We haven't reported on the Plastech bankruptcy for some time. Well, they're still bankrupt. burning their way through a $45.15m line of credit (up $10m since we last checked). And they're still making parts for Chrysler, who is none-too-pleased about their inability to remove the tooling to make the plastic parts for the cars that they can't sell. Of course, you already know the big winner in this fiasco: the lawyers. Automotive News [AN, sub] reports that "The New York law firm Skadden, Arps, Slate, Meagher & Flom LLP on Tuesday, March 25, billed Plastech $1,002,674.50 in legal fees and $54,486.82 in expenses during the supplier's first month of Chapter 11 bankruptcy court proceedings, according to documents filed in U.S. Bankruptcy Court in Detroit." More specifically, "Skadden Arps billed Plastech for 1,835.05 hours of service at an average rate of $546.40 an hour. The $54,486.82 in expenses covered travel, printing, research and messenger fees, as well as meals for the Skadden Arps legal team." As AN points out, Skadden Arps is drinking small beer. "Supplier Federal-Mogul Corp., which emerged from more than six years of bankruptcy proceedings at the end of 2007, spent about $700 million, or $9.3 million a month, on bankruptcy related [legal] expenses."
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Stay in school, kids, learn your jurisprudence, and pass the bar. I was expecting at most $400 per hour, but $546.40 average??? I would love any job for that money :)
I’m not sure if this is current info but Skadden Arps has perenially been among the two or three most profitable law firms in the nation. Now you can see why.
@Joshvar:
Jurisprudence has nothing to do with it. Large law firms are about one thing, and only one thing: the billable hour. That is how much clients pay for an hour of your time.
Lawyers don’t keep that money, however.
Partners get paid per annum, most of the ones involved in this action are probably earning $1m per year. The people doing the actual work, about 2200 hour per year worth, are the young associates. While their $165,000 starting salary seems astronomical, when you do the math they are taking in $75/hour.
It’s a miserable life, even if you’re being compensated well to have someone scream at you while you look through boxes and make checklists of checklists. This ain’t no Clarence Darrow glory work.
Justin, That sound I hear is the world’s smallest violin. Many working people making much less than lawyers put up with much more. Lawyers deserve many things, but sympathy isn’t one of them.
Also, according to your 2200 hour/year number breaks down to 43 hrs/week with no vacation. I would suspect the number is higher.
“… Skadden … billed Plastech $1,002,674.50 …”
The important word here is billed. This is only the first round of negotiations, and if, Plastech hits the tubes, well so does the Skadden invoice.
Its getting worse for the lawyers, too. Used to be partnership meant security. Nowadays, even the partners are getting fired if they don’t produce enough.
If you hire a lawyer, check your bill closely. The hours are more likely than ever to be inflated. Pity the next poor jurist who tries to cheat me. I settled for a correction last time, next time I am going straight to the government.
Oh, wait, they are all lawyers, too. Shit, we are all screwed.
Jurisprudence has nothing to do with it. Large law firms are about one thing, and only one thing: the billable hour. That is how much clients pay for an hour of your time.
Lawyers don’t keep that money, however.
Partners get paid per annum, most of the ones involved in this action are probably earning $1m per year. The people doing the actual work, about 2200 hour per year worth, are the young associates. While their $165,000 starting salary seems astronomical, when you do the math they are taking in $75/hour.
It’s a miserable life, even if you’re being compensated well to have someone scream at you while you look through boxes and make checklists of checklists. This ain’t no Clarence Darrow glory work.
$75/hr? To shuffle through boxes and file paperwork?
Incredible.
@Jkross22:
I don’t pity those people. The point of my post isn’t that associates are underpaid (they are overpaid by a factor of 2). My point is that much like a UAW boss or GM CEO, the management gets millions of dollars just for being management.
As for the underlings, I went to law school with them, and I have very little respect for someone that derives their self worth from their bosses’ paychecks. People choose that profession so I have neither envy nor sympathy for them.
jkross22:Also, according to your 2200 hour/year number breaks down to 43 hrs/week with no vacation. I would suspect the number is higher.
It’s not. The key is that we’re talking about billable hours, which comprises roughly 1/2 of an associate’s time in the office.
The actual target for billable hours in a firm like Skadden is 2000-2500 per year (I don’t have Skadden’s actual bonus structure). While that means only 42 billable hours per week, actual time in the office is approximately twice that.
Most of my friends that work at AmLaw100 firms (the largest 100 firms in the US) are billing 2000-2500 per year and spend roughly 80-100 hours a week in the office, and weekend work is expected.
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Giant businesses trying to rip off customers… law firms, car dealerships, or auto manufacturers, it’s the same business model.
Stories like this Plastech one are why giant firms like this are going to go out of business in the next 30 years. Clients just won’t get ripped off anymore.
Legal fees have gone absolutely nuts in this country … and we wonder why our colleges are graduating more lawyers then they are engineers and scientists.
What engineer gets to bill out at over $500/hour?
Guess what, real engineering is harder to do than the paper pushing nonsense which fills the world of corporate law. Most of the lawyers could never have passed any upper division math or science courses to save their lives.
Taxes and Attorney Fees are superpriorities in Bankruptcy – a main reason why corporate bankruptcy law is a good paying profession.
jthorner:
I can assure you that corporate law involves much more than paper pushing. Even paralegals are much more than paper pushers nowadays. I can also assure you that lots of lawyers have done quite well in math and science. And money is not the only reason people choose law careers. The intellectual challenge and the opportunity to handle important matters are high on the list.
Ohh the vultures. This reminds me my small country, where copy-paste nation lives in an illussion that we don`t need hands for making bread, tables or buttwipes. that all we need is papers, dot coms and salesclerks or lawyers. Where everyone is proud, walking around in their Armanis with a presumably important folder. Where a person that cleans streets or works at school is considerd underdog, or not agile enough. Well, chinese have set an alarm buzzer, and it is going to set off pretty soon, those who wake up, will survive. No Genesis here.
Corporate lawyers doing “important work”.
HAH!
Corporate lawyers argue about what has already been created while taking huge fees for themselves. They don’t create a single useful thing. You cannot eat, sleep in, drive or otherwise actually use the end product of any attorney. Corporate lawyers look for ways to shield their paymasters from accountability and from competition while assuring the maximum possible dollar flow into the pockets of the masters and their loyal adjuncts.
The whole field of intellectual property law has in fact held back progress. One of the many reasons China is surging forward is that they value actual results over first-to-file paperwork chases.
The culture of maximizing your personal financial take which dominates the world of MBAs and corporate attorneys is part of the corrosion of American real productivity, community and joy.
Billing $500 + per hour to handle the routine BS of a bankruptcy filing is not defensible.
Delphi pays their bankruptcy lawyers $12 million per month. It’s easy to see why they want to get out from under both of them as fast as possible.