The cryptocurrency turmoil has rocked major crypto exchanges and driven down the price of crypto assets, but one group is benefiting: bankruptcy attorneys.
The potential for significant fees from regulatory compliance and representation of clients has made cryptocurrency law a lucrative field for large law firms. High-profile bankruptcy cases, including busts Cryptocurrency exchange FTXHedge funds Three arrows capitaland cryptocurrency lenders BlockFiCelsius Network and Voyager Digital Ltd are creating new opportunities – and higher fees – for law firms representing distressed crypto businesses.
“You have to pay gravediggers… these are complex cases, there are novel issues, and not surprisingly they require a lot of attorney involvement.”
Adam Levitin, Georgetown University Law Professor.
Kirkland Ellis is killing it with Crypto Law
By 2023, large law firms could earn more than $100 million in legal fees from lengthy bankruptcies.
Represented by Kirkland & Ellis Celsius Network and Voyager Digital, both of which filed for bankruptcy earlier this year. The company itself is also the principal consultant BlockFi In its bankruptcy proceeding filed in late November. Additionally, Kirkland & Ellis represents Galaxy Digital Gemini, a regulated cryptocurrency exchange.
According to Bloomberg Law, Kirkland charges up to $1,995 an hour for its associates’ services on the Celsius and Voyager cases, one of the highest billing rates in the industry. In each case, the business may have invoiced an average of $3.3 million monthly. Reuters Claims.
Volatile and complex nature The Cryptocurrency Industry This means that law firms specializing in crypto law must carefully weigh the potential risks and rewards.
Normal law firm billing rates are individual, but in bankruptcy cases, the debtor firm’s attorneys must provide a breakdown of their expenses and ask a judge to approve their fees. According to experts cited by Reuters, courts do not require substantial reductions in professional fees because lawyers are paid from the assets of the bankruptcy estate.
Sullivan & Cromwell represents SBF and FTX
Sullivan & Cromwell, a Wall Street law firm, is acting as bankruptcy counsel to FTX. According to Reuters, the company charged up to $1,825 an hour, although their rates have yet to be made public.
Alameda Research, another firm founded by Sam Bankman-Fried, is represented by Sullivan & Cromwell as a creditor in the Celsius and Voyager cases. Latham & Watkins has received the highest fees so far for its work with Celsius and Three Arrows Capital. The news agency says they charged at least $1,825 an hour.
Latham & Watkins thrives in the world of crypto chaos
Latham & Watkins has a maximum billing rate of $2,075 per hour, the highest disclosure rate. Latham & Watkins is currently advising Celsius on regulatory issues and serving as debtor-in-possession counsel to Three Arrows Capital.
Other industries, such as retail, have seen a slowdown in Chapter 11 filings due to the COVID-19 pandemic. However, the crypto world has provided steady revenue for major law firms, legal experts told Reuters.