May 15, 2011
BRUCE A. BRENNAN BLOG FROM THE WORLD AND MY MIND
The news as I see it and the views as I want them.
May 15 is … National Chocolate Chip Day
This should be a good day for all of us; at least for most of us.
Osama bin Laden apparently sat around his hideout watching news videos of himself and pornography. He was just laying around the house with the remote in one hand and himself in the other. Do you think the girls in the porn movies were Muslims in full traditional Muslim dress or beautiful, naked non-Muslim women? The type he wanted to kill. It was probably all done in research.
Perhaps Friday the 13th is not unlucky for everyone. CNN reported on Friday May 13, 2011 that the various parties working on Bernie Madoff’s mess are requesting payment. They all have received previous payments. What does it cost to clean up after the biggest swindle ever? A lot.
The court-appointed lawyers working to recover money for victims of Bernard Madoff's Ponzi scheme want a judge to approve a $43.7 million legal bill, for work done over a recent four-month period. That is $43.7 million in fees for a four month period. What work is being done on other clients’ files? The fee request is seeking payment for only six hours of time in Court during the four month period. That likely kept the bill down since lawyers usually charge higher rates for time in Court.
Court-appointed trustee Irving Picard and his firm, Baker & Hostetler, submitted the bill to a U.S. bankruptcy court judge, who will decide whether to approve it on June 1. The documents reveal that the firm's lawyers were paid at an average rate of $437.89 per hour, while paralegals and library staff were paid a rate of $250 per hour, as they scoured the earth to recover money and assets stolen by Madoff. If a paralegal or library staffer works a forty hour week and gets $250.00 per hour, this gives that worker a weekly salary of $10,000.00 or $520,000.00 annually. Even if the law firm puffs the hourly rate for support staff by 100%, that still amounts to an annual salary for these clerk type positions of $260,000.00, with the law firm making the same amount for overhead.
All told, 285 lawyers and 66 paralegals and staffers worked on the case. This is in addition to the $128 million that has already been paid to the firm. The fees are paid from money collected from Wall Street firms by the Securities Investor Protection Corp.
For his part, Picard put in for $714,000. He has so far been paid $3.2 million for his work on the Madoff case. But Picard was not the highest paid lawyer. That distinction goes to the firm's chief counsel David Sheehan, who has requested $893,000. Documents filed by the firm say that Sheehan worked 1,075 hours during the four months that ended in January. His hourly rate: $830.45. That comes to an average of about nine hours a day, seven days a week -- Thanksgiving and New Year's included.
The documents provide some insight into the type of work the lawyers were doing. The lawyers spent 5,230 hours investigating hedge funds that fed funds to Madoff's scheme -- for which they were paid $2.6 million. They have requested another $1.7 million for the 4,266 hours they spent investigating the Madoff family. In December, Picard's firm sued Madoff family members and former employees of their tainted firm for $69 million, accusing them of benefiting from the Ponzi scheme. The lawyers are seeking more than $80,000 for the 146 hours they spent handling inquiries from the press. Court appearances, totaling a mere six hours during the four months, were worth $2,800 for the firm.
The judge is being asked to approve $1.1 million worth of expenses for Baker & Hostetler. The expenses run the gamut, from $74,000 for making copies to $248,000 in translation costs. The single biggest category was for out-of-town travel, worth $202,000. Business meals totaled nearly $54,000. Postage cost $1,500.
A spokeswoman for Baker & Hostetler intelligently declined to comment.
While the firm's bills might seem pricey, the pay scale at Baker & Hostetler is typical for New York lawyers, said David Paige, chief executive and founder of Sterling Analytics, which analyzes legal fees. "The rates do seem on the higher side, but not out of line for top firms," said Paige. Picard has spearheaded the recovery of about $10 billion worth of funds and assets that were lost in Madoff's massive fraud, which netted thousands of hapless investors. Another $10 billion in stolen money has yet to be recovered. The largest source of recovered funds is the$7.2 billion settlement agreement with Barbara Picower, widow of Jeffry Picower, who the trustee considers to be Madoff's biggest beneficiary. Picower died of a heart attack in 2009. Of the 16,518 investors who have filed claims with Picard's firm, he has recognized 2,414 claims as being eligible for compensation. The legitimate claims total nearly $6.9 billion, according to the trustee. This includes the approximately $800 million that has already been paid to the victims by SIPC.
Meanwhile, Madoff languishes at a medium security federal prison in Butner, N.C., where he is serving a 150-year sentence. Madoff was arrested in December of 2008 and pleaded guilty three months later to running the largest pyramid-style scheme in history.
I knew I should have gone to work in New York City. I also worked Thanksgiving and New Year’s, just not in New York City. I don’t understand how you can justify $830.45 per hour plus costs. I know the cost of living in New York City is high but you are getting your meals paid for and you work so much, allegedly, that you do not have time to lounge around in a $10,000.00 per month apartment. All of your work related expenses are paid for. That is called overhead and should be paid for out of the $830.45 per hour. That is how businesses operate. Why should I pay you a profit and pay you for the cost of doing business; that’s double-dipping.
I know or have met well over one hundred lawyers just as intelligent and as capable as the lawyers at this New York firm. Anyone of them would do this work for $200.00per hour and an office with a staff of three. It can be determined from the bills the firm is seeking payment for that support staff do the leg work and heavy lifting. You need a focused supervisor who can read to manage the staff. You should be able get a lot of qualified candidates for this job since they have already been paid $128 million, are seeking another $43.7 million and are not done yet. Additionally, other lawyers, investigators, state agencies, support staff, etc. are seeking and are being paid from the Madoff case. How much money, on a per cent basis, will the investor who lost money to the crook ever get back? At this rate, not much will be left.
Just a couple of thoughts I had.
BRUCE A. BRENNAN
DEKALB, IL 60115
COPYRIGHT 2011
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Book Titles:
Holmes the Ripper
A Revengeful Mix of Short Fiction
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