FTX’s legal team is poised to reap millions from the ongoing FTX bankruptcy case. With the trial set to take place in October 2023, the team has under eight months to sort out the issue. The process is expected to take a lot of time and money, all at the expense of the investors.
Are these average market rates?
According to Bloomberg Law’s Jan. 27 report, Sullivan & Cromwell comprises 150 attorneys and 30 partners. In a court document cited, the partners’ hourly pay rate stands at $2,000.
The associates will earn from $810 to $1,475 per hour. As such, fees in the FTX case are anticipated to total hundreds of millions of dollars before the firm’s bankruptcy inquiry is complete.
Sullivan & Cromwell contended in a court statement that their suggested rates are in line with market rates of other top law firms. They represent a saving over the rates charged in non-bankruptcy cases.
The firm began working with the now-defunct marketplace in 2021. Sullivan & Cromwell would earn about $8.6 million over the next 16 months while consulting for FTX.
According to Jonathan Lipson, a law professor at Temple University, the fees are justifiable if the lawyers can assist in recovering money from FTX. He adds that the question should be on performance in the case and not on the cost.
High demand for crypto bankruptcy lawyers
When asked about the expertise of lawyers in the cryptocurrency sagas, Jonathan Lipson affirms that the lawyers are up to the task. He believes lawyers will do well even in the cryptocurrency space.
Using an example of the U.K.’s law firm Weil Gotshal which earned close to $500 million in fees from the 2008 Lehman Brothers bankruptcy, he believes this case isn’t different.
The 2022 crypto winter saw a record number of bankruptcies. Some affected crypto firms include Genesis Global Trading, Celsius Network, and Voyager Digital. As a result, bankruptcy professionals have been in high demand.