Creditors and former workers struggle while Big Law firms see the softer side of the Sears bankruptcy.
Over at The Wall Street Journal last week, journalist Soma Biswas illuminated the “tug of war” between former professionals, vendors, and the teams of Big Law firms vying for a piece of the shrinking pie of Sears assets in bankruptcy.
Some of the biggest firms with the biggest price tags have charged more than $200 million in legal bills since Sears went under in late 2018. Sears’ main bankruptcy firm, Weil, Gotshal & Manges LLP, maxes out their billing at $1,695 an hour according to the article, and their total payout has been more than $65 million.
In October, a $50 million estate fund was set up to pay creditors. Akin Gump, who represents unsecured creditors, has so far billed for more than half the funds of that pot, while vendors and creditors were paid $21 million in December.
Meanwhile, more than $3 million in severance to former Sears employees remains unpaid.
While these numbers might sound shocking, it’s a trend we’ve seen growing in the legal industry over the last decade. Last summer, WSJ wrote a groundbreaking piece, based largely on data we provided, that examined the changing nature of law firm partnerships and their interactions with clients. In the span of a few decades, white-shoe law firms have transitioned from a relationship-based model to a system where “data and money rule.”
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