The attorneys and professionals in the Weinstein Co. bankruptcy case have received $26 million in fees thus far, considerably more than the $17.1 million that Harvey Weinstein’s victims will receive.
The legal bills are still coming in, and will likely exhaust the $3.3 million remaining in the company’s accounts, according to testimony from Robert Peck, the company’s former controller.
The fees represent a sizable chunk of the cost of resolving the case, but have received far less attention than the payouts to other stakeholders.
Last Monday, U.S. Bankruptcy Judge Mary Walrath approved a $35.2 million settlement, which includes the $17.1 million fund that will be paid out to more than 50 of Weinstein’s sexual misconduct accusers. The plan, which is funded by insurance policies, will also pay $9.7 million to cover defense costs for Weinstein Co. directors and officers, and $8.4 million to the company’s trade creditors, including law firms and other entertainment companies.
The women with the most serious allegations — rape or sexual assault — will be paid something in the range of $500,000 to $1 million. While not insignificant, that is much less than they would receive if the company were solvent. Likewise, the trade creditors will get just a small fraction of what they are owed.
But under bankruptcy law, the lawyers and professionals who worked on the case will be paid close to the full amount billed. Experts in the field said they were not surprised by the fee amount.
“Is it a staggeringly high number? Absolutely,” said Nancy Rapoport, a law professor at the University of Nevada, Las Vegas. “Does it shock me for a big case? Absolutely not.”
Lynn LoPucki, a law professor at UCLA, has tracked fees in bankruptcy cases for decades, and waged a lonely battle to try to rein them in. Asked about the Weinstein Co. fees, he said, “They’re high. They are high in all bankruptcy cases, because there’s no one controlling them.”
Cravath, Swaine & Moore, the debtor’s lead counsel, has billed more than $12.4 million in fees and expenses. Paul Zumbro, the firm partner who has done most of the talking in Delaware bankruptcy court, has billed the debtor at the rate of $1,725 an hour — a substantial hike from the $1,360 an hour he was billing when the case began nearly three years ago. In total, Cravath has billed more than $12.4 million in fees and expenses.
The relationship between Cravath and the Weinstein Co. dates from before the company’s collapse. In 2017, two Cravath attorneys — Karin DeMasi and Evan Chesler — represented the company in a distribution dispute. The firm continued to represent the company in litigation against Harvey Weinstein after he was fired in October 2017.
Richards, Layton and Finger, based in Wilmington, was brought in to represent the company as “local counsel” in the Delaware bankruptcy court. That firm, which advertises itself as Delaware’s largest, has billed another $4.4 million. And Pachulski Stang Ziehl & Jones has billed more than $4.8 million to represent the committee of unsecured creditors, which included three trade creditors and two sexual misconduct claimants.
Debra Grassgreen, a senior partner at Pachulski Stang who billed at the rate of $1,095 an hour, told the court at the confirmation hearing that she had had emotional conversations with many of the women. She argued that the settlement was best deal the victims were likely to get.
“These women need closure,” she said.
But the opponents of the deal argued that it offered protection to Weinstein and his cohorts, who otherwise could face civil liability for allegations that they enabled his abuses. The settlement bars anyone — even those who opposed the bankruptcy plan — from suing Weinstein Co. board members Bob Weinstein, Tarak Ben Ammar, James Dolan, Richard Koenigsberg, Marc Lasry, Lance Maerov, Jeff Sackman, Tim Sarnoff, Paul Tudor Jones, and Dirk Ziff. It also protects ex-Weinstein Co. employees Frank Gil, David Glasser, and Barbara Schneeweiss from liability.
The deal also also offers accusers a powerful inducement to settle their claims against Weinstein. A claims examiner will review each woman’s allegations and divide up the victim’s fund based on a point scale. But in order to get the full amount, the accusers must relinquish any civil claims against Harvey Weinstein. If they refuse, they will forfeit 75% of the award.
The objectors argued the deal granted Weinstein the benefit of discharging a liability, without forcing him to declare personal bankruptcy or forfeit his own assets.
“They’re effectively protecting Harvey Weinstein. That’s what the whole bottom line in this situation is,” LoPucki said. “Why is the bankruptcy court protecting Harvey Weinstein? Harvey’s not in bankruptcy. Why is he getting the same benefits he would get if he did file bankruptcy?”
Subscribe to Variety Newsletters and Email Alerts!
Source: Read Full Article