Big Law firms have collected over $750 million in legal fees from cryptocurrency-related bankruptcies, with work on these cases edging closer to completion. According to a Bloomberg Law analysis of court documents, 22 prominent law firms have been involved in seven Chapter 11 bankruptcies that originated from the crypto turbulence starting in 2022. These firms have received or requested fees totaling $751 million as of mid-August.
The surge in crypto bankruptcies is reminiscent of other industry-driven Chapter 11 filings, like those witnessed in the oil and gas sectors in 2015 and 2016, or the pandemic-triggered retail restructurings. However, the momentum is slowing, with only three cases still accruing substantial monthly legal bills, while four have mostly concluded.
The ongoing cases include FTX Ltd., Genesis Global, and Terraform Labs. FTX, the crypto exchange founded by Sam Bankman-Fried, who was recently convicted of fraud, has a confirmation hearing set for early October. Interestingly, the FTX case alone has generated over $312 million in legal fees for five law firms, eclipsing other major cases like Celsius Network LLC, which paid $155 million in fees, and Genesis Global, with close to $97 million.
Sullivan & Cromwell has billed more than any other firm due to its role as debtor’s counsel for FTX, accounting for $215 million through June. By comparison, Weil Gotshal & Manges billed over $480 million for the Lehman Brothers bankruptcy, which remains the most expensive Chapter 11 case in U.S. history.
Kirkland & Ellis comes second in fee earnings at approximately $120 million, followed by White & Case with $75 million, thanks primarily to their work on the Genesis and Celsius cases. Cleary follows closely with nearly $73 million, stemming from its role as lead counsel to Genesis.
Though the flow of crypto legal fees is diminishing, bankruptcy practices in Big Law are predicted to stay busy. The first half of the year saw a record 346 corporate bankruptcy filings, the highest since the first half of 2010, driven by an unprecedented spike in June.
Litigation involving the U.S. Securities and Exchange Commission and continued lobbying efforts reflect an ongoing demand for legal services within the crypto industry, which spent nearly $79 million on lobbying in 2022 and 2023.