Somebody’s Getting Rich off the Recession: Bankruptcy Lawyers Charging $1,000 an Hour
I guess there must be a bright side for somebody in any economic downturn, and top bankruptcy lawyers seem to have found it. As hard times hit more businesses, they are charging upwards $1,000 per hour or more for company restructurings, Bloomberg reports.
Lawyers at Kirkland & Ellis LLP, home to former Whitewater prosecutor Ken Starr, are asking as much as $1,110 an hour for bankruptcy work while creditors are recovering less of their loans through company restructurings.
Kirkland requested a top rate equal to $18.50 a minute for advising Tronox Inc. in its bankruptcy, according to court papers filed Jan. 26. Chicago-based Sidley Austin LLP and New York’s Skadden, Arps, Slate, Meagher & Flom LLP also requested hourly rates exceeding $1,000 in the past two months in separate bankruptcy cases, as lenders’ recoveries are forecast by ratings company Moody’s Corp. to drop 22 percent in the recession.
Professionals’ fees in bankruptcy cases are growing at four times the rate of inflation, estimated Lynn LoPucki, a professor of bankruptcy law at the University of California, Los Angeles. Total fees paid for lawyers, accountants and other professionals in bankruptcies from 1998 to 2007 doubled, while the consumer price index rose about 25 percent, he said.
“As the economy gets worse, the bankruptcy lawyers are charging more,” LoPucki said. “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.”
Nice to see that sense of civic responsibility in the bankruptcy profession. I guess bankruptcy lawyers have joined the ranks of bottom-feeders trying to profiteer from the hard times endured by others, much like the firms that swindle people by promising loan restructurings that never take place. Just because they wear nice suits and work at Ken Starr’s firm doesn’t necessarily make these lawyers any better than that.