Legal News

Simpson Thacher?s Bargain Basement Rates for Bailout Work

By Dan Slater

This afternoon, we at LBHQ came across BailoutSleuth.com, a joint venture between Mark Cuban and the folks at ShareSleuth.com. The blog’s mission, writes Cuban, is to track both “how our tax dollars are spent and the people and companies that are impacted by this program.”

In an early post, Bailout Sleuth homes in on Simpson Thacher’s $300,000 “time and materials” contract to provide Treasury with legal advice in its deployment of the bailout funds. Bailout Sleuth bemoans the fact that Treasury blacked out the hourly rate it’s paying Simpson employees. The contract, which lasts six months — from October 10, 2008, to April 10, 2009 — merely lists estimated hours for each employee category: 564 hours for partners; 1,692 hours for associates; 376 hours for counsel; and 1,128 hours for legal assistants.**

Bailout Sleuth writes: “The contract that the Treasury Department gave Simpson Thacher was awarded through competitive bidding, although only two firms made proposals. Without the information on the hourly rates, it is impossible for outside observers to say for sure whether the government got a good deal.”

We sympathize with Bailout Sleuth’s frustration over the hourly rates being blacked out. But by our estimation — and we emphasize estimation — Treasury got a heckuva deal.

Here’s one possible break-down of Simpson’s hourly rate:

564 partner hours @ $120 = $67,680

376 counsel hours @ $100 = $37,600

1,692 associate hours @ $80 = $135,360

1,128 assistant hours @ $50 = $56,400
______________________________________

TOTAL: $297,040

Even providing for a substantial margin of error in our estimates, these are bargain basement rates. After all, one of the six “key personnel” listed on the contract is Lee Meyerson (Duke, NYU law), a senior partner and the head of the firm’s financial institutions practice. Another is David Eisenberg (Duke, Duke law), whose firm bio says he’s responsible for creating Simpson’s asset-backed practice.

A call to Simpson Thacher was not returned. A Treasury spokeswoman told the Law Blog that Simpson opted to black out their hourly rates because the firm was not required to disclose the rates under the Freedom of Information Act.

We wonder, Law Blog Loyals: When was the last time the Simpson Thacher partnership charged these kinds of rates for a paying matter?

**The contract says: “The estimated hours represent 60% of the Government’s estimated hours in the solicitation.”

Full post as published by Law Blog - WSJ.com on October 21, 2008 (boomark / email).