A recent Wall Street Journal story, “Madoff Trustee’s Firm Seeks Payment of Legal Fees,” reports that the law firm leading the charge to recover the funds that Bernard Madoff stole from investors is seeking payment of $40.1 million for four months of work during which an army of lawyers struck deals to recover hundreds of millions of dollars.
Liquidation trustee Irving Picard and his law firm, Baker & Hostetler LLP, filed papers asking a bankruptcy judge to authorize the fees as well as to release $12 million in previously approved fees that haven’t yet been paid. Since Picard was tapped in December 2008 to oversee the liquidation of Madoff’s investment firm—a complex case that has required litigation all over the world—his firm has sought compensation of about $700 million, according to court papers.
The fees Baker & Hostetler is seeking cover 97,115.5 hours of work performed, for an average hourly rate of $413.30, between Dec. 1, 2014, and March 31. Picard and his team said that during that time, they settled 63 lawsuits, allowing them to recover $552.6 million in stolen funds that will be returned to victims of Madoff’s Ponzi scheme.
Such “significant results” warrant payment of fees, Baker & Hostetler attorneys said in the filings. The U.S. Bankruptcy Court in Manhattan will review the request at an Aug. 20 hearing. As a result of lawyers’ efforts over the past 6 ½ years to date, deals have been reached to recover $10.9 billion of more than $17 billion in stolen principal.
The fees charged by Baker & Hostetler and the other law firms working on the case aren’t paid out of the recovered funds. Rather, the Securities Investor Protection Corporation (SIPC), the government-mandated organization created to protect investors, will cover the fees. Since Picard’s appointment as liquidation trustee in Dec. 2008, Baker & Hostetler has agreed to a 10 percent “public interest” discount to its normal rates. For the current fee request, that shaved $4.5 million off the firm’s fees. Separate from the discount, the firm said it also wrote off another $1.7 million in fees on this request.