Lehman's UK legal advice costs £60m in first year

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  • Some people might think it is justifiable to charge £300 - £800 (?) p/h for occasional sitting around time, cabs home to West London penthouses and dinners after 7pm for work involving a solvent business. It is arguably more difficult to justify however, when the work concerns the world's most disastrous insolvent bank, which has creditors globally still waiting to gather some remnants of even just the European entities.
    I do not doubt that this whole insolvency raised novel and complex issues and a firm other than Linklaters would unlikely have had the manpower or the expertise(which Linklaters - particularly its top partners - genuinely does possess) - maybe in that way the situation and the fees were unavoidable. However, this is then an example of top firms charging extortionately because they can "afford" to do so. Whether the service is actually worth (particularly where it involves the fate of creditors and even retail investors) is another question…

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  • Anonymous, I take it you would rather have a free for all with creditors grabbing what they can wherever they can rather than an organised process governed by statute delivered by professionals. Or perhaps Linklaters and PWC should have undertaken this work on a Pro Bono basis??

    Yours is a ridiculous post at best.

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  • Anonymous -

    Perhaps a high street firm should have been instructed... much cheaper... less penthouse more hovel

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  • Once you start from the premise that there is nothing wrong with making lots of money as long as you are worth it, then all the bleating envy and pompous outrage by those who just aren't good enough to command the premium become irrelevant. And who decides if you are worth it? The correct albeit unpopular choice is "the competitive market", however imperfect that may be.

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  • I am in agreement that few firms possess the ability to manage such a complex insolvency so I have no objections to Linklaters appointment but it is hard to justify standard £300 - £800 p/h fees when so many people have been cleaned out. On this type of insolveny I feel that ceiling fees need to be set. It's not as if Linklaters would have rejected the appointment...

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  • Just wait and see what the 2nd year number is. My guess is it will double.

    As for the rates - they seem in line to me.

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  • Restructuring work in the Lehman context involves winding down the bank so that creditors can recover any residual value there is, as they are entitled to do. Why should advisers, assisting with this on either the debtor or creditor side, have to lower their charge out rates to carry out what they specialise in? They assist in maximising the value recovered, which has a benefit to everyone entitled to recover. The service they provide is just as valuable (if not more so) than commoditised corporate work. Bottom line: these advisers run businesses. They provide a high quality service for premium rates, and clients get what they pay for. The amount of work required in the Lehman case is not quantifiable, so a cap is difficult to set at best. The process (and fees) are overseen by a Court, which is more than you would get in any other context. I don't see where that any of the objections above can be justified in light of these facts. Personal attacks related to lifestyle aren't really relevant here, but there is nothing wrong with working hard and earning a high wage as a consequence. How you choose to spend that cash is not a matter of public debate.

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  • I agree James Miller's posting.
    However it does not address the more generic point that the concept of "clients get what they pay for " is frequently less applicable when considering the value to the client of the time spent (and charged) at prevailing MC firms rates for trainees and relatively inexperienced assistant solicitors of say less than three years PQE.

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  • These pompous self-serving justifications for extortionate charge out rates no doubt originate from those who swim in the cesspool of insolvency practitioners.

    It's well known throughout the industry that professionals involved in insolvency work charge extortionate and above market rates just because they know they can get away with it.

    The creditors are generally either too poor - often, ironically, as a result of the insolvency - to mount an effective legal challenge to the costs and in any event their own personal benefit would only be marginal even if successful.

    Furthermore, the creditors are hardly ever sufficiently organised to mount a united front against the sharks who, again ironically, can easily afford to defend any challenges because of the extortionate fees they've extracted.

    "The process (and fees) are overseen by a Court .." Yeah, right, that's a really effective control - not!

    No, people involved in insolvency work are vultures, whose first consideration by far is lining their own pockets. Anything left for the creditors is purely incidental.

    At the end of the day it's just a more lucrative form of ambulance-chasing - or perhaps more accurately hearse-chasing.

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