The legal actions against Lehman total, by some estimates, 62,000 plaintiffs which have a total of $785 million in claims against the failed bank. The restructuring of the firm had already cost $642 million as of last month. One law firm, Weil Gotshal, was paid $150 million.
A court appointed investigator recently found, and described in a 2,200 page report, that the shuttering of Lehman was largely due to its own management, lack of accounting oversight by Ernst and Young, and the actions of several investment banks. These people and entities may be sued based on the report, but that will do nothing to mitigate claims against the firm itself.
The judge presiding over the Lehman bankruptcy and the thousands of plaintiffs who want a part of the assets that are still left from the collapse may find that the total value of those assets could be substantially eroded by the legal fees the bank must pay to defend itself. It is truly a process in which no one wins other than the lawyers.
Large attorney’s fees are inevitable in cases as complex as those against a huge financial institution that was there one day and gone the next. But, if the court does not put substantial caps on the fees Lehman must pay for its legal work, there will be nothing left but court case files that historians can look at to write the eulogy of the bank.
Douglas A. McIntyre
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