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New York - Madoff Legal Fees Could Reach $250 Million

Published on: August 4, 2009 09:10 AM
By:  NY Post
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Irving H. Picard, at the head of the table, with members of his legal team overseeing the claims for victims in the Madoff fraud. [J.B. Reed for The New York Times]Irving H. Picard, at the head of the table, with members of his legal team overseeing the claims for victims in the Madoff fraud. [J.B. Reed for The New York Times]

New York - Angry victims of convicted Ponzi schemer Bernie Madoff are up in arms over as much as $250 million in legal fees they claim will be paid to Irving Picard, the court-appointed trustee overseeing the break-up of the fraudster’s fake investment firm.

The victims, who claim they are being treated unfairly by Picard and the Securities Investor Protection Corp. (SIPC), the body set up to provide insurance for victims of securities fraud, are set to air their grievances in New York Bankruptcy Court on Thursday.

Chief among their complaints are the massive legal fees Picard and his firm, Baker & Hostetler, are charging. So far, the firm has claimed more than $15 million, or around $1 million a week, in fees for 3½ months of work. Picard believes it could take as long as five years to settle all Madoff claims, which means his firm could reap at least $250 million from the bankruptcy.

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If approved by the bankruptcy court, those fees will be paid out of SIPC’s coffers. The victims claim in court papers filed last night that the money being claimed by Picard is rightfully theirs.

Neither Picard, nor Stephen Harbeck, CEO of SIPC, returned calls.

“It is unconscionable that SIPC should be squandering potentially hundreds of millions of dollars when it doesn’t even have enough money to compensate all the victims who have filed a claim,” said Helen Davis Chaitman, a lawyer representing more than 100 Madoff victims in the case.



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Read Comments (25)  —  Post Yours »

1

 Aug 04, 2009 at 08:17 AM Anonymous Says:

Picard and his colleagues at BH have done a brilliant job at sorting out the most complex ponzi scheme in history and recovering more money than anyone initally thought was possible. These "victims" groups should be grateful to him and stop whining about his fees. They are the normal and reasonable fees charged for this type of work and will have to be approved by a judge before they are paid out. He is not doing this work pro bon or as a charitable contribution. If the victims know where more money is hidden, they should come forward. If not, be thankful you are getting anything.

2

 Aug 04, 2009 at 08:41 AM ShatzMatz Says:

As is always the case in these kinds of situations, the only ones to walk away winners are the lawyers. The same is true for protracted divorce cases, class action lawsuits and especially bankrupcies.

The actual victims usually get the short end of the stick while the lawyers laugh all the way to the bank.

It's just how our litigation system works. No one has come up with a better system yet.

3

 Aug 04, 2009 at 08:46 AM Anonymous Says:

these lawyers keep up the whole criminal system

4

 Aug 04, 2009 at 08:57 AM Anonymous Says:

Lawyers are sharks.

5

 Aug 04, 2009 at 09:23 AM Anonymous Says:

Reply to #3  
Anonymous Says:

these lawyers keep up the whole criminal system

If you check the facts of this case, the lawyers from Baker are doing this work at a substantial discount from their normal billing rates which for partners typically run between $700-$950 per hour depending on seniority.

6

 Aug 04, 2009 at 09:39 AM misterzee Says:

judge chinn is a tryant and a dictator what he says go,but in the wexfraud case he did cut fees quite allot.the question is why not give the deal to a bidding process,why not cap it,why do we pay for first class travel,5 star hotel and meals for these guys.and picard may have found a billion maybe some other firm would have found 2 billion.lawyers should be pad like the judges,whom i doubt get 700 dollars an hour as that would work out to 28k a week,take down overhead it is still a fortune

7

 Aug 04, 2009 at 09:58 AM Anonymous Says:

1 million dollars a week is a little fishy. Do the math: even if the average lawyer on the case charged 500 dollars an hour (unlikely in a case this scrutinized, especially taking junior associates into account), that amounts to the equivalent of fifty lawyers working full time on this case alone (1,000,000/500 = 2000/40 = 50) , and all from one firm.

I don't think even Enron got that treatment.

8

 Aug 04, 2009 at 10:57 AM Denny Craine Says:

Why the need for such a high powered legal firm to handle this? A bit like the surgeon general doing veterinary autopsies lehavdil. Let the $80,000 per year junior prosecutor handle this.

9

 Aug 04, 2009 at 11:15 AM Anonymous Says:

Reply to #8  
Denny Craine Says:

Why the need for such a high powered legal firm to handle this? A bit like the surgeon general doing veterinary autopsies lehavdil. Let the $80,000 per year junior prosecutor handle this.

A low level prosecutor wouldn't know where to start...sorting out the frauduelent distirbutions through multiple feeder funds and the associated clawback issues as well as the SIPIC issues are a highly specialized body of law. Some of the investors in the Madoff funds are upset that under the law they have limited recovery options and are blaming Picard rather than their own stupidity for not doing adequate due dillegence and their greed for "investing with Bernie" rather than more conservative investment options. Anyone who believes a "guaranteed" 12 percent annual return over a 15 year period is about as dumb as they get. And we know many well known and smart investors were duped by their greed

10

 Aug 04, 2009 at 11:23 AM Anonymous Says:

Reply to #2  
ShatzMatz Says:

As is always the case in these kinds of situations, the only ones to walk away winners are the lawyers. The same is true for protracted divorce cases, class action lawsuits and especially bankrupcies.

The actual victims usually get the short end of the stick while the lawyers laugh all the way to the bank.

It's just how our litigation system works. No one has come up with a better system yet.

As always, lawyers & doctors are the only two professions living off the misery of the common people. Its horrendous how these lawyers can charge those outrageous amounts of $800 & up per hour considering how many victims have lost a hugh amount of money. By the way, the first post sounds like a shill lawyer working for Picard.

11

 Aug 04, 2009 at 11:45 AM Anonymous Says:

Reply to #10  
Anonymous Says:

As always, lawyers & doctors are the only two professions living off the misery of the common people. Its horrendous how these lawyers can charge those outrageous amounts of $800 & up per hour considering how many victims have lost a hugh amount of money. By the way, the first post sounds like a shill lawyer working for Picard.

What does the amount of money "lost" by the victims have to do with how much a lawyer should charge to recover whatever funds are left?? I would think just the opposite..the larger the theft and scope of the fraud, the more complicated the task of analysis and recovery and the more experience (and expensive) the the lawyer must be. If your child was seriously ill with a rare disease, would you look for the cheapest surgeon or the best, without regard to cost. These lawyers and doctors are able to charge what they do because they have studied for years and worked for decades to gain their experience and right to charge "exhorbitant fees".

12

 Aug 04, 2009 at 11:39 AM Moshe Says:

Reply to #10  
Anonymous Says:

As always, lawyers & doctors are the only two professions living off the misery of the common people. Its horrendous how these lawyers can charge those outrageous amounts of $800 & up per hour considering how many victims have lost a hugh amount of money. By the way, the first post sounds like a shill lawyer working for Picard.

Lawyers and doctors are professionals often with Ivy League educations. They can charge what the market will bear - just like the diamonds on 47th.

13

 Aug 04, 2009 at 11:38 AM Anonymous Says:

Reply to #9  
Anonymous Says:

A low level prosecutor wouldn't know where to start...sorting out the frauduelent distirbutions through multiple feeder funds and the associated clawback issues as well as the SIPIC issues are a highly specialized body of law. Some of the investors in the Madoff funds are upset that under the law they have limited recovery options and are blaming Picard rather than their own stupidity for not doing adequate due dillegence and their greed for "investing with Bernie" rather than more conservative investment options. Anyone who believes a "guaranteed" 12 percent annual return over a 15 year period is about as dumb as they get. And we know many well known and smart investors were duped by their greed

Correct, but that should'nt give the right for the lawyers of Picard to charge so outrageously for their "guaranteed" payout.

14

 Aug 04, 2009 at 12:17 PM Anonymous Says:

Reply to #12  
Moshe Says:

Lawyers and doctors are professionals often with Ivy League educations. They can charge what the market will bear - just like the diamonds on 47th.

Not when these two professions are regulated like a monopoly. The amount of lawyers and doctors who graduate are controlled by the ABA & AMA to keep their fees very high. That's what put this country into the worst recession since the depression. Unregulated greed breeds resentment and eventually collapses of its own inertia. There is no such thing as pure capitalism just like there is no such thing as pure socialism. The best system is regulated capitalism when its applied evenhandedly. When some special interest groups like doctors & lawyers or the financial sector gets preferential treatment and laws, that breeds resentment from other groups and tilts the system of undue compensations unfairly towards the preferred groups. By the way, Bill Clinton, the liberal, was the one who relaxed the regulations for investment bankers that led us to the currrent recession.

15

 Aug 04, 2009 at 12:23 PM Anonymous Says:

Reply to #11  
Anonymous Says:

What does the amount of money "lost" by the victims have to do with how much a lawyer should charge to recover whatever funds are left?? I would think just the opposite..the larger the theft and scope of the fraud, the more complicated the task of analysis and recovery and the more experience (and expensive) the the lawyer must be. If your child was seriously ill with a rare disease, would you look for the cheapest surgeon or the best, without regard to cost. These lawyers and doctors are able to charge what they do because they have studied for years and worked for decades to gain their experience and right to charge "exhorbitant fees".

Don't you think it's unseemly for the "best" doctor to charge whatever he can get away with because he or she knows that the seriously ill person will pay any price to live?? It's a disgusting way to make an outrageous living, if you ask me...

16

 Aug 04, 2009 at 12:49 PM ESQ Says:

Reply to #11  
Anonymous Says:

What does the amount of money "lost" by the victims have to do with how much a lawyer should charge to recover whatever funds are left?? I would think just the opposite..the larger the theft and scope of the fraud, the more complicated the task of analysis and recovery and the more experience (and expensive) the the lawyer must be. If your child was seriously ill with a rare disease, would you look for the cheapest surgeon or the best, without regard to cost. These lawyers and doctors are able to charge what they do because they have studied for years and worked for decades to gain their experience and right to charge "exhorbitant fees".

The outrageous fees are aimed at these firms' usual clients: Fortune 100 companies and, in some cases, extremely high net worth individuals. It does not follow that a judge in bankruptcy, who can control the rates charged by the lawyers, should be paying those fees at the expense of the victims.

I know that some people would argue that it's necessary in order to get these firms to do the work, but the fact is that in this economy nothing could be further from the truth. Many high priced lawyers are sitting on their hands and the ones that are working are constantly dealing with demands from blue chip clients to drastically slash their fees (and are complying). The dirty little secret in the high-priced firms these days is that the bankruptcy work is the best paying in town. It's the only work that they are fully paid for. Believe me, I am there and I know.

17

 Aug 04, 2009 at 01:32 PM Anonymous Says:

Reply to #14  
Anonymous Says:

Not when these two professions are regulated like a monopoly. The amount of lawyers and doctors who graduate are controlled by the ABA & AMA to keep their fees very high. That's what put this country into the worst recession since the depression. Unregulated greed breeds resentment and eventually collapses of its own inertia. There is no such thing as pure capitalism just like there is no such thing as pure socialism. The best system is regulated capitalism when its applied evenhandedly. When some special interest groups like doctors & lawyers or the financial sector gets preferential treatment and laws, that breeds resentment from other groups and tilts the system of undue compensations unfairly towards the preferred groups. By the way, Bill Clinton, the liberal, was the one who relaxed the regulations for investment bankers that led us to the currrent recession.

Either you are making a bad attempt at a joke or you are truly living in a world only you can visualize, We have more lawyers in this country per capita than any other industrialized society. The ABA has nothing to do with how many kids go to law school. The AMA does have somewhat greater leverage on med school grads but that has little to do with the reality that the best doctors will always charge obscene rates for their sevices. .

18

 Aug 04, 2009 at 01:30 PM Anonymous Says:

Reply to #16  
ESQ Says:

The outrageous fees are aimed at these firms' usual clients: Fortune 100 companies and, in some cases, extremely high net worth individuals. It does not follow that a judge in bankruptcy, who can control the rates charged by the lawyers, should be paying those fees at the expense of the victims.

I know that some people would argue that it's necessary in order to get these firms to do the work, but the fact is that in this economy nothing could be further from the truth. Many high priced lawyers are sitting on their hands and the ones that are working are constantly dealing with demands from blue chip clients to drastically slash their fees (and are complying). The dirty little secret in the high-priced firms these days is that the bankruptcy work is the best paying in town. It's the only work that they are fully paid for. Believe me, I am there and I know.

You are detached from reality. The busiest lawyers right now are those doing exactly what Picard is doing, i.e. working on restructurings, bankruptcies, etc. Why would they want to do work at substantially discounted rates when they already have plenty to do.

19

 Aug 04, 2009 at 01:59 PM Anonymous Says:

The same ehrleche yiddin who complain about Obama's interference with the private sector and health insurance seem to be the same ones who scream about lawyers and doctors making too much money. You can't have it both ways.

20

 Aug 04, 2009 at 04:00 PM Anonymous Says:

Reply to #17  
Anonymous Says:

Either you are making a bad attempt at a joke or you are truly living in a world only you can visualize, We have more lawyers in this country per capita than any other industrialized society. The ABA has nothing to do with how many kids go to law school. The AMA does have somewhat greater leverage on med school grads but that has little to do with the reality that the best doctors will always charge obscene rates for their sevices. .

The ABA and AMA may not directly control the number of lawyers or doctors that are produced in the US each year. However, as monopolistic organizations, they control the industry by virtue that no other organizations competes against them. And because they are very wealthy organizations due to the wealth of their memberships, they have an inordinate amount of leverage and influence on the politicians who make the laws benefitting these ganovim. It's not by accident that most politicians are lawyers and will make laws allowing unrestricted compensation for their own kind...

21

 Aug 04, 2009 at 03:52 PM ESQ Says:

Reply to #18  
Anonymous Says:

You are detached from reality. The busiest lawyers right now are those doing exactly what Picard is doing, i.e. working on restructurings, bankruptcies, etc. Why would they want to do work at substantially discounted rates when they already have plenty to do.

I don't think I'm the one detached from reality. If you think that all of these "bankruptcy lawyers" working on these bankruptcies for big firms were bankruptcy lawyers two years ago, you are sadly mistaken.

Law firms are throwing scores of underutilized corporate lawyers into bankruptcy practice and will take any work they can get. Some of these people may be among the"busiest lawyers", as you say, but weren't all that busy a few weeks ago. There is no lack of manpower that could not be readily remedied at these large firms.

It's also true that the bankruptcy lawyers are highly compensated now, but that's precisely because they extract so much from the bankruptcy estate. Are high priced lawyers charging anything like those rates in other practice areas right now?

Absolutely not.

If these bankruptcy cases were open to bidding, would the lawyers be making this kind of money?

Didn't think so.

22

 Aug 04, 2009 at 04:09 PM CLUE Says:

Reply to #1  
Anonymous Says:

Picard and his colleagues at BH have done a brilliant job at sorting out the most complex ponzi scheme in history and recovering more money than anyone initally thought was possible. These "victims" groups should be grateful to him and stop whining about his fees. They are the normal and reasonable fees charged for this type of work and will have to be approved by a judge before they are paid out. He is not doing this work pro bon or as a charitable contribution. If the victims know where more money is hidden, they should come forward. If not, be thankful you are getting anything.

Are you kidding? at $300,000 an attorney they have put in 50 attorney years on this case in less than 4 months. If we assume they actually worked for four months they would have had to have 150 attorneys working around the clock to justify this fee. Give me a break. What have they done that any firm of reasonably bright attorneys could not have done?

This is actually an easy case where there is no question of liability and no risk.


23

 Aug 04, 2009 at 04:03 PM Aryeh Says:

Okay, it takes a brain to sort through the repayment, but honestly, is there actually anything left to pay these people aside from the change in the Louis XIV sofa?

24

 Aug 04, 2009 at 08:06 PM Anonymous Says:

Reply to #22  
CLUE Says:

Are you kidding? at $300,000 an attorney they have put in 50 attorney years on this case in less than 4 months. If we assume they actually worked for four months they would have had to have 150 attorneys working around the clock to justify this fee. Give me a break. What have they done that any firm of reasonably bright attorneys could not have done?

This is actually an easy case where there is no question of liability and no risk.


Obviously you are not a "very bright attorney" or you would realize that most of the fees were not charged by Picard and the lawyers at Baker but the forensic accounting experts they retained.

25

 Aug 05, 2009 at 02:59 PM Anonymous Says:

Reply to #24  
Anonymous Says:

Obviously you are not a "very bright attorney" or you would realize that most of the fees were not charged by Picard and the lawyers at Baker but the forensic accounting experts they retained.

I'm sure as one hand washes the other, the forensic accountants that Baker retained kicked back a lot of their fees to Baker itself. It's only natural when doing this type of incestuous business between acountants and lawyers.

26

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