Welcome back to the Big Law Business column. I’m Roy Strom, and today we look at the fees Big Law’s racked up on major cryptocurrency bankruptcy cases. Sign up to receive this column in your Inbox on Thursday mornings.
Big Law’s bill for major crypto bankruptcies has so far run upwards of $600 million, and there’s no end in sight.
Major law firms to date have requested more than $567 million in six major crypto bankruptcies. The true figure is likely north of $600 million, since firms working on three of the six cases haven’t filed their bills with courts for some recent months.
The bankruptcy work and offshoot litigation from the crypto cases gave Big Law’s financial performance a significant boost in an otherwise stagnant year.
Bankruptcy practices achieved 4.4% year-over-year demand growth in 2023, according to data from Thomson Reuters Institute. That figure was the highest among any practice. Litigation ranked second with 3.2% growth.
The biggest winner will likely be Sullivan & Cromwell, which is working on only one crypto case: Sam Bankman-Fried’s doomed crypto exchange FTX Trading Ltd. The firm has billed more than $153 million from November 2022 through last November, according to court documents.
Sullivan & Cromwell’s work on the FTX case in 2023 will generate so much revenue that if the firm took no other work last year it would still rank among the 200 largest law firms in the country. The FTX case in total paid five major law firms $225 million through November, the latest month for which fee requests have been filed.
A decent estimate of the FTX case’s total legal fees through January is about $260 million, using the average monthly fees from three law firms (Sullivan & Cromwell, Paul Hastings and Quinn Emanuel) that have filed fee requests in the case each month since at least December 2022. Sullivan & Cromwell, for instance, has billed on average $11.8 million a month in the case.
While the FTX case is far from finished, it’s already blown away the other five major crypto bankruptcies in terms of how much work and fees it’s piled on law firms.
The other five bankruptcies are Celsius Network LLC, Genesis Global Holdco LLC, Voyager Digital Holdings Inc., BlockFi Inc., and Core Scientific Inc.
I reported last week that Kirkland & Ellis’ fees representing three of those companies—Celsius, Voyager and BlockFi—totaled $120 million. That number is roughly final, with all three cases having confirmed their Chapter 11 exit plan.
After Sullivan & Cromwell and Kirkland, White & Case has billed roughly $65 million, which is the third most fees among firms working on the crypto bankruptcies.
The firm had a tall order in its work on behalf of Celsius creditors, helping investigate the company’s former chief executive officer, Alex Mashinsky, who faces criminal fraud charges. In that case, the firm billed $50 million.
Through October, White & Case racked up another $14.6 million in fees in the Genesis case, where it represents the unsecured creditors committee. That case is ongoing.
Cleary Gottlieb Steen & Hamilton has billed nearly $44 million for its work representing crypto lender Genesis Global Trading.
That case has been complicated by litigation, including an effort by Genesis to obtain roughly $620 million in payments from its parent company, Digital Currency Group. Genesis was also sued by its former business partner, Gemini Trust Co., and faces lawsuits brought by the US Securities and Exchange Commission and New York state.
The bills law firms collect from crypto bankruptcies aren’t going to end any time soon.
Another crypto entity, Terraform Labs Pte., filed for Chapter 11 protection in Delaware this week. Weil Gotshal & Manges leads the case.
Plenty of people in the investing community have wondered what are the true “use cases” for crypto. Looks like the lawyers have figured at least one out.
Worth Your Time
On Sidley: Last year, I wrote about Sidley Austin’s restructuring practice. I noted the firm was advising six companies that could file Chapter 11 cases in the near term. Sidley represented two companies that filed cases in December: Software company Ebix and Impel Pharmaceutical. The firm this month advised cargo liner Amerijet International Airlines, Inc. in an out-of-court restructuring.
On SPACs: We wrote a lot about blank-check companies around here when they surged into a major Big Law business line. That time may forever be in the rearview mirror, with the SEC this week approving new rules that will drive up the legal risks and costs for those behind SPAC transactions, Bloomberg’s Lydia Beyoud reports. Some in the SPAC industry already fear it may doom the product.
On Harvard: The embattled school has added King & Spalding to its legal team for two probes by the House Education and the Workforce Committee, Bloomberg reports. The lawmakers are investigating antisemitism on campus as well as the university’s handling of plagiarism allegations against Claudine Gay-bsp-person>, who stepped down as Harvard president on Jan. 2.
That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.