According to a recent article published by CNN Money, Lehman Brothers’ bankruptcy legal and other professional fees and expenses have reached $1.6 billion as of January 31, 2012. The Lehman Brothers’ bankruptcy, which is the largest bankruptcy in U.S. history, has incurred more than double the fees and expenses that were incurred in the Enron bankruptcy, which is the second largest in history.
Weil, Gotshal & Manges, Lehman Brothers’ primary counsel, has collected $383 million in legal fees and expenses for work performed on the matter through January. According to The AM Law Daily, Weil billed $7.4 million in January alone. The amount billed by Weil in the Lehman Bankruptcy represents nearly 8% the law firm has collected in gross revenues over the last four years.
More than 30 law firms have advised Lehman Brothers and submitted bills in the bankruptcy. Milbank, Tweed, Hadley & McCloy, lead counsel to the Lehman Brothers’ creditors, has billed $133 million for its work in this case. Additionally, special litigation counsel Jones Day, conflicts counsel Curtis, Mallet-Prevost, Colt & Mosle, and special tax counsel Bingham McCutchen, have billed $61.2 million, $42.5 million and $21 million, respectively.
In addition to legal fees, Lehman Brothers has paid a significant amount in fees and expenses to other professionals, including consultants and accountants. According to CNN Money, Alvarez & Marsal, a bankruptcy consulting firm which managed Lehman Brothers after it filed for bankruptcy in 2008, has received $512 million for its services. FTI Consulting, consultants for the creditors, has billed $81 million in fees for its work.
CNN Money has reported that bankruptcy fees in general have been on the rise. According to research conducted by two UCLA law professors, bankruptcy fees have increased approximately 9.7% each year between 1998 and 2007. The research also revealed that only 1.3% of fees submitted to bankruptcy courts were overturned during this time. Overall, it seems that bankruptcy cases in general are ripe for implementation of legal cost controls.