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Paralegal Billing Draws Scrutiny in Sears Bankruptcy

January 25, 2019 | Posted in : Bankruptcy Fees / Expenses, Billing Practices, Billing Record / Entries, Hourly Rates / Hourly Billing

A recent The American Lawyer story by Dan Packel, “Weil Fees in Sears Bankruptcy Shine Light on Big Billers: The Paralegals,” reports that, fees are continuing to pile up in the Sears bankruptcy, and Weil Gotshal & Manges, the storied retail giant’s lead law firm, is under the spotlight.  The firm caught the attention of the New York Post over a single paralegal’s busy month: 431 hours, billed at $405 per hour.  That’s more than 14 hours for every day of the month.  It’s also more than the billing rate for some partners at large firms.  And it tops the rate earned by a number of attorneys, including shareholders, at McAndrews, Held & Malloy, the Chicago firm handling trademark issues for Sears in the Manhattan bankruptcy case.

Paralegal Keri Grant, from Weil’s corporate department, put more hours into the bankruptcy than anyone else at the firm for the month of November, the period covered by its second monthly fee statement in the case.  Grant’s Herculean effort involved hours on weekends and Thanksgiving Day, along with 19 and a half hours on Black Friday, and led to a final bill of $174,514.50.  But Grant is only one of seven Weil paralegals who bill at over $400 an hour.  Kathleen Lee, of the business financing and restructuring group, took the top mark at $420.  And the lowest rate of the 13 paralegals billing for the matter is $240.

That puts all of the Weil paralegals in the highest billing bracket tracked by the National Association of Legal Assistants in its 2018 survey on utilization and compensation: those billing more than $215 an hour.  Twelve percent of NALA respondents fell into that range, up from 8 percent in the organization’s 2016 survey.  Still, the total billed by Weil’s paralegals in November—just over $500,000—is just a small sliver of the firm’s total November bill of over $10 million.

The majority of that bill—$5.6 million—came from over 60 associates billing at rates between $560 and $975.  Twenty-three partners and 10 of counsel attorneys, billing at between $1,600 and $1,025 an hour, combined to contribute $3.8 million in bills. Of these lawyers, business financing and restructuring partner Jacqueline Marcus has been busiest, billing just short of 225 hours for November at $1,375 per hours, for a total of $309,000.

Weil has attracted criticism in the past for its hefty bankruptcy fees.  In 2017, an Iowa judge overseeing the bankruptcy of aerospace-parts manufacturer Wellman Dynamics Corp. cut the firm’s million-dollar payment in half after calling the bill “staggering,” according to The Wall Street Journal.  But it isn’t the only firm charging Sears rates north of $1,000 an hour.

Paul Weiss is also in the mix for the debtors in the Sears case, billing a total of $2.8 million for the month.  Five partners billed between $1,455 and $1,560, with securities litigation and enforcement group co-chairwoman Susanna Buergel putting in the most work: 109 hours.  Two of the three of counsel attorneys topped that figure and earned between $1,125 and $1,160 an hour.  Collectively, these senior lawyers billed just over $1 million.  Associates at the firm, who together scraped past that figure, falling just short of $1.1 million, billed between $640 and $1,030 an hour.  The firm’s staff attorneys, paralegals and other nonlegal staff are all lumped into the same category in its filing, pulling in between $345 and $480 hourly.

Wachtell Lipton Rosen & Katz, which has spent over a decade serving as general corporate counsel to the company, also has a small slice of the bankruptcy work, billing over $463,000 from the middle of October through the end of December.  Its three partners on the job each billed at $1,400.  Partners and counsel together put in 372 of the 383 hours the firm logged over that period.  And the firm’s sole paralegal on the matter?  She put in 15 minutes at $275 an hour.

Intellectual property boutique McAndrews Held & Malloy billed a similar figure for its work on Sears’ trademarks, tallying nearly $467,000 for the same interval.  This combined a mixture of fixed-fee work for preparing and prosecuting new trademark applications and monitoring key trademarks, flat-fee work for preparation, filing and prosecution of patents around the globe, and some additional hourly work.

In its hourly billings, the firm’s most handsomely compensated attorney, shareholder Chris Winslade, charged a rate of $560.  Other partners and shareholders billed at between $332 and $464, while a patent agent and the firm’s associates billed at between $264 and $330.  The firm’s eight paralegals all billed at $184, putting them in the top quartile of the NALA findings.