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| Richard S. Fuld Jr, Chairman and Chief Executive Officer, Lehman Brothers, captured during the session Myths and Realities of Sovereign Wealth Funds at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008.
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Big 4 accounting firm PwC (Pricewaterhouse Coopers) has said that its first year of working as administrators in winding up Lehman Brothers Europe, the European unit of the collapsed US investment banking giant, has earned it £154 million and £112 million has been paid in legal fees binging the total to £266 million.
Lehman collapsed on September 15, 2008 and the fees are to September 14, 2009.
A report prepared for creditors says PwC is preparing a claim of $90bn against the US parent, which will raise the value of claims by the European unit against other Lehman companies, to $208bn.
The administrators say: "At this stage, there is no visibility on the level of recoveries."
PwC says:
- Of the $35.2bn held in client inventory at 15 Sept 2008 for 553 clients
- $13.3bn has been returned to 51 clients
The firm also says creditors with a value of $7bn in the Statement of Affairs that was prepared by PwC, have submitted claims with a value of $21bn.
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The history of Lehman Brothers parallels the growth of the United States. The firm began as a general store in the American South. Henry Lehman, who came from Germany, opened a shop in Montgomery, Alabama in 1844. In 1850, he was joined by brothers Emanuel and Mayer, and they named the business Lehman Brothers. Cotton was the cash crop of the day and the Lehmans accepted it from farmers as currency to settle accounts. The firm traded the cotton for cash or merchandise, becoming brokers of the crop. In 1858, they opened an office in New York, which was the commodity trading center of the country. |
Over 840,000 pending or failed trades existed at collapse date and 158,700 over-the-counter derivatives.
PwC said in the half-year to September 2009, the average hourly charge was £302 compared with £329 in the previous six months.
It doesn't imply that PwC cut its charges and reflects a higher level of donkey-work charges in the most recent period.
Partners' average charge per hour was £636.
The chargeout rate for the juniors was £141.
PwC's second progress report dated.
The Economist reported last month that US law firm Weil, Gotshal & Manges, the lead law firm in the clean-up at Lehman Brothers, had requested more than $100m of fees in the case so far.
It said Weil’s lawyers worked 86,000 hours on Lehman, with the most senior partners getting around $1,000 per hour. They spent an estimated $692,000 on computer research and $224,000 on photocopies.
When all is done, the Economist said lawyers, financial advisers, restructuring experts and others could bag close to $1 billion in court-awarded fees from Lehman in the US, well above the $757m they received after Enron’s demise, the record for a bankruptcy case.
SEE: Finfacts article Sept 09, 2009: Boom or bust - - Big accounting firms still in the money but should they be trusted?
