Good Work, If You Can Get It

Bernie Madoff was so terribly evil that no less than 150 years in prison would be enough to right the wrong done his victims.  And what about those victims?  They’ve got Irv Picard on their side, the court-appointed trustee doing God’s work to make sure that each and every victim of Madoff’s scheme gets back what they lost, right?  Well, kinda.

From Bloomberg :

The trustee liquidating Bernard Madoff’s investment company won court approval of a $14.7 million bill for four months’ work by his law firm, overcoming challenges from victims.

The payment to trustee Irving Picard and his firm, Baker & Hostetler LLP was approved today by U.S. Bankruptcy Judge Burton Lifland in New York. Some victims argued that Picard isn’t paying Madoff clients fast enough and is wasting money that should go to them.

“Nothing has been shown that this trustee is not acting in good faith,” Lifland said. “Many of the objections are based on the assumption that granting fees here affects the amount to be distributed; that isn’t the case.”

Now let me crunch those numbers a bit.  $14.7 million for 4 months work times one team of lawyers equals one damn fine payday. While Judge Lifland may be correct in concluding that Picard isn’t acting in bad faith, it’s hard to follow his reasoning that draining $14,.7 million from the pool of available assets to distribute to the victims doesn’t matter.  Did he miss that day in Economic 101 where they explained the allocation of scarce resources?

So if Picard managed to amass more than $3.6 million in legal fees per month, though the number of lawyers on his team is unknown, one has to wonder why?  Granted, he’s probably really good at handling billing, and there’s no doubt that every B&H partner needs a few associates trailing behind them to carry their bags and open doors, while victims lose their houses.  So what did Picard to rack up these kinds of fees?

The amount covers Picard’s work from Dec. 15 to April 30. The trustee and the law firm argued the fees were justified by their recovery of $1.08 billion for victims as of June 30 and their filing of complex lawsuits against the con man’s biggest investors seeking about $14 billion more in damages.

Recovering $1.08 billion sounds pretty good, but for the most part it was just picking up loose change on the floor.  As for filing “complex lawsuits,” preparing complaints really isn’t heavy lifting either.  And once he’s done the first one, others demand little more than changing the names. 

Even if Picard is putting in hundred hour weeks, and has a dozen lawyers on his “team” all of whom are putting in 100 hour weeks, that nets out an hourly fee of $656 per lawyer.  While I can’t imagine that he’s got that many lawyers on the team, or that they are all working hundred hour weeks, or that they would have an average hourly billing rate at the very tippy-top of the scale of $656, that’s what Lifland approved. 

Wait, you say.  Greenfield, you doofus, what about expenses?

Picard has said 20 percent of the firm’s fee will be deferred until the Madoff brokerage has been liquidated. His law firm said it made a voluntary reduction of more than $111,000 by not charging for intra-office expenses including lodging, meals, airfare and other transportation.

It’s not like Picard is heartless.  The man is nearly a saint, suffering for the good of the victims.  But he does have to pay the lease on the Maybach, and it’s not like Irv’s kids don’t need new shoes.  Really nice new shoes.

The victims, in the meantime, are complaining that they aren’t seeing much out of the whole magillah, and up to now, those who haven’t agreed with Picard about how much they’ve lost had the screws put to them by being denied any payouts.  But Irv has seen the light on that count as well.

Picard yesterday changed his procedure for paying as much as $500,000 to victims, dropping a requirement that blocked payments to investors who disputed his calculation of their claims. Under the new plan, undisputed sums will be paid promptly and the disputed portions will be dealt with later.
No longer will acquiescence with Irv’s assessment be extorted by the refusal to pay undisputed claims, at least to the extent that any claims are being paid by pennies on the dollar.  I told you he was nearly a saint.

Of course, we’ve barely touched the subject of clawbacks, for those victims who manages to pull back their investments before the house of cards fell.  Just wait until Picard starts to exact his revenge for their lack of greed or simple sound personal judgment, ripping mortgage and college tuition payments from the grasp of retirees.  It’s going to be painful and difficult work for the trustee. 

Anybody want to guess how much he’s going to charge for that bit of litigation?

Answer:  It won’t matter, because Judge Lifland will approve it.  At least Bernie won’t miss another meal in what’s left of his life.

4 thoughts on “Good Work, If You Can Get It

  1. John R

    Maybach? I would trade any Maybach on the planet for a drive around the block in your sublime Austin Healey.

  2. SHG

    Me too, but then I’m just a working stiff so it’s not like I would be able to appreciate the finest things in life like Irv Picard.

  3. David Giacalone

    Thanks for covering this turf in the absence of Prof. Yabut from the blawgiverse. I, too, wonder how paying the fees to the trustee doesn’t reduce the pie (cake crumbs) left for the victims. Maybe one of the Bar’s many defenders of high law fees will explain this for us.

  4. SHG

    This is unconfirmed, but I hear that Picard is considering opening up a debt consolidation practice at B&H and offering the service to Madoff victims in lieu of payments.

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