GETTING IN DEEP
Sears hit with $5M legal bill for 17 days’ work
Sears may be scrambling for cash, but its lawyers are making a mint.
The bankrupt retailer’s white-shoe law firm, Weil Gotshal & Manges, on Friday submitted its first bill in the Chapter 11 case: a whopping $5 million for 17 days of work.
Weil Gotshal partner Michael Bond, who bills at a rate of $1,600 an hour, racked up 88 hours for a two-week tab of $140,800 for his work alone. His colleague Garrett Fail, meanwhile, billed 216.03 hours for a total of $270,244.09, according to court filings.
In all, 80 attorneys and legal assistants billed Sears for 5,032 hours of labor, which amounts to about $312,000 a day, according to a Friday filing.
“It’s a staggering amount of money,” said bankruptcy attorney Eric Snyder of Wilk Auslander.
Particularly remarkable, he added, was that some 19 staffers who were either first-year lawyers or not yet admitted to the bar billed at hourly fees ranging as high as $920.
“What gives court fee examiners pause are the hourly rates of people who have no experience,” Snyder said.
Still, it was Weil Gotshal’s more-seasoned legal eagles — some 27 partners, with hourly rates ranging from $1,050 to $1,600 — that accounted for more than $2 million of the bill.
“The heavy reliance on part- ners is driving the fees up,” said bankruptcy attorney Stephen Selbst of Herrick Feinstein, who previously worked for Weil Gotshal. “But they must feel that they needed all those partners because this is a high-level crisis with a high level of complexity that the associates” are not up to.
Weil Gotshal and Sears didn’t respond to requests for comment.
By comparison, law firm Kirkland & Ellis, which represents Toys ‘R’ Us in its bankruptcy filed in September 2017, charged the toy retailer $6.5 million in its first bill, covering five weeks and 6,621 hours of labor.
The hefty fees for Sears will likely rankle its creditors, who went on record last month calling for the 125-year-old retailer to liquidate its stores entirely rather than keep it breathing as a smaller chain — which is what its chairman and largest shareholder, Eddie Lampert, is trying to do.
“The debtors are pursuing an unjustified and foolhardy gamble with other people’s money,” the group of creditors said in a court filing in November.
Lampert had no comment Monday.
Amid Sears’ fracas with its creditors, Weil Gotshal’s top partners, like Jacqueline Marcus, logged 148.2 hours at a rate of $1,375, submitting an eyepopping tab of $203,775.
Hourly rates for the big law firms began crossing the $1,000 threshold about a decade ago, said bankruptcy attorney David Wander of Davidoff Hutcher & Citron.
“These lawyers give up their lives for the next three to six months,” Wander said. “But the burn rate in this case is unbelievable.”
Legal fees in bankruptcy cases tend to be higher in the beginning, experts say, and Sears’ initial bill doesn’t necessarily mean it will be averaging $10 million a month during the reorganization.
Still, Weil Gotshal isn’t the only firm that’s billing. Paul, Weiss, Rifkind, Wharton & Garrison, which was retained to investigate “conflict matters,” just submitted a $1.4 million bill for the first 17 days of the bankruptcy.
“Everyone is filing motions and fighting,” Wander said. “The lawyers are just getting started.”