The General Motors bankruptcy has been tough on most of the company's constituents, but not on its lawyers.The Wall Street Journal reports (subscription required) that "Weil, Gotshal & Manges LLP earned $54 million in fees and expenses in the six months leading up to the auto maker's June 1 bankruptcy filing, according to a recent court filing by Weil Gotshal. Much of the $54 million didn't relate strictly to GM's Chapter 11, according to a Weil lawyer. The firm's lawyers are billing GM at a rate of $355 to $950 per hour."
The firm is trying to become lead debtor's counsel for the GM bankruptcy but hasn't yet received court approval. GM's other top two law firms earned a combined $26 million in fees.
I'm not enough of an expert on legal fees to know whether $54 million is a great deal or a rip-off, but here's what we do know: GM is now being run as part of the government bureaucracy and that's very, very rarely a recipe for good cost control.
I was discussing this reality with a friend who does consulting for business and government agencies and he told me that he always, always charges the government more because they have the worst negotiators on the planet. People signing off on $500 million a year in contracts often have minimal training in negotiation, and one contact actually told him in an email they had a bunch of money to spend and needed to spend it quickly to avoid getting their budget cut for the next year, and so how much did he charge? His fee doubled just because of that email.
So if I had to guess, I would say that bankruptcy lawyer to GM is a pretty sweet gig.
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