The Work

August 17, 2010 3:28 PM

Lehman Chapter 11 Case Still A Boon For Bankruptcy Lawyers

Posted by Brian Baxter

Another month, another set of mammoth legal bills linked to the ongoing Lehman Brothers bankruptcy, the largest in U.S. history.

Bloomberg reports that Lehman paid its outside lawyers and restructuring advisers $44.5 million in July, bringing the Lehman estate's total outside advisory fees to $917.6 million after about 22 months of Chapter 11 proceedings.

Leading the law firm pack: Lehman's bankruptcy counsel at Weil, Gotshal & Manges, which billed for nearly $11.7 million in fees and expenses, according to a monthly operating report filed with the SEC on Monday. That brought the firm's total Lehman bankruptcy bill to $212.3 million, up from $200.6 million last month.

Wayne State University Law School professor Peter Henning, editor emeritus of the White Collar Crime Prof Blog and writer for The New York Times's DealBook, recently wrote that investigations by the Justice Department and Securities and Exchange Commission into former Lehman directors and officers had caused an increase in legal fees for Weil and other firms seeking compensation under D&O insurance policies.

The Wall Street Journal also reported earlier this month that Lehman was still ploughing more money into failed real estate investments in the hope of salvaging distressed assets in order to replenish its cash reserves for making returns to creditors, something that the paper notes could take another five years.

Perhaps that's why three more Am Law 100 firms appear on the bankrupt investment bank's July operating report as special real estate counsel. The filing shows that Gibson, Dunn & Crutcher was paid $311,000 last month, Dechert another $172,000, and Latham & Watkins $166,000 for their roles as special real estate counsel.

Most of the 16 other law firms being paid by Lehman--click here for a full breakdown--saw their bankruptcy bills increase incrementally in July. Milbank, Tweed, Hadley & McCloy, which is serving as lead counsel to Lehman creditors, saw its total billings increase from $56.5 million to nearly $61.1 million. Quinn Emanuel Urquhart & Sullivan, conflicts counsel for creditors, saw its total fees rise from $7.8 million to more than $9.2 million.

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