The Work

February 17, 2011 6:17 PM

SIPC: Madoff Work Yields Big Bucks for Baker & Hostetler

Posted by Brian Baxter

As of January, Baker & Hostetler had received $128 million in fees in the roughly two years since being appointed as counsel to the court-appointed trustee tasked with recouping funds for victims of bankrupt Bernard L. Madoff Investment Securities, according to The Financial Times and

Irving Picard, the Baker & Hostetler partner and trustee acting for Madoff victims--who has been dubbed by some an "avenging angel"--has so far been paid $3.2 million for his own work on the matter. Over the next three years, Picard stands to receive another $12.5 million for his efforts. Legal fees do not come from whatever recoveries Picard and the firm make on behalf of victims but are instead being paid by the federal Securities Investor Protection Corporation.

The Madoff fees were broken down in a letter sent last month by the SIPC to New Jersey congressman Scott Garrett. A call placed to Garrett's office in Washington, D.C., late Thursday seeking a copy of the letter was not immediately returned. (Garrett himself is a lawyer, having once worked at Livingston, N.J.-based civil litigation shop Sellar Richardson.)

In September, we reported that Picard and Baker & Hostetler's Madoff work had pushed the firm close to breaking the $100 million billable barrier after a U.S. bankruptcy judge overruled some Madoff victims' objections to the bills. The objectors were led by Becker & Poliakoff partner Helen Chaitman.

The Madoff work has clearly bolstered Baker & Hostetler's bottom line, with the firm's gross revenues increasing 17 percent to $386 million in 2010 and its profits per partner soaring by 27 percent, to $763,000, according to our early Am Law 100 reporting. But Baker & Hostetler isn't the only firm getting paid in connection with the matter.

As The Am Law Daily has previously reported, New York's Windels Marx Lane & Mittendorf and Hogan Lovells are the second- and third-largest legal billers for Madoff work. Offshore firms such as Higgs & Johnson in the Cayman Islands, Williams Barristers & Attorneys in Bermuda, SCA Creque in the British Virgin Islands, and Attias & Levy in Gibraltar are working on making recoveries for Madoff victims abroad. Also on the SIPC payroll: British firm Mishcon de Reya, Ireland's Eugene F. Collins, Luxembourg's Schiltz & Schiltz, and Montreal boutique Kugler Kandestin.

While Picard and his legal team are certainly being well compensated for their efforts, the trustee has also received praise for the amount that has so far been recovered for Madoff victims. A late-year litigation frenzy of civil suits and settlements against those alleged to have profited from the collapse of BLMIS has brought nearly $10 billion into SIPC coffers--roughly half of the $20 billion that Picard estimates was lost in the massive fraud.

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