$80 Million in Legal Fees for GM

Weil, Gotshal & Manges, Jenner & Block, and Honigman Miller Schwartz and Cohn have filed their applications for employment as counsel to General Motors in the troubled automaker's Chapter 11 case. The filings show that GM has paid more than $80 million in fees to the three firms over the past six months.

As lead bankruptcy counsel to GM, Weil has the lion's share of the billings at more than $54 million accrued during that period. That's roughly equivalent to the $55 million that Weil billed bankrupt Lehman Brothers between September 2008 and January 2009.

Weil bankruptcy partners Stephen Karotkin, Harvey Miller, and Joseph Smolinsky appear on the filing. The firm states that partners advising GM are billing between $650 and $950 per hour with associates billing at hourly rates between $355 and $640. Weil was paid a $5.9 million retainer, part of which it intends to apply to "any outstanding amounts" that were "not processed through [Weil's] billing system" prior to the firm being retained as bankruptcy counsel.

In an addendum listing current and former firm clients, Weil revealed that only annual fees paid to the firm by Lehman Brothers, General Electric, Microsoft, Citigroup, AIG, and private equity firm Thomas H. Lee Partners exceeded 1 percent of the firm's annual gross revenue. According to Am Law 100 financial data, Weil had more than $1.2 billion in gross revenues for 2008. Full story

Twitter Sued for Hosting Fake Page

Cardinal’s manager Tony La Russa sued Twitter last month in a California state court in San Francisco. La Russa’s suit alleges that Twitter allowed a user to maintain a page under his name without his permission. He complains that many posts were vulgar and included off-color statements about Darryl Kile and Josh Hancock, two Cardinals who died during La Russa's tenure.

La Russa argues in his complaint that the impersonation was “derogatory and demeaning,” and damaged to his brand. He seeks unspecified damages and that the page be shut down. For more coverage, click here.

Cravath, Bryan Cave in Hedge Fund Tax Fraud Scam

Federal prosecutors today unsealed an indictment charging the chief executive of what used to be one of the world's largest investment funds with constructing elaborate tax shelters for some of his wealthiest clients. The executive, Jeffrey Greenstein, former head of the Seattle-based fund Quellos Group, and two other defendants (including a Quellos in-house lawyer) face 18 counts related to tax evasion and fraud for a scheme that netted them $86 million in fees and allowed six clients to avoid paying about $400 million in federal taxes, according to the indictment.

What's interesting for our purposes is that the indictment details how lawyers from Cravath, Swaine & Moore and Bryan Cave blessed the shelters with letters indicating to the taxpayers that they were legal and would withstand scrutiny from the Internal Revenue Service. (The firms are identified as C.S.M. and B.C. in the indictment, but two sources familiar with the matter confirm they are Cravath and Bryan Cave. In addition, a 2006 Congressional investigation mentioned the role the two firms played in the Quellos tax shelters, and at least one lawyer, Lewis Steinberg, then of Cravath and currently at Linklaters, testified before a Congressional subcommittee.)

Those sources say it is extremely unlikely the named firms or their lawyers will be charged with any crime, and the indictment accuses Greenstein and the other defendants of lying to outside firm lawyers in order to get those attorneys to bless the tax shelters.

The scheme involved the creation of sham offshore funds that would engage in fabricated money-losing securities transactions in order to produce fictitious capital losses, according to the indictment. Greenstein and Charles Wilk, an in-house lawyer at Quellos, provided the "C.S.M." and "B.C." lawyers with documentation outlining what appeared to be legitimate operations, the indictment says. Full story

Kilpatrick Slashes Associate Salaries

AM Law Daily reports that the law firm of Kilpatrick Stockton acknowledged it is cutting associate salaries by 10 percent across all of its offices. Associates in Atlanta and North Carolina, meanwhile, will see their pay drop to $130,000, while those in New York and Washington, D.C. will take a cut from $160,000 to $145,000, the story says. The firm, which has 200 associates and saw a 7.4 percent jump in profit per partner in 2008, will give associates the chance to earn back the lost salary in bonuses that will be contingent on hitting billable-hour targets. The salary cuts go into effect July 1 and are expected to save the firm about $1.75 million by the end of the year, the Daily Report says.

SEC (Finally) Charges Former Countrywide CEO Angelo Mozilo; Irell to Lead Defense

The wait is over: On Thursday the Securities and Exchange Commission charged former Countrywide Financial Corp. chief executive officer Angelo Mozilo--the most visible villain of the subprime mortgage meltdown--with securities fraud and insider trading. It also, according to Legal Times, brought securities fraud charges against Countrywide's former COO David Sambol and former CFO Eric Sieracki. Full story