Tuesday, January 27, 2009

Lawyers Paid Better Than Ever as Creditors Lose Shirts

We have written extensively on the subject (here and here), and we feel it is about time mainstream media paid a little more attention to this very troubling issue. In a time of unprecedented losses for most investors, it is counterintuitive that lawyers should be getting paid as much as $1,110/hour, as this new Bloomberg report observes.

Rick Cieri of Kirkland & Ellis is the best paid human being on an hourly basis, charging $1,110 per hour (converted from British pounds) on his Tronox assignment. Incomprehensibly, Skadden Arps has requested as much as $1,050/hour for partners in the Circuit City Liquidation...uh, LIQUIDATION for god's sake... just how much value are these lawyers going to bring?

Stephen Lubben, a professor at Seton Hall University has the right idea “There is a limit to how many attorneys can demand these kinds of hourly rates, so long as the credit markets remain tight and Chapter 11 tends to be little more than a glorified liquidation tool.”

It is only a matter of time before the general public redirects its attention from Vikram's jet and Thain's commode, to this practice, which in our opinion is just as questionable, even more so as it is shrouded in the secrecy of bankruptcy court proceedings, which very few people understand or care about. It is about time they did.
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Anonymous said...

Clearly the General Counsel at Circuit City who hired Skadden at that kind of hourly rate is an idiot, or desperate...or both!

Honestly, are there no sufficiently competent bankruptcy attorneys in the United States available at $500 per hour?

Just another member of the same management crew there who kept the corporate jet until the very end...