How do you call a bunch of dead lawyers on the bottom of the ocean? A good start...Ok, that's perhaps one of the worst lawyer jokes out there. But it's about what the American taxpayers will feel when they will learn how much GM's bankruptcy will cost them in terms of lawyers alone.
According to a report by Reuters, a total of $1 billion (we say again, $1 billion) will enter law firms' accounts as a result of Chapter 11 proceedings, result from the $1,000 an hour (for at least ten hours a day) charged by the firms.
These funds are very likely to be provided by the US government, as well as counsel fees for bondholders, employees and all other parties involved. Still, Scott Stuart, former US Trustee thinks "it's certainly not going to be the wild wild west of fees charged in a case like Lehman." In Lehman's case, four months of work were charged by Weil, Gotshal & Manges (a total of 12 employees worked on the case) with $55.1 million.
"When a firm jumps into bankruptcy it's an 'Oh my god!' situation. It's very expensive in the beginning," Patrick Woods, executive vice president of Legal Cost Control told the source. "Everyone duplicates each others work."
Overall, the bill to be paid by the US to law firms can amount to $1.2 billion, as Lynn LoPucki, a UCLA law professor and Chapter 11 critic says. "Do I believe there will be a public outcry? No. I hope not. They are providing good and valuable services," Fred Caruso, vice president of Development Specialists said.
So far, GM has already drawn lot of criticism from its bondholers on account of the company's public exchange offer. They consider it "a blatant disregard of bondholders" and "neither reasonable nor adequate".
According to a report by Reuters, a total of $1 billion (we say again, $1 billion) will enter law firms' accounts as a result of Chapter 11 proceedings, result from the $1,000 an hour (for at least ten hours a day) charged by the firms.
These funds are very likely to be provided by the US government, as well as counsel fees for bondholders, employees and all other parties involved. Still, Scott Stuart, former US Trustee thinks "it's certainly not going to be the wild wild west of fees charged in a case like Lehman." In Lehman's case, four months of work were charged by Weil, Gotshal & Manges (a total of 12 employees worked on the case) with $55.1 million.
"When a firm jumps into bankruptcy it's an 'Oh my god!' situation. It's very expensive in the beginning," Patrick Woods, executive vice president of Legal Cost Control told the source. "Everyone duplicates each others work."
Overall, the bill to be paid by the US to law firms can amount to $1.2 billion, as Lynn LoPucki, a UCLA law professor and Chapter 11 critic says. "Do I believe there will be a public outcry? No. I hope not. They are providing good and valuable services," Fred Caruso, vice president of Development Specialists said.
So far, GM has already drawn lot of criticism from its bondholers on account of the company's public exchange offer. They consider it "a blatant disregard of bondholders" and "neither reasonable nor adequate".