Tuesday, January 6, 2009

Is a fee of $100,000 a day unreasonable?

The ABA Journal.com reports:

A $100,000-a-day fee application by Dewey & LeBeouf for receivership work is excessive, according to a federal judge in New York City. U.S. District Judge Denny Chin said Dewey provided "extensive and outstanding legal services,” but it had overstaffed and overworked the case, the American Lawyer reports. He cut more than $400,000 from the law firm’s request for $2.1 million in fees as receiver for WexTrust Capital.

The law firm was appointed as receiver to safeguard the trust’s assets after the Securities and Exchange Commission sued, claiming the trust was operating as a Ponzi scheme that targeted the Orthodox Jewish community.

The fee request is “excessive in the context of a securities receivership where hundreds of victims of fraud have suffered substantial losses,” Chin wrote in a Dec. 30 opinion (PDF posted by the American Lawyer). He said the law firm can reapply for disallowed fees at the conclusion of the case based on its success recovering funds.

Chin’s ruling came after he raised questions about the firm’s billing rates, which were as high as $950 an hour for some partners, $605 an hour for some associates, and $285 an hour for summer associates.

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