October 9, 2009 12:25 PM

Working for the Government: A Matter of Prestige, Not Profits?

Posted by Zach Lowe

When the Treasury Department reached out to law firms for various advisory roles on federal bailout programs, some of the leading New York-based firms declined. Lawyers and outside experts told us that firms were likely worried about the Treasury Department's strict contract rules; others speculated that firms might be expected to cut their hourly billing rates for government work. 

The contract Cadwalader, Wickersham & Taft signed in December for $417,000 worth of work on the government's Troubled Asset Relief Program (TARP) shows the firm steeply discounted its hourly rates as part of the deal, according to The National Law Journal, an Am Law Daily sibling publication. 

Cadwalader partners billed $525 an hour for the TARP work; they normally bill between $625 and $1050 per hour, according to documents the NLJ obtained through a Freedom of Information Act request. 

Other firms that did similar bailout work, including Simpson Thacher & Bartlett and Venable, did not have to release billing rates under the FOIA request, the NLJ says. (Cadwalader, perhaps mistakenly, appears to have "expressly consented" to the release of the data, according to the government's response to the NLJ).

Since signing that initial contract, Cadwalader has won a lot more federal work, including a role advising the government in the restructuring of General Motors, Chrysler, and Delphi as well as getting a separate contract for advising on the restructuring of CIT Group, the NLJ says. (The firm's contract for the auto bankruptcy work was far more lucrative than its initial TARP deal, totaling $8.59 million.)

Sonnenschein Nath & Rosenthal also discounted its hourly rates to win a $8.59 million government contract, the NLJ says. (The rates came to light when the government inadvertently released the Sonnenschein contract without redacting billing figures.)

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