The Work

October 9, 2008 3:32 PM

Weil Received $5 Million from Lehman During Crisis

Posted by Nate Raymond

Weil, Gotshal & Manges received a $5 million advance in September from Lehman Brothers Holdings Inc. for work leading up to the bank's bankruptcy filing, according to court documents made public Wednesday.

Lehman reportedly retained Weil Gotshal on September 10. Five days later, Lehman filed for bankruptcy. Lehman paid Weil a $5 million advance to cover legal fees and expenses arising from Lehman's negotiations and efforts to remain in business and to prepare for the possibility of the Chapter 11 filing if negotiations failed.

"The negotiations were unsuccessful and the chapter 11 cases resulted," Harvey Miller, the senior Weil partner representing Lehman, said in a filing. "[Weil] is applying the advance to the charges for the professional services performed and to reimbursement of out of pocket expenses."

The sum contrasts with the $51.8 million Weil earned from Lehman for work done in the 12 months preceding September, according to the filing. And the $5 million is nothing compared to what the total bounty could be from the Lehman bankruptcy for lawyers. Lynn LoPucki, a professor at UCLA Law School, estimates legal fees could come to $906 million, Bloomberg reports.

The disclosure of Weil's fees came as part of a formal application by the firm to be retroactively hired as Lehman's bankruptcy lawyers. In a separate filing, also on Wednesday, Lehman sought to employ Curtis, Mallet-Prevost, Colt & Mosle as its conflicts counsel. The filing says Lehman asked Curtis Mallet to fill that role before the bankruptcy proceedings commenced.

A spokesman for Weil, Gotshal did not immediately return a request for comment. Calls to Curtis, Mallet were not immediately returned.

Both applications lay out billing rates the two firms expect to charge Lehman. Weil says its partners charge $650 to $950 an hour. Curtis, Mallet says its partners charge $675 to $785 an hour. Rates for counsel, associates, and paralegals also are detailed.

Curtis, Mallet bankruptcy partners Steven Reisman and Lynn Harrison will step in as Lehman's lawyers when a potential or actual conflict of interest arises with Weil, Gotshal, the filings say. The application says Curtis, Mallet has a history of serving as conflicts or special counsel, including in the bankruptcy cases of Northwest Airlines and Calpine Corporation.

As part of the applications, both firms laid their potential conflicts bare. Miller, in his filing, listed more than 100 Weil clients who might have an interest in the proceedings. Only seven of those, Miller said, comprised more than 1 percent of the firm's revenue during the last 12 months. The biggest of those were General Electric Capital Corporation with 3.3 percent, Providence Equity Partners with 1.54 percent, and Microsoft Corporation with 1.49 percent, Miller says in the filing.

(In 2007, Weil, Gotshal had $1.175 billion in gross revenue, according to the Am Law 100.)

Curtis, Mallet listed only four current clients with potential conflicts. The firm said in its filing that several of the clients "have either executed a waiver letter or indicated that they will execute a waiver" for Lehman's case, including JPMorgan Chase Bank, N.A.

Curtis, Mallet also says that "as a one-time courtesy," it represented former client NYSE Euronext, Inc. on issues arising out of Barclays Capital, Inc.'s acquisition of Lehman's broker-dealer business and real estate. Curtis, Mallet says it had a waiver from NYSE, and that it no longer represents the exchange in the bankruptcy.

A hearing on both applications is scheduled for next Thursday.

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What about the stock holders? What about the Lehman pensions? What about the retirement plans & 401Ks.

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