Judge to Dewey & LeBoeuf: What’s Up With the $600 Associates?

[WSJ_law_blog]

An intriguing little spat has broken out between two law firms in the SEC’s lawsuit against WexTrust Capital, with Boston’s Sullivan & Worcester throwing stones at Dewey & LeBoeuf for allegedly running up some pretty high fees while serving as a receiver for WexTrust.

A little background: In August, the SEC sued WexTrust, alleging that company officials ran a Ponzi scheme (they’re big these days) that raised at least $255 million by targeting members of the Orthodox Jewish community. Here’s the Dow Jones story; here’s an earlier Law Blog post; and here’s a copy of the complaint. In its answer, WexTrust denied the allegations.

Immediately after the SEC sued, Manhattan federal judge Denny Chin froze WexTrust’s assets and appointed Dewey to serve as the receiver for WexTrust. Last month, Dewey submitted an application to collect compensation and expenses for the first twenty or so days it served as receiver. Dewey’s tab? Approximately $2.2 million.

But G&H Partners, which is one of the larger victim-creditors in the receivership and represented by Sullivan & Worcester, objected to the request. Yesterday, Judge Chin, in a polite and judicious order, asked Dewey to provide a bit more information on its fees:

It is difficult to evaluate the reasonableness of the hourly rates for most of the lawyers listed. For example, [five attorneys] — all simply described as “Associate” — have substantial hours billed at hourly rates of, respectively, $605, $605, $550, $605, and $605. Without knowing anything about their backgrounds, it is difficult for the Court to determine whether the requested hourly rates are reasonable. While I do not need descriptions of the backgrounds for all the lawyers, it would be helpful to have them for the lawyers who spent substantial amounts of time of these matters.

While I accept the representations that the requested hourly rates are D&L’s standard hourly rates for the individuals involved, I wonder whether the rates are high for legal services rendered in connection with a securities receivership proceeding. Is it reasonable to bill at hourly rates of $700 to $950 to $950 for partners and $425 to $550 to $605 for associates in the context of a securities receivership? Is it reasonable to bill at hourly rates of $285 for summer associates & $175 to $275 for paralegals? Have courts in other receivership cases awarded fees applying such rates?

Dewey & LeBoeuf declined to comment.

LB Readers: Is $425-$605 the going rate for an hour of a big law-firm associate’s time? Is it “reasonable”?