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Weil's AIG Fees Could Exceed $25 Million, Filing Shows
The American Lawyer
June 25, 2009
AIG has no doubt been a boon to the coffers of the law firms advising the company throughout its divesture efforts. But how big of a boon has never come to light -- until now.
In a filing in the General Motors bankruptcy Tuesday (pdf), Weil, Gotshal & Manges disclosed that 3 percent of its revenue during the last 12 months came from AIG. The firm revealed the fees in the process of disclosing possible conflicts of interest in the GM bankruptcy.
Exactly what dollar amount that equals is unclear. But back-of-the-envelope math suggests the fees are at least $25 million to $36 million, if not more.
Here's the math. Weil's filing says Lehman Brothers made up 6.6 percent of its revenue in the last year. Weil has already submitted a $55 million bill for its work on the Lehman case between September 15 to January 31. A little cross multiplication, then, would put its AIG fees easily in excess of $25 million.
And that's erring on the low side since our calculation doesn't factor in what Weil earned in the months before Lehman melted down or its work since February. (Weil will likely file its next quarterly fee request next month.)
It also ignores Weil's 2008 revenues. Last year, it earned $1.23 billion, up 4.75 percent. Quick multiplication puts AIG fees at more than $36 million.
But again, that too likely undervalues the bill, since Weil's bankruptcy work is booming and the firm will probably close the year with higher revenue. In a March memo obtained by The American Lawyer, Weil said its "overall level of business has remained strong and is expected to remain strong when the economy 'normalizes.'"
AIG does not break out its legal fees in quarterly reports, but by now, SEC filings suggest, the sum reaches into the tens of millions.
From September through March, AIG has spent $274 million in exit expenses, according to its first-quarter report. AIG says those expenses are primarily consulting and other professional fees related to disposing assets, restructuring AIG's debt and capital with the Federal Reserve Bank of New York and Treasury Department, and unwinding the business and portfolios of its financial products division.
AIG says it expects to incur a total of $700 million in exit expenses.
A spokeswoman for AIG declined to comment or disclose the company's legal fees. Stephen Dannhauser, Weil's chairman, did not return a call seeking comment, and a spokeswoman was unable to find anyone at the firm who could comment.
In a March press release, Weil Gotshal says it has been "representing AIG in connection with the company's broad, ongoing global divestiture and restructuring program that has been highlighted by several recapitalizations led by the U.S. Department of the Treasury and the Federal Reserve."
The firm says it has worked with AIG since early 2008 to develop legal strategies to cope with the company's write-downs of credit default swaps. More recently, Weil advised AIG on its global divestiture and restructuring program.
The firm says it has developed a "customized crisis management team" consisting of lawyers from bankruptcy to litigation to M&A to structured finance to work with AIG and co-counsel to address the myriad of legal challenges facing the company.
Among the Weil lawyers advising AIG have been partners Michael Aiello, Matthew Gilroy, Marcia Goldstein, Joseph Allerhand, Robert Carangelo and Jason Smith.
AIG is also getting counsel from Sullivan & Cromwell, Simpson Thacher & Bartlett and Sidley Austin, among others. None of their fees are known.
In its GM filing, Weil Gotshal also disclosed the amount of revenue it gets from other clients: General Electric made up 3.2 percent; Thomas H. Lee Partners made up 2.7 percent; Microsoft Corporation consisted of 0.9 percent and Citigroup Inc. made up 1.1 percent.
Weil has already netted $54 million from GM pre-bankruptcy.
This article first appeared on The Am Law Daily blog on AmericanLawyer.com.
