Given a long-established principle that lawyers working in receivership situations should be awarded moderate fees, “the request for fees of $2,147,666 for 20 days of work is excessive,” said US District Judge Denny Chin in Manhattan.

Lawyers, paralegals and staff at New York’s Dewey & LeBoeuf logged over 5,500 hours on the WexTrust case, or more than 275 hours a day.

Chin determined that the law firm should receive $1.7 million for the work performed between August 11th and 31st. Dewey & LeBoeuf may apply for the difference between what it sought and what he awarded when the final distribution of WexTrust assets is made.

The law firm’s request was part of a joint application for compensation by Timothy Coleman, the court-appointed receiver for WexTrust and a partner at Dewey & LeBoeuf.

Chin approved the full amount of Coleman’s request for $57,300 in receiver’s fees. Coleman’s hourly rate had been cut to $250 specifically for the WexTrust case, from his standard rate of $850 to $950. The judge also approved a request of $66,640 in fees for the accounting and advisory firm Deloitte Financial Advisory Services.

Chicago-based WexTrust and two of its owners, Joseph Shereshevsky and Steven Byers, were charged by the SEC with defrauding investors by diverting $100 million of funds to unauthorized uses. Afterward, the court froze the defendants’ assets and appointed Coleman as WexTrust’s receiver.

Via PilotOnline.

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Dewey & LeBoeuf served as reciever for WexTrust Capital in an SEC lawsuit. WexTrust ran a Ponzi scheme that raised $225 million by targeting the Orthodox Jewish community (a popular tactic these days).

Judge Chin froze WexTrust’s assets, and appointed Dewey to serve as receiver. Last month, Dewey submitted an application to collect compensation and expenses for the first twenty or so days it served as receiver. The firm asked for $2.2 million.

G&H Partners, one of the larger creditors in the receivership, objected to the request. Now Chin has asked Dewey & LeBoeuf to justify the amount:

It is difficult to evaluate the reasonableness of the hourly rates for most of the lawyers listed. For example, [five attorneys] — all simply described as “Associate” — have substantial hours billed at hourly rates of, respectively, $605, $605, $550, $605, and $605. Without knowing anything about their backgrounds, it is difficult for the Court to determine whether the requested hourly rates are reasonable. …

While I accept the representations that the requested hourly rates are D&L’s standard hourly rates for the individuals involved, I wonder whether the rates are high for legal services rendered in connection with a securities receivership proceeding. Is it reasonable to bill at hourly rates of $700 to $950 for partners and $425 to $550 to $605 for associates in the context of a securities receivership? Is it reasonable to bill at hourly rates of $285 for summer associates & $175 to $275 for paralegals? Have courts in other receivership cases awarded fees applying such rates?

Dewey & LeBoeuf declined to comment — their mouths were full of Almas caviar while they cavorted on a solid gold yacht.

Via WSJ Law Blog via Patrick Lamb.

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