FTX lawyers leaving bankruptcy court, Delaware, November 2022 – Image: Sarah Silbiger/Bloomberg
The disaster of Sam Bankman-Fried’s FTX collapse is a boon for Sullivan & Cromwell, the Big Law firm that has a reported 150 lawyers working on the collapse of the crypto-empire.
Sullivan & Cromwell sit at no. 2 on LawFuel’s Big Law prestige law firm list.
At $2000 an hour, as shown in court filings, and with those on the big law salary scale charging out at between $800 and $1500 per hour, the likely legal costs around the FTX collapse is set to run into the hundreds of millions – making crypto -collapse millions for the law partners.
Bankman-Fried faces a slew of civil and criminal charges regarding the operation of his crypto empire, which saw many investment and banking organizations as well as regulatory authorities treating him as some kind of wunderkind crypto pioneer, following from different agencies following his arrest in the Bahamas in December.
Among the charges against Bankman-Fried are charges from the Securities and Exchange Commission claiming he had “orchestrated a year-long fraud” that concealed from investors the diversion of FTX customer funds to his crypto trading firm Alameda Research. The Commodity Futures Trading Commission accused Bankman-Fried of fraud and is also seeking civil penalties.
A Bloomberg report noted that Weil Gotshal pocketed nearly $500 million in the bankruptcy of Lehman Brothers after the 2008 financial crisis.
In addition to the Weil Gotshal windfall, Kirkland & Ellis in 2019 was awarded roughly $56 million for 15 months of work on the Toys “R” Us bankruptcy, while Eastman Kodak Co. paid $240 million in bills to advisers during its Chapter 11 reorganization, including more than $63 million for Sullivan & Cromwell on that bankruptcy.
“The professionals are going to do very well in FTX, just as the professionals have done very well in other big cases,” said Jonathan Lipson, a Temple University law professor told Bloombergs. “That’s the way the system has been developed.”
The court documents show that more than 100 Sullivan & Cromwell lawyers in the bankruptcy, regulatory and litigation practices worked at least 10 hours on the FTX case in November alone, which included 25 partners whose rates are $2,165 an hour.