM CST

As fascinating as this banter may be as a philosophical discussion, one must conisder the real-life repercussions of an environment where law firms are continually and systematically raising hourly or minute rates either out of greed, ego or whatever term one might insert for the phrase ‘capitalism.’  The chain reaction of all sub-group employees raising their financial expectations will require that those attorneys who do not wish to partake of the greed-game to raise rates in order to finance their subordinates.  The consequences is that of pricing legal assistance out of the reach of the majority of Americans who need need it.  Some common sense might be in order.

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23.

Publius
Jan 31, 2009 4:07 PM CST

Well said, D! It is interesting that the ABA runs this article along with an article claiming that today’s law practice is a lot like Abe Lincoln’s. If I recall my history correctly, Lincoln worked based on need, not greed. That’s what it should be about.

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24.

Andy the Lawyer
Feb 4, 2009 11:37 AM CST

My old contracts professor used to say: “if you don’t ask, you don[‘t get.”

Greedy bigfirm lawyers filing bankruptcy court applications for ridiculous fees shouldn’t be news—but orders approving them should be.

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