Lawyer Fees Mount in Crypto Bankruptcies (ft.com) 36
An anonymous reader shares a report: The investment bank B Riley is so determined to persuade the troubled bitcoin miner Core Scientific to avoid filing for bankruptcy that it has offered as much as $72mn in fresh financing to keep the company from seeking a court-supervised Chapter 11 restructuring. "Bankruptcy is not the answer and would be a disservice to the Company's investors," B Riley wrote in a letter from early December. "It will destroy value for the Company's shareholders, reduce potential recoveries for the Company's lenders, deplete its limited resources and create massive uncertainty for all its stakeholders."
Core Scientific filed for bankruptcy anyway last week. Still, B Riley's aversion should be understandable. A series of players have succumbed to the ongoing crypto winter including FTX, BlockFi, Voyager Digital and Celsius with customer accounts largely frozen. The novel legal issues about digital asset ownership, the continuing problems in the sector and the deliberative nature of US bankruptcy proceedings have kept any of the major companies from exiting court protection yet. The costs are piling up and account holders are noticing. Lawyers, bankers and other advisers in the Celsius case that began in July recently submitted detailed fee requests to the New York federal bankruptcy court totalling $53mn.
Per US law, these official advisers will have these so-called "administrative expenses," subject to court approval, paid by the "estate" or the company which will naturally eat into the recoveries of account holders. Law firms involved including Kirkland & Ellis and White & Case which are usual powerhouses in corporate and private equity bankruptcies are involved in Celsius and have top lawyers billing more than $1,800 per hour. (This may remain a bargain as top lawyers in the FTX bankruptcy at Sullivan & Cromwell are charging in excess of $2,000 per hour).
Core Scientific filed for bankruptcy anyway last week. Still, B Riley's aversion should be understandable. A series of players have succumbed to the ongoing crypto winter including FTX, BlockFi, Voyager Digital and Celsius with customer accounts largely frozen. The novel legal issues about digital asset ownership, the continuing problems in the sector and the deliberative nature of US bankruptcy proceedings have kept any of the major companies from exiting court protection yet. The costs are piling up and account holders are noticing. Lawyers, bankers and other advisers in the Celsius case that began in July recently submitted detailed fee requests to the New York federal bankruptcy court totalling $53mn.
Per US law, these official advisers will have these so-called "administrative expenses," subject to court approval, paid by the "estate" or the company which will naturally eat into the recoveries of account holders. Law firms involved including Kirkland & Ellis and White & Case which are usual powerhouses in corporate and private equity bankruptcies are involved in Celsius and have top lawyers billing more than $1,800 per hour. (This may remain a bargain as top lawyers in the FTX bankruptcy at Sullivan & Cromwell are charging in excess of $2,000 per hour).
Note to self (Score:3)
If I had to guess they're hoping to get their money out before the inevitable bankruptcy. Bitcoin miners haven't been profitable in months let alone GPU miners. As near as I can tell they're hanging on as long as they can so the owners can pay themselves consultancy fees in the meantime.
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I look at this and I think.. dang: should have gone into Law, and not IT. 1 of those Billable hours on a bankruptcy case earns more than I get in almost 80 hours.
Is $1800/Hour truly a reasonable compensation for work that can be done by a single person?
Re:Note to self (Score:5, Insightful)
dystopia undersells it (Score:5, Funny)
Next after that, we're replacing polimaticians with a small script^W^W quickly trainable AI.
you're welcome for the nightmares.
Re:dystopia undersells it (Score:4, Interesting)
But you're not going to replace politicians because those guys are members of the ruling class and the only way you replace them is by getting rid of them entirely. And so far about a third of the population has been unwilling to do that
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Pft. You're taking the wrong approach.
Just revive trial by combat -- it's a kind of trial, after all -- and set up a series of municipal Thunderdomes for dispute resolution instead of courts. No fancy AIs needed -- just some chainsaws and bungee cords.
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$180/hr is Eighteen Hundred Dollars ($1800) per billable (we presume) hour.
What is a 'billable hour'? From previous observation;
- An attorney's time and attention to a matter.
- The time and effort of an assistant, perhaps an attorney, though often a skilled worker, to a matter.
- Administrative time necessary to conform to court rules and regulations, or in response to various requests, or other necessary tasks.
How many of these bill at Eighteen Hundred Dollars ($1800) per hour? Some? All?
Now, we can argue o
Re:Note to self (Score:4, Insightful)
When you see lawyers charging those fees it's usually because you're paying them to do something extremely dodgy that shouldn't be legal and somehow is. Kind of like how mitt Romney spent his entire career in the private sector gutting publicly traded companies like fish and screwing over the investors and came out smelling like roses. It's a skill. A terrible ghastly skill that does immense harm to all of society. But a skill nonetheless
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When you see lawyers charging those fees it's usually because they are guaranteed to get paid first.
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More generally, law schools are struggling and some are closing because they’ve churned out more lawyers than needed for the past several decades. It used to be the “anyone can get rich” field but DEFINItELY not any more.
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It can be ridiculously hard to get into a high paying firm.
THAT SAID, what the lawyers I know did, is basically go work in public defender type jobs for a few years until the "trainer wheels" are off and they can fully practice and THEN the good job offers start up.
Thats not a bad arangement, gets a bunch of fresh faced kids into real world lawyering tasks while making a pool of cheap and freshly minted lawyers available for folks on low or no budget to get represented.
Re:Note to self (Score:4, Insightful)
Certain types of law can charge exorbitant fees. M&A, Tax, private equity bankruptcies, etc. tend to be the highest in terms of hourly rate because you can generally guess within about 20% what a deal is going to take in terms of hours and then make an assessment of how much you're going to pay vs. how much you're going to recover. As someone else pointed out, there's also the rockstar effect.
For example, let's say there's $100M worth of recovery, and 1 million potential creditors. THey're layered too, as in who gets paid first; first employees' back pay, then vendors, then debt holders, then shareholders. And in this depositors fall somewhere in with debt holders as creditors. If you're in the shareholder bucket, then odds are you're going to get nothing. But with the right lawyer, maybe you can end up fighting your way to 20% of that payout as a shareholder, or $20M, if they have the right legal understanding and argument strategy to recover some of your losses. Is it worth it to pay that lawyer and estimated $1-2M if you can recover $18M after paying him, when you're alternative is probably nothing? You bet it is. And you want the best then, with good experience; no $500/hr lawyer will do, you want the guys who charge big to fight for you, and ideally they can charge big because they've done deals like this before nad understand the nuances and complexities of the law to manuever around others to get you a piece of the pie.
So when you can correlate financial outcomes to the cost of the lawyer, it's easy to justify high fees. It's much harder to do this with securities law or labor law or even IP law to some extent, so the rates are generally lower for those as they're more of "offsetting future risk" which is hard to quantify the monetary gain. But tax law or things like this, you can exactly point to what it's worth and therefore know it's worth the rate.
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No it's not reasonable, but it's the market.
And you want the best then, with good experience; no $500/hr lawyer will do, you want the guys who charge big to fight for you, and ideally they can charge big because they've done deals like this before nad understand the nuances and complexities of the law to manuever around others to get you a piece of the pie.
But once a lawyer brings out some old ruling or law and makes it work for the client, wouldn't everyone else be aware of how this was done? Especially the other lawyers involved?
Which will "teach" other lawyers about this particular process/method/loophole.
Presumably the other lawyers can research more into whatever was used for future use - maybe even figure out how to make it not work in the future if necessary, So will a highly paid lawyer always be able to use the same tricks every time in the future if
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With code, there's maybe 10 or 50 or 100 different ways to code something with an end function in mind, some are more efficient than others, but in the end you're delivering an end function that A) either works or it doesn't, and B) works but has relative efficiency (e.g. uses less or more hardware resources). But the outcome is somewhat binary.
There are two parts to the law. The first part is like code, whic
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Very few people can manage a rate like that; more likely it's not being reported all that accurately. Also, it's not much fun; lawyers get assigned quotas of billable hours they need to bill per year, and much work in the office isn't billable, so what should be a 40 hour/week job can easily be double that. And you don't get to keep the money. It goes to the firm and is used to pay for the office rent, for non-billable assistants and staff, for equipment and supplies, etc. The lawyers get a fraction of it a
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Yes, that or they sold some shares in Core Scientific to their customers and lied about the risks. That would make them liable. Of course they cannot really prevent anything here, they can only delay the inevitable.
Probably The Plan All Along (Score:2)
to milk as much as possible before the suckers get anything.
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to milk as much as possible before the suckers get anything.
I have no sympathy for those holding the bag for Core Scientific. A bunch of scam artists getting bled to death by lawyers - I'm rooting for the lawyers. Though that leaves me a bit conflicted, in this case I'll make an exception.
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It feels kinda weird when you find yourself rooting for the parasites instead of the host, doesn't it?
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Lawyer Fees Mount (Score:3)
anytime there are lawyers
lawyer fees (Score:5, Funny)
flushing more money down the toilet (Score:4, Insightful)
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Throwing good money after bad isn't a sane solution.
Indeed. However the whole crypto-bubble is basically concentrated insanity, so YMMV.
How soon until the government covers it? (Score:5, Funny)
I expect the government to cover all losses and fees if Pelosi lost money or the law firm knows the right people.
It's probably already in the $1.7T omnibus bill.
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Well, they did it with banks in 2008.
Give us time to pull out (Score:2)
Somebody seem to have lied to their customers... (Score:2)
... about how risky some investments are. And it is not Core Scientific.
Okay, I give up (Score:2)
Okay, I give up- who am I supposed to feel sorry for here?
Is it the lawyers making $2000 an hour or is it the greedy fuckers who hoped to make a killing and instead got rinsed? I ask because I can't dredge up a molecule of sympathy for any of the players.
"Trust me- if you look down the barrel you can actually see the bullet as it comes out!"