It’s been nearly a decade since Irving Picard was appointed trustee of the funds recovered for victims of Bernard Madoff’s massive Ponzi scheme. The matter is still generating payouts for victims and Baker & Hostetler, where Picard is a partner in New York.
Last month, a federal judge approved a nearly $36 million payment for four months of work by the firm, bringing Baker & Hostetler’s total fees for the matter to just shy of $925 million.
This week, Picard also reached the largest settlement related to the dissolution of Bernard L. Madoff Investment Securities LLC (BLMIS) since 2011—a $687 million payout from an Irish investment firm that will bring the total recovery for Madoff victims to about $12.7 billion, or about 72 percent of the $17.5 billion that Picard states that Madoff’s investors lost.
The settlement this week with Thema International Fund plc amounts to 100 percent of the money the Dublin-based fund received from BLMIS for six years prior to the New York fraudster’s collapse, Picard said in a court filing. It will raise the fund for victims by 5.7 percent.
Meanwhile, the Madoff matter has managed to bolster Baker & Hostetler’s finances for years.
The firm’s gross revenue has grown 15 percent since fiscal 2008, the year before the start of its Madoff work. Profits per partner at the Cleveland-based Am Law 100 firm rose to $965,000 last year, up 42 percent from 2008. And revenue per lawyer, at $700,000 last year, is up 22 percent since 2008.
Compared to its Am Law 100 peers, Baker & Hostetler has risen to No. 78 from No. 98 in revenue per lawyer for fiscal 2008. The firm’s profits per partner ranking last year was No. 76, up from No. 96 almost a decade ago. Baker & Hostetler’s partner profit numbers are somewhat difficult to compare over that timeframe, however.
Last year the firm restructured its partnership to provide some equity to all partners, which resulted in a slight uptick in the profits per partner metric by lowering the number of “equity partners” under The American Lawyer’s definition. An equity partner is someone who receives 100 percent of compensation from shares in a law firm.
As of last year, Baker & Hostetler had 142 full equity partners and another 216 who receive between 10 percent and 40 percent of their compensation from the firm’s profits.
The latest payment to Baker & Hostetler in the BLMIS matter is for 68,341.3 hours worked by its lawyers, including 24,539.7 by partners and of counsel and 43,801.6 by associates. The team bills at a blended rate of $515.81, with the highest hourly rates being the $998 earned by Picard and partners David Sheehan and David Rivkin. Those rates, along with all others, are then discounted 10 percent.
Picard and Baker & Hostetler are not paid from the Madoff victims’ fund, but rather from the Securities Investor Protection Corp. In June, Picard’s team reached two other settlements totaling about $370 million, bringing the total recovery for victims in the past four months to over $1 billion.
“The Thema International settlement is the latest in a series of highly successful negotiations and mediations,” said a statement by Baker & Hostetler partner Oren Warshavsky, who along with Sheehan joined the firm’s New York office in 2008 from Troutman Sanders.
Sheehan’s hire, as previously noted by The American Lawyer, proved to be a critical factor in Baker & Hostetler getting the call for its Madoff work. Sheehan had previously worked with Picard at another firm, and when Picard was appointed liquidation trustee for BLMIS in late 2008, he called on Sheehan to advise. Baker & Hostetler hired Picard from New Jersey’s Gibbons shortly thereafter.