The Price of Excellence

June 21, 2009 | Filed Under In the News

Harvey Miller of Weil Gotshal gets a glowing write-up today in the Father’s Day edition of the Detroit Free Press.

GM wanted the best for their fast-track, “quick rinse” Chapter 11 filing, and it doesn’t come cheap:

Weil, Gotshal & Manges has about 25 lawyers working on the GM bankruptcy, and GM has already paid the law firm $54 million for services incurred in the past six months and as advance payments to cover some of the Chapter 11 case, according to court records.

The firm’s normal hourly rate for lawyers ranges from $650 to $950. Associate lawyers’ hourly rates range from $355 to $640.

(I say make that $640/hr associate a partner!).

Mr. Miller is clearly dedicated to his clients and craft, and while it pays well, it does come at a cost:

He once told the Wall Street Journal that he decided early in life to skip having children because it would only get in the way of his law practice.

“Children would have been an added pressure,” Miller reportedly said. “You have to have time to give them love, and I didn’t.”

Given the astounding workload (he’s still guiding the Lehman Brothers case), and the early stage of the GM bankruptcy, we might assume that Mr. Miller had to work today.

Hopefully most of the father-attorneys out there, on this their day, didn’t.

No Stimulus for Detroit Lawyers

May 27, 2009 | Filed Under In the News

Just minutes ago, GM announced that its equity swap offer to bondholders has failed. Chapter 11 is now almost a certainty, likely by the end of the week.

Writing from the secure Wired GC bunker that’s about as close to GM headquarters as the electric range of a Chevy Volt, you’d think I’d be hearing two cheers from the Detroit bar about the potential windfall from a local bankruptcy mega-filing.

No so fast, as the New York Times noted yesterday, the chance of a Detroit filing:

… is unlikely, however, as bankruptcy cases are typically handled in New York or Delaware, where many business are incorporated and the bankruptcy courts have more experience handling complex filings.

With Chrysler filing in New York, GM is expected to follow suit. Michigan officials have been lobbying for a Detroit filing, most notably AG Mike Cox.

I do have one idea for the Obama administration: let all the lawyers working for GM, Treasury or the UAW know that no fee requests will be supported unless they start buying and driving American.

C’mon down, the lot is full of great deals.

(P.S.: The nuclear Wired GC family drives two Chevys, a Ford and a Pontiac.)

Legal Cover Up; TARP for Law Firms?

April 1, 2009 | Filed Under Law Firm Trends, In the News

The Wired GC can now report the results of a 3 month-long investigation into potential U.S. governmental support for major law firms.

Discussions at the highest levels of the new administration have resulted in a working plan. Initial staffing for the project was difficult due to the requirement that no lawyers work on it.

While still subject to change, the broad outline of this unprecedented initiative can now be revealed:

1. The plan is driven by a need to keep the legal industry from imploding. Since so many large firms are needed to document other bailouts, the government wants to bail them out first.

2. All firms can’t become 100% bankruptcy or Madoff litigation houses. There will likely be some M&A deal flow later in 2010, and there’s talk of an IPO or two in early 2011. Beyond that, there’s the need for experienced lawyers to handle the trust-and-estates “boomlet” some firms see as early as 2020.

3. Alternative fee arrangements are still a wildcard. The government has been told in no uncertain terms that many firms would rather fold than depart from hourly billing. But a recent government offer to fund the pensions of equity partners is starting to weaken the resolve of certain firms on this “third rail” issue.

4. Some “shotgun” marriages may be in the offing. A few link ups of national and international firms could be required by the government as a condition of bailout funding. Early in the process, it looked like some UK firms would be in the lead, lately it’s not as clear. Other G-7 countries do not appear interested in providing assistance, except for the French.

5. Equity partners will have to share the pain. The government is requiring some senior-level sacrifice. It’s not certain that any managing partners will have to step down. But at least one major firm has told its 7-series BMW drivers that they will have to roll back to a 5-series (for their second car). Any requirement to “Buy American” has been a non-starter, citing international treaty restrictions.

6. Some additional restructuring of firms will be required. Partners without clients are getting a tad nervous. Here are some telltale signs for the slow-on-the-uptake: (a) you are given a really hot assignment as “activities chair” for the next firm retreat; (b) the original art in your office is replaced by motivational posters about “change” and “teamwork”; (c) your emails to the managing partner are being returned as “undeliverable”; and (d) your code for the Xerox machine says “3 copies remaining.”

7. The plan is still in search of a name. While this train appears to be leaving the station, no legal industry bailout moniker is etched in stone. Two leading alternatives, according to our sources: (a) Lawyers Annuity Protection Directive (Operated Governmentally); and (b) Partner Assets Recovery Scheme (National Income Protection).

The negotiations are very fluid, and concerns about a public backlash to yet another government-funded bailout could derail things at any time. Still, one recent governmental appointee told us on deep background: “We just can’t let the law firms down. They’ve been there for us before. And where am I supposed to go in four years?”

Thomas Friedman on the Law?

December 12, 2008 | Filed Under Cost Control, In the News

Well no, actually about the teetering auto industry, but on some days many things have a legal angle to me:

… I can’t help but reflect on what, in my view, is the most important rule of business in today’s integrated and digitized global market, where knowledge and innovation tools are so widely distributed. It’s this: Whatever can be done, will be done. The only question is will it be done by you or to you. Just don’t think it won’t be done.

An article more to the legal point today sports the headline: