Who says there are no vibrant sectors in the U.S. economy? Bloomberg News reports that bankruptcy lawyers are setting new records for hourly fees, with the current champ–Kirkland & Ellis, Clinton special prosecutor Ken Starr’s firm–whacking clients for $1,110 an hour:
Professionals’ fees in bankruptcy cases are growing at four times the rate of inflation, estimated Lynn LoPucki, a professor of bankruptcy law at the University of California, Los Angeles. Total fees paid for lawyers, accountants and other professionals in bankruptcies from 1998 to 2007 doubled, while the consumer price index rose about 25 percent, he said.
“As the economy gets worse, the bankruptcy lawyers are charging more,” LoPucki said. “It seems that each month one sets a new record for hourly billing rates. $1,110 is, to my knowledge, a record for the debtor’s bankruptcy counsel.”
Creditors, meanwhile, are doing markedly less well. The average lender recovery at this point is 35 cents on the dollar, down 10 percent from the average recovery rate during previous recessions.
Some industries exist primarily to provide busines for turnaround firms and bankruptcy attorneys. I am thinking in particular of the airline industry.