When the SEC shops around for receivers in a down economy, how thrifty must it be?

wextrustIn August, before Dreier and Madoff became household names on Wall Street, there was Steven Byers and Joseph Shereshevsky, the owners of WexTrust who allegedly ran a Ponzi scheme targeting Orthodox Jews. (Remember affinity fraud? It’s when scammers target individuals with a common interest or belief.)

Immediately after the SEC sued WexTrust, Manhattan federal judge Denny Chin froze WexTrust’s assets. Dewey & LeBoeuf was appointed counsel to the receiver in the case. In November, Dewey submitted an application to collect compensation and expenses for the first twenty or so days it served as receiver. Dewey’s tab? Nearly $2.2 million — or about $100,000 per day.

But G&H Partners, which is one of the larger victim-creditors in the receivership and represented by Sullivan & Worcester, objected to the request. Last month, Judge Chin — wondering aloud about the propriety of $600/hr associates — asked Dewey to provide a bit more information on its fees.

In an opinion dated Dec. 30, Chin shaved about $400,000 off Dewey’s tab. Here’s the opinion. Judge Chin writes:

    . . . I wonder whether the SEC should’ve made more of an effort to present the Court with more options. In this economy, with law firms going out of existence or laying off lawyers for lack of work, and clients — including large corporate clients — insisting upon and obtaining alternative fee arrangements . . . surely there would have been qualified law firms willing to perform these service at rates substantially lower than $850 or $950 per hour for partners and $605 per hour for associates six years out of law school.