Part 1: When America’s fourth-largest investment bank, Lehman Brothers Holdings, failed in September, 2008, it began the domino effect which brought the world economy to its knees. The only “too big to fail” bank which was actually allowed to fail, it became the largest bankruptcy in history. Replacing the ubiquitous million dollar bonuses Lehman and the other Wall Street bankers were famous for receiving are million dollar bankruptcy attorneys. Nearly $1.6 billion in fees have racked up so far according to CNN Money.
Nobody is claiming straightening out the Lehman mess was an easy job. One law firm alone, Weil, Gotshal & Manges had more than 40 partners each earning at least $1,000 an hour. That does not include overtime, bonuses and incentives. As of last moth this law firm is on track to earn $431.6 million in fees as of March, plus $11.2 million in incentives, according to The Wall Street Journal.
This does not even include the lead attorneys in the case. Alvarez & Marsal has already earned $535.5 million and is not stopping there. They are on course to bump that to more than $620 million soon reports Jacqueline Palank.
All this work has paid off – not just for the lawyers but for the jilted investors. Lehman Brothers has just exited bankruptcy as a literal shell of its former self. Now it exists to increase available funds to pay the creditors. To their credit the law firms have pulled together many billions more to go towards restitution of the investors than anyone imagine. Apparently the lawyers also feel they deserve the credit and have appointed themselves as the officers of the new Lehmans.
Graphic courtesy Damon Hart-Davis