September 29, 2011 5:24 PM
TARP Watchdog Snaps at Four Am Law Firms' Billing Practices
Posted by Brian Baxter
A new audit report released by the office of the special inspector general for the Troubled Asset Relief Program criticizes legal fees paid by the U.S. Department of the Treasury to four Am Law 100 firms, according to sibling publication The National Law Journal.
The report questions some $8.1 million in fees paid to the firms—Simpson Thacher & Bartlett, Cadwalader, Wickersham & Taft, Bingham McCutchen, and Locke Lord—as a result of the controversial bank bailout program launched by the federal government in response to the financial crisis in 2008, The NLJ reports via its Blog of Legal Times.
The four firms provided legal counsel to the Treasury Department under the TARP program, which was responsible for injecting huge amounts of capital into the economy by making loans to large and small financial institutions. But much of the legal work provided by the outside lawyers—whose firms have collectively received $27 million—is only vaguely described in invoices and billing statements, according to the 52-page report.
Christy Romero, acting special inspector general or SIGTARP, is a former SEC lawyer who once worked as a restructuring counsel for Akin Gump Strauss Hauer & Feld. The latest report by Romero and her team—an earlier report in April critiqued Venable for its TARP–related billing practices—focuses on $8.1 million of a sampling of $9.1 million in fees paid to the four firms by the Treasury's Office of Financial Stability.
The NLJ reports that a Treasury official defended the payments in a written response to the SIGTARP report. Timothy Massad, an assistant secretary for financial stability and former Cravath, Swaine & Moore partner, wrote that the contracts with the four firms were necessary in order to assist government officials in managing the fallout from the 2008 financial crisis.
The SIGTARP report focuses on $5.8 million in fees paid to Simpson Thacher under three Treasury Department contracts. (Click here to see one of those contracts, which covers work that we have reported on before.) The audit notes Simpson Thacher submitted two bills totaling $500,000 that "contained only the total dollar amount owed" with no additional detail on the nature of the work performed and at what hourly rates, according to the NLJ.
The NLJ reports that auditors recommended that the Treasury Department try and get back from Simpson Thacher at least $91,481, an amount that reflects "questioned, ineligible fees and expenses" that the firm should not have been paid for. A Simpson Thacher spokeswoman told the NLJ that the firm was "honored" to work with the Treasury Department during "an unprecedented and extremely challenging time."
The SIGTARP report also singled out payments to Cadwalader ($2 million), Locke Lord ($146,867), and Bingham ($57,939), which acquired its government contract through its merger with McKee Nelson in July 2009, criticizing the firms for submitting bills rife with inadequate detail. None of the three firms immediately responded to requests for comment from the NLJ about the audit.Make a comment