Filings plummet but US firms reap big bankruptcy profits
US law firms continue to rack up significant fees in bankruptcy work despite a 14 per cent drop in business filings, recently published research has revealed.
A report on the AmLaw Daily web site maintains that although corporate bankruptcy filings have declined over the last year, new cases are still providing opportunities for law firms.
The report highlights the pharmaceutical sector, pointing out that North Carolina-based law firm Wilson & Ratledge is acting for Curaxis Pharmaceutical, which faces debts of more than $9.5m, including $1.3m in legal fees owed to several different firms.
Likewise, K-V Pharmaceutical is instructing New York’s Willkie Farr, Washington-based Williams & Connolly and transatlantic firm SNR Denton to advise on its ongoing law suit against the Food and Drugs Administration, as well as in its bankruptcy action.
The report also targets New York-headquartered Weil Gotshal & Manges as a law firm that still cashing in on high profile bankruptcy cases. Weil continues to represent one-time financial services giant Lehman Brothers, with the web site estimating that the practice has pocketed a total of some $420m from the case.
A court ruling also recently supported Weil’s bill in relation to savings bank holding company Washington Mutual. Weil will receive $80m in legal fees and expenses for its work in WaMu’s bankruptcy case, despite claims that the lawyers had billed at extortionate rates for extended hours.
Weil has also collected more than $2m for its work in the bankruptcy filing of discount clothing retailer Daffy’s, and has recently been appointed to represent Foxwoods Resort Casino in its attempts to restructure $2.2bn in debt.
Business bankruptcies are not the only profitable field being ploughed by law firms, points out the report, as US municipalities are also going bust. Paul Glassman, a restructuring partner at west coast law firm Stradling Yocca Carlson & Rauth is to advise San Bernardino, the third Californian city to file for bankruptcy this summer.