New Book Documents the Cost and Failure of Professional Fee Control System in Big Bankruptcies

Bankruptcy expert and UCLA School of Law professor Lynn LoPucki and political scientist Joseph Doherty report results of largest empirical study of professional fees in major corporate reorganizations in Professional Fees in Corporate Bankruptcies: Data, Analysis, and Evaluation​

Lauri Gavel
Director of Communications
UCLA School of Law
(310) 206-2611
gavel@law.ucla.edu

LOS ANGELES, CA, March 22, 2011 -- Bankruptcy expert and UCLA School of Law professor Lynn LoPucki and political scientist Joseph Doherty, director of UCLA Law’s Empirical Research Group, have authored a new book that reports the results of the largest empirical study ever conducted of professional fees in large corporate bankruptcy cases. Professional Fees in Corporate Bankruptcies: Data, Analysis, and Evaluation (Oxford University Press, March 2011) is based on a study of thousands of documents from the court files in more than 100 of the largest corporate reorganization cases, including Enron, Worldcom and Global Crossing. It reveals a legal system in crisis, but also offers opportunities for needed reform.

The book provides an unprecedented window on the worlds of bankruptcy professionals, professional fees and their scientific study. It employs statistical analysis, and records its findings to scientific standards, to document the cost and failure of the bankruptcy professional fee control system.

With the ability to choose among courts that want or need to attract big cases, the professionals have largely taken charge of the fee-control system and rendered it powerless. During the book’s ten year period of study, fees increased at the rate of 9.5 percent per year—nearly four times the rate of inflation. Bankrupt Enron paid more than $1 billion dollars in cash to bankruptcy lawyers, financial advisors and other bankruptcy professionals, with money that would otherwise have gone to creditors, employees or shareholders.

Professional Fees in Corporate Bankruptcies is accessible to readers with no background in statistical analysis or bankruptcy procedures. It will be of interest not only to scholars studying professional fees, but also to bankruptcy professionals, judges, policymakers and anyone interested in the functioning of law-based systems.

Review copies of the book are available by contacting Ninell Silberberg at Ninell.Silberberg@oup.com.

ABOUT THE AUTHORS

Lynn M. LoPucki is the Security Pacific Bank professor of law at UCLA School of Law. Each fall semester he is the Bruce W. Nichols visiting professor of law at Harvard Law. Professor LoPucki has engaged in empirical research on large public company bankruptcies for the past 25 years. The UCLA-LoPucki Bankruptcy Research Database (http://lopucki.law.ucla.edu) provides data for much, if not most, empirical work on the subject. His prior book, Courting Failure: How Competition for Big Cases Is Corrupting the Bankruptcy Courts (2005), shocked the bankruptcy world with empirical evidence of the devastating effects of forum shopping and court competition.

Joseph W. Doherty is the director of the Empirical Research Group (ERG) at UCLA School of Law and the co-director of the UCLA-RAND Center for Law and Public Policy. He teaches Empirical Legal Studies at UCLA Law.

About UCLA School of Law
Founded in 1949, UCLA School of Law is the youngest major law school in the nation and has established a tradition of innovation in its approach to teaching, research and scholarship.  With approximately 100 faculty and 970 students, the school pioneered clinical teaching, is a leader in interdisciplinary research and training and is at the forefront of efforts to link research to its effects on society and the legal profession. For more information, visit http://www.law.ucla.edu.