Some of the $15 million McKinsey & Co. is paying to resolve allegations of inadequate conflict-of-interest disclosures in large corporate bankruptcies could end up in the pockets of the firm’s own employees because of its extensive investment holdings, WSJ Pro Bankruptcy reported. Lawyers for McKinsey told a bankruptcy judge on Thursday they couldn’t guarantee the firm’s employees won’t indirectly benefit from the settlement payout, which is meant to hold McKinsey accountable for allegedly improper disclosure practices that have dogged its bankruptcy business. The payment stems from a settlement between McKinsey and the U.S. Trustee Program, a unit of the Justice Department that oversees the bankruptcy system. The trustee alleged McKinsey wasn’t forthcoming about investments it held that gave it an interest in the outcome of bankruptcy cases it advised on and said the firm lacked “timely, voluntary and direct candor in making disclosures.” McKinsey didn’t admit any wrongdoing.
More than 100 Kirkland & Ellis partners, and about 240 firm lawyers overall, billed time in the Toys “R” Us bankruptcy proceedings, netting the law firm more than $50 million, American Lawyer reported. A judge on Friday approved $56.2 million in fees requested by Kirkland, according to an order filed in the Eastern District of Virginia. Kirkland billed for 57,237.30 hours of work as debtor’s counsel over nearly a year and a half in the toy retailer’s chapter 11 proceedings. Toys “R” Us filed for bankruptcy in September 2017, marking the latest in a string of brick-and-mortar retail failures in the online shopping era. The company retained Kirkland to restructure its nearly $5 billion in debt, as previously reported by The American Lawyer. Kutak Rock, Goodmans and Munger, Tolles & Olson landed roles in the case. In all, 105 partners, 131 associates and two of counsel from Kirkland billed time on the case between the September 2017 bankruptcy filing and Dec. 17 2018. Its partner billing rates for the work ranged from $565.00 to $1,795.00, according to the firm’s final fee application.
