January 31, 2012 6:29 PM

With Trustees in Place, Big Bankruptcy Billers Line Up to Feast on MF Global Fees

Posted by Brian Baxter

With former federal judge and FBI director Louis Freeh and Hughes Hubbard & Reed corporate reorganization cochair James Giddens set in their roles as trustees for bankrupt MF Global Holdings, several Am Law 100 and international firms are angling to help unwind the defunct derivatives broker.

Freeh was appointed trustee for MF Global's New York–based parent in November in a role that has him managing the company's Chapter 11 case in U.S. bankruptcy court in Manhattan. At the time, MF Global's bankruptcy lawyers at Skadden, Arps, Slate, Meagher & Flom said they intended to pass the outside counsel baton in the case to lawyers brought in by Freeh, a founder and senior managing partner of both his own risk consulting firm, Freeh Group International Solutions (FGIS), and law firm Freeh Sporkin & Sullivan.

But Skadden is not totally stepping away from MF Global. Last week, the firm filed an application to serve as special counsel to Freeh in the company's Chapter 11 case. Skadden corporate restructuring partners J. Gregory Milmoe, Kenneth Ziman, and J. Eric Ivester are leading a team from the firm in the matter.

Skadden partners have been billing between $795 and $1,095 per hour for their work on the case, with counsel and special counsel billing between $770 and $860, and associates billing between $365 and $710. Going forward, Skadden has agreed to discount its hourly rates by 10 percent per an agreement reached with Freeh after he was named trustee a little more than two months ago.

The firm states in court filings that it was paid a $500,000 retainer prior to MF Global's Halloween 2011 bankruptcy filing, but that the debtor owes it an additional $123,773 for work Skadden has handled for the company. Skadden adds that it will waive that amount, pending approval of its role as Freeh's special counsel.

Skadden's application for employment for the special counsel assignment contains several other interesting disclosures about its past work for clients and its connections to individuals associated with MF Global, whose general counsel, Laurie Ferber, was once a Skadden associate. (Two former MF Global executives are scheduled to testify Thursday before the House Committee on Financial Services.)

The firm notes that it provided counsel to New Jersey in 2008 at a time when state officials were considering the privatization of the New Jersey Turnpike. The Garden State's governor at the time was Jon Corzine, CEO of MF Global at the time of its collapse. Skadden also reveals that it has done work for Chicago Mercantile Exchange owner CME Group, which has been under fire for its regulation of MF Global.

In court filings, Skadden acknowledges that its prior relationship with CME means that firm will have to recuse itself from anything related to the exchange that might arise in the course of the MF Global case. Under such circumstances, Skadden notes, it will defer to conflicts counsel. Skadden states in its filing that it has created an "ethical wall" to separate its CME and MF Global work, while also noting the creation of another barrier to wall off its new London-based restructuring partner hire Dominic McCahill.

McCahill joined Skadden in early January from Weil, Gotshal & Manges, another firm that found itself pulled into the MF Global bankruptcy orbit, as it advised the company's London unit on the restructuring of its overseas operations. While at Weil, McCahill was part of a group of Weil lawyers representing the KPMG administrators who took the reins of the debtor's British arm.

Freeh, who lists his own hourly rate at $850 in court filings, seeks to employ his firm as investigative counsel in the Chapter 11 case. Freeh Sporkin partners and special counsel are billing between $600 and $750 per hour in the matter, while associates are billing between $275 and $500 per hour. Managing directors of Freeh's consulting firm, meanwhile, are billing between $475 and $600 per hour, while investigators are charging between $250 and $450 per hour, according to court records.

Assisting Freeh in the case are Freeh Sporkin partner Thomas Southern ($750 per hour) and FGIS managing director and CEO James Bucknam ($750), a former head federal prosecutor and head of risk management and compliance at Kroll.

Other firms Freeh has lined up to assist him in his capacity as Chapter 11 trustee are Kasowitz, Benson, Torres & Friedman, Morrison & Foerster, and Pepper Hamilton.

Court filings by Kasowitz Benson, which Freeh seeks to have serve as his conflicts and special investigative counsel, show that the firm has agreed to reduce its standard hourly rates by 10 percent if it lands the assignment. The firm's partners are billing at hourly rates ranging from $550 to $1,100, while associates and counsel are billing between $250 and $800 per hour.

Founding partner Marc Kasowitz ($1,100), bankruptcy litigation and restructuring partner David Rosner ($875), litigation partners Daniel Fetterman ($850) and Aaron Marks ($800), bankruptcy of counsel David Mark ($800), and bankruptcy partner Jeffrey Gleit ($640) are leading the firm's team on the matter.

Pepper Hamilton corporate restructuring and bankruptcy cochair David Stratton ($700) is leading a team from his firm, which Freeh seeks to have serve as special counsel. Pepper Hamilton partners and counsel are charging at hourly rates between $380 and $825, while associates are billing between $240 to $435 an hour, according to court filings by the firm.

The firm has also agreed to lop 10 percent off its standard hourly rates. Other Pepper Hamilton lawyers working on the matter include investment management practice head Joseph Del Raso ($850 per hour), tax head Joan Arnold ($760), bankruptcy partner David Fournier ($620), insurance of counsel Charles Leasure III ($615), tax partner Kevin Johnson ($575), and bankruptcy of counsel Evelyn Meltzer ($405).

Freeh aims to hire Morrison & Foerster as his lead bankruptcy lawyers in the MF Global case. MoFo, too, has agreed to discount its hourly rates by 10 percent, according to court records. MoFo partners are billing between $695 and $1,125 per hour, of counsel between $550 and $950, and associates at rates ranging from $380 to $685. MoFo bankruptcy partners Brett Miller ($975), Lorenzo Marinuzzi ($865), and of counsel Melissa Hager ($735) are advising Freeh in the case.

And then there are the attorneys that Giddens, the trustee tapped by the Securities Investor Protection Corporation to oversee the liquidation of the MF Global brokerage, has hired for an adversary proceeding in U.S. bankruptcy court in Manhattan.

Giddens received approval in January to hire Slaughter and May as English counsel to the SIPC trustee, according to U.K. publication Legal Week. A recent court filing shows that George Seligman, the head of the Magic Circle firm's corporate recovery and insolvency group, has taken the lead in the matter.

Slaughter and May has agreed to discount the hourly rates it charges for its work overseas by 20 percent, and partners from the firm are billing roughly $857 per hour. The firm also states that since 2008 it has advised MF Global's U.K. arm on certain tax and IP matters, for which the firm has been paid roughly $157,300. Slaughter and May has agreed to write off an outstanding tax bill from last year valued at $8,666.

Also seeking to be appointed as special counsel to Giddens as SIPC trustee are attorneys from Haynes and Boone. Litigation partner David Siegal and of counsel Jonathan Pressment—who joined the firm four years ago after a decade at Hughes Hubbard—have agreed not to raise their rates for one year and not to seek reimbursement for after-hours meals or travel expenses.

Haynes and Boone partners are billing between $387 and $744 per hour, counsel between $272 and $744, and associates between $191 and $510, according to court records. The firm has also written off an outstanding $1,700 bill it is owed by MF Global in connection with an unspecified finance matter.

Finally, MF Global's many creditors, a revised list of which was filed just after the new year kicked off, are well-represented in their own right.

The Am Law Daily reported in November that creditors had hired Dewey & LeBoeuf to represent them in bankruptcy proceedings by MF Global. A court filing by Dewey in late December shows that partners are billing between $775 and $1,200 per hour, of counsel between $760 and $900, and associates between $395 and $675.

Dewey business solutions and governance practice chair Martin Bienenstock ($1,000) and partner Michael Kessler ($1,000), who followed Bienenstock to Dewey from Weil three years ago, are leading a team from the firm advising creditors. Dewey also disclosed that it was paid $59,720 for advice on three MF Global tax transactions last August.

Other Dewey lawyers with roles in the Chapter 11 case include European restructuring head Mark Fennessy ($995), and partners Hazel Miller ($950), Irena Goldstein ($875), Timothy Karcher ($875), and special counsel Elizabeth Smith ($760). Both Fennessy and Miller joined Dewey in London last September from Orrick, Herrington & Sutcliffe.

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