Associate Hourly Billing Rates Surge Past $1K as Firms Snap Up Bankruptcy Work
Rates for top associates at firms such as Weil, Gotshal & Manges and Kirkland & Ellis are rising just as a new wave of Chapter 11s gathers steam. A filing shows J.Crew paid its lawyers at Weil close to $12 million in the 90 days before the company filed for bankruptcy this month.
May 22, 2020 at 04:00 PM
4 minute read
The original version of this story was published on The American Lawyer
The coronavirus pandemic quickly upended the economy and sent already struggling companies into free-fall, with retailers such as J.Crew, Neiman Marcus and J.C. Penney among those filing for Chapter 11 protection in recent weeks.
Recent court filings highlight the avalanche of fees these new cases are already generating for Big Law restructuring practices.
Take J.Crew, which was the first major retailer to succumb during the pandemic. In the 90 days leading up to the company's Chapter 11 petition May 4, it paid or advanced its lawyers at Weil, Gotshal & Manges close to $12 million, according to court papers filed this week seeking formally to hire the firm as debtor's counsel. The Weil team is led by New York partner and restructuring practice co-chair Ray Schrock.
The fees were bolstered by the firm having just recently increased its hourly rate for lawyers and paraprofessionals alike. Signaling a new era, some Weil associates are now billing more than $1,000 per hour—a milestone that was surpassed only about a decade ago at the level of Big Law partners—making it one of the first firms to break that pricey barrier.
Weil said in the J.Crew filing that it had increased its standard billing rates in October 2019. Members and counsel are now billing from $1,100 to $1,695 at the firm; associates are billing $595 to $1,050; and paraprofessionals are billing between $250 and $435 per hour.
Previously, the firm's rates topped out at $1,600 for partners and $995 for associates, according to the filing.
While the partner and associate rates stand out, the paraprofessional fees can add up too. Last November, when the firm billed $10 million for one month of work on the Sears bankruptcy, a single paralegal's billings added up to 431 hours at $405 per hour—more than 14 hours for every day of the month.
Weil isn't the first firm whose associate rates have topped $1,000 per hour, and its rates aren't even the highest. When Kirkland & Ellis signed on to represent Barney's New York—one of last pre-pandemic retail bankruptcies—it said in a filing that associates' rates reached $1,125 per hour. At Skadden, Arps, Slate, Meagher & Flom, at least two associates working on the McClatchy newspaper company bankruptcy have also billed over $1,000 per hour.
Efforts to reign in ballooning law firm fees have received little traction in recent years, though creditors, shareholders and employees occasionally raise alarms. A group of small Sears creditors awaiting payment filed an objection to Weil's fees in that company's Chapter 11 late last year.
Weil, which did not respond to a request for comment, is just one of a growing gaggle of fee-earning firms in the new retail bankruptcies filed so far in May. Neiman Marcus and J.C. Penney both turned to Kirkland & Ellis in those cases, though the firm has yet to disclose pre-petition fees.
The cases have also featured appearances for various stakeholders by Hunton Andrews Kurth; Squire Patton Boggs; Williams Mullen; Ballard Spahr; Vedder Price; Fox Rothschild; Blank Rome; Willkie Farr & Gallagher; Greenberg Traurig; Holland & Knight; McGuireWoods; Milbank; Wachtell Lipton Rosen & Katz; Paul, Weiss, Rifkind, Wharton & Garrison; and Latham & Watkins, among others.
|Read More
Weil Nabs First Big Retail Bankruptcy of Pandemic Era as J. Crew Succumbs to Chapter 11
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllNY Lateral Partner Moves Spike, Especially in PE and Funds Practices
Rising Varied Investment Products, Regulatory Activity Drive Demand in Investment Funds
Rates Will Go Up (Again), But Here's Why Profitability Might Not Be Maximized
4 minute readFinancial Services Has a Trust Problem. Can GCs Help Right the Ship?
Trending Stories
- 1The Law Firm Disrupted: Playing the Talent Game to Win
- 2A&O Shearman Adopts 3-Level Lockstep Pay Model Amid Shift to All-Equity Partnership
- 3Preparing Your Law Firm for 2025: Smart Ways to Embrace AI & Other Technologies
- 4BD Settles Thousands of Bard Hernia Mesh Lawsuits
- 5A RICO Surge Is Underway: Here's How the Allstate Push Might Play Out
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250