While the rest of the world is going bankrupt, the bankruptcy lawyers are only getting richer. Professionals’ fees in bankruptcy cases are growing at four times the rate of inflation. Studies reveal that the total fees paid for lawyers, accountants, and other professionals in bankruptcies from 1998 to 2007 doubled, while the consumer price index rose about 25 percent. It is almost like a competition among various firms to set a record for charging the highest fees per hour! Chicago-based Sidley Austin LLP and New York’s Skadden, Arps, Slate, Meagher & Flom LLP also requested hourly rates exceeding $1,000 in the past two months in separate bankruptcy cases. The lawyers are definitely regarded as saviors during this time of financial crisis that many companies are facing. But their exorbitant fees definitely need to be curbed. According to Stephen Lubben, a professor at Seton Hall University School of Law in Newark, New Jersey, bankruptcy fees may eventually be challenged because lawyers are mostly liquidating companies instead of restructuring them.
At this rate, only lawyers will emerge as victors over the ongoing recession.
[Bloomberg]
