The Work

April 18, 2012 5:54 PM

Tallying Up the TARP-Related Legal Fees Racked Up by Am Law Firms

Posted by Brian Baxter

The U.S. Department of the Treasury's Troubled Asset Relief Program (TARP) may have expired, but some of the initiatives that grew out of that massive federal effort to bail out ailing banks and cope with other financial crisis fallout live on—and not always in a positive way.

Consider the Hardest Hit Fund, which was meant to help struggling homeowners. Already under fire in the press, the $7.6 billion fund took another hit last week when it emerged as the main focus of a scathing report issued by Christy Romero, TARP's new inspector general.

Romero joined the agency's inspector general's office in 2009 from the SEC, where she served as counsel to chairs Mary Schapiro and Christopher Cox (now at Bingham McCutchen). A litigator specializing in financial restructuring, she previously worked at Akin Gump Strauss Hauer & Feld, Jenner & Block, and Snell & Wilmer, and hasn't been shy about criticizing her former colleagues in the private sector.

In a 2011 audit report issued while she was still serving as TARP's acting inspector general, Romero chastised Bingham, Cadwalader, Wickersham & Taft, Locke Lord, and Simpson Thacher & Bartlett for what she said were their sometimes vague billing practices and the Treasury Department for failing to adequately monitor those bills.

While the 76-page document Romero put out last week did not single out specific firms, it did serve as a reminder that plenty of Am Law 100 and Second Hundred firms have reaped the benefits of taking on TARP assignments. Cadwalader, for instance, has collected nearly $24 million in fees for work connected to the program; Simpson Thacher has billed for more than $10 million; and Hughes Hubbard & Reed has taken in just over $5 million.

Romero's latest report also comes as The Am Law Daily uses the presidential election season as an occasion to examine which law firms have gained the most from high-profile federal government programs over the past four years. Last week we looked at the firms—such as Clifford Chance, Debevoise & Plimpton, and Paul, Weiss, Rifkind, Wharton & Garrison—that have earned substantial fees under the American Recovery and Reinvestment Act of 2009.

As for TARP—a program established by the Emergency Economic Stabilization Act of 2008 in the waning days of the George W. Bush's second presidential term—about 20 firms have legal advisory contracts tied to the program, according to a March report filed by Treasury to Congress. Sibling publication The American Lawyer reported two years ago on the total value of some of those TARP contracts, which are capped at $100 million. (The Am Law Daily has reported separately on Treasury's decision to hire 13 firms to help run programs—like the Hardest Hit initiative—that ran past TARP's expiration date.)

Several Am Law 100 or Second Hundred firms have amassed significant legal tabs over the past four years. Treasury has a breakdown on those firms and the "obligated value" of their TARP contracts, which extend for various time periods between 2008 and 2015, through the procurement section of its Web site.

Copies of the contracts—which are mostly boilerplate agreements for legal advice on investments, asset-backed security deals, debt transactions, mortgage loan modifications, other mortgage-related legal issues, or restructuring matters—are also included below.

Cadwalader — $23,842,317click here, here, here, and here for the firm's legal services contracts, which run between January 2009 and August 2015.

Simpson Thacher — $10,310,139click here, here, and here for the firm's legal services contracts between October 2008 and May 2011.

Hughes Hubbard — $5,293,857 — click here, here, and here for the firm's legal services contracts between October 2008 and August 2015.

Paul Weiss — $4,799,741click here for the firm's legal services contract from August 2010 through August 2015.

SNR Denton$4,639,403 — click here, here, here, and here for the firm's legal services contracts between November 2008 and March 2010, which include work done by Thacher Proffitt & Wood, the bulk of which joined SNR Denton in December 2008. (SNR Denton was known as Sonnenschein Nath & Rosenthal prior to its May 2010 merger with British firm Denton Wilde Sapte.)

Squire Sanders$3,917,349click here and here for the firm's legal services contracts between October 2008 through October 2011.

Venable$1,892,824click here and here for the firm's legal services contracts from February 2009 through August 2015.

Alston & Bird$1,339,366click here for the firm's contract through August 2015 for legal services.

Haynes and Boone$345,746click here and here for the firm's legal services contracts between March 2009 and August 2015.

Shulman Rogers Gandal Pordy & Ecker — $313,725 — click here for the firm's legal services contract from August 2010 through August 2015.

Bingham — $298,673 — click here and here for the firm's legal services contracts between March 2009 and December 2010, including pacts for work done by McKee Nelson, which Bingham acquired in 2009.

Locke Lord — $272,243click here for the firm's contract for legal services from February 2009 to August 2009.

Fox, Hefter, Swibel, Levin & Carroll$207,693 — click here and here for the firm's contracts for legal services from January 2009 through August 2015.

Debevoise — $159,175click here for the firm's legal services contract between March 2009 and January 2011.

Schiff Hardin$97,526 — click here for the firm's legal services contract from July 2010 to July 2011.

Orrick, Herrington & Sutcliffe, Perkins Coie, and Seyfarth Shaw are also listed in the TARP procurement database, but none of those firms have yet received payments from the government under their contracts, according to Treasury Department records.

Firms that received contracts from both the Recovery Act and TARP programs were Debevoise, Haynes and Boone, and Paul Weiss, which have been paid $2,128,415$346,680, and $6,081,399, respectively, for their work over the past four years.

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The government needs to seriously consider having all these legal fees and documented expenses and this process will serve as an example of responsible financial oversight. The is absolutely know need to continue with this criticism of alleged high legal fees without the benefit of a thorough legal audit. We have been providing government agencies with this service for many years with extremely positive results wherein both parties benefited from our audit findings. By that I mean the law firm will specifically know what the government will pay for and of course will pay for and the government will now have much more data to make better decisions. This legal auditing process can be a useful tool for all parties to the matter(s) being handled by these law firms. We want toro vide all our clients with this necessary tools to more effectively and efficiently manage all these law firms. If the firms are fond to be in full compliance with the government billing protocols this is a good thing but if certain firms are found to be in a non compliant situation then depending upon the degree of non compliance then the government will have to decide what they want to do with these none compliant issues. It really all boules down to the degree of severity as to wat course

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