Major Law Firms Earn Over $750 Million in Crypto Bankruptcy Fees

Major law firms have accumulated more than $750 million in legal fees from handling cryptocurrency-related bankruptcies, according to a Bloomberg Law analysis of court documents.

According to the document, 22 major law firms have been involved in seven Chapter 11 bankruptcies related to the crypto fallout since 2022. As of mid-August, these firms had been paid or requested fees totaling $751 million.

The wave of legal work stemming from the collapse of several crypto firms is winding down. The cases are being compared to previous periods of industry-driven Chapter 11 surges, such as the oil and gas bankruptcies in 2015 and 2016 and the pandemic-era restructurings of retailers. Of the seven cases, four have largely concluded, with only three currently generating large monthly bills. The ongoing cases include FTX Ltd., Genesis Global, and Terraform Labs.

The FTX case, linked to the downfall of the crypto exchange founded by Sam Bankman-Fried, has led to more than $312 million in legal fees across five law firms, making it the most expensive case in this group. This amount is “twice as much as the next most lucrative Chapter 11 case in the bunch, that of Celsius Network LLC,” which paid about $155 million to four law firms. The Genesis case has generated roughly $97 million in fees.

Sullivan & Cromwell, acting as debtor’s counsel for FTX, has billed $215 million in total through June, making it the highest-billing firm in these cases. The firm was billing more than $10 million monthly until February, with recent bills dropping to less than $7 million per month. The firm’s fees for its work on the FTX case are not unprecedented as Weil, Gotshal & Manges billed over $480 million for its work on the Lehman Brothers bankruptcy, regarded as the most expensive Chapter 11 case in U.S. history.

Kirkland & Ellis has billed $120 million, the second highest among firms, mainly from its role as lead debtor’s counsel for Celsius, BlockFi, and Voyager. “Its largest single case was representing Celsius, which generated more than $75 million in fees.” White & Case has billed just over $75 million for its work on the Genesis and Celsius cases, while Cleary Gottlieb has billed nearly $73 million for its role as lead counsel to Genesis.

According to the analysis, law firms billed a combined total of roughly $15 million in June for the three ongoing crypto cases. This is a decrease from the peak periods in mid-2023, when the cases generated more than $35 million a month. For Sullivan & Cromwell, work on the FTX case contributed to approximately 7.5% of the firm’s total revenue of $1.86 billion in 2023.

The legal work for some of these cases is nearing an end, with the FTX case having a confirmation hearing scheduled for early October and Terraform Labs for September. Genesis Global has already emerged from bankruptcy, with the company paying about $4 billion in digital assets and cash to creditors.

Lawrence does not hold any crypto asset. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.

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