Advisers cash in from failure fee bonanza

Advisers have already raked in £100m in fees from Lehman's bankruptcy - and the less said about Rover the better...

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Last Updated: 31 Aug 2010

The accountants and lawyers currently winding down Lehman Brothers have apparently managed to rack up fees of more than £100m in just six months. According to the Times, administrator PwC says costs will keep accumulating at a similar rate for years and years, as some 1,500 advisers crawl over the wreckage of this once-proud bank trying to sort the whole mess out. Meanwhile over in Whitehall, it's emerged that the four-year investigation into MG Rover's collapse in 2005 has already cost the Government £14.8m - and there's still no end in sight. Bankruptcy isn't bad news for everyone, it seems...

The complexity of the Lehman administration is set to make this a highly lucrative job for PwC, which has already charged Lehman's creditors £77.2m for its services thus far. Over 500 of its staff were working on the administration at one point, and these accountants don't come cheap: even its most junior bean-counters were charged out at £143 an hour, while the top brass cost an average of £620 an hour. Then there are the lawyers: City firm Linklaters has racked up £33.5m in fees thus far. And with no end in sight - PwC even suggested that this could take longer than the 12 years required for BCCI - the advisers will be milking this particular cash cow for a long time yet.

On the other hand, at least Lehman's creditors can console themselves by thinking that these expensive advisers might be able to squeeze a bit more juice out of the mess for everyone else. Sadly the same probably can't be said of the Rover probe, which according to the FT has so far cost nearly £15m in taxpayers' money (£12m in fees to lawyers and accountants, plus VAT) and yielded precisely nothing in four years. Given that the period it's investigating - Rover's ill-fated acquisition by the ‘Phoenix Four' - only lasted five years, it's a bit hard to see why it's taking so long (the official line is that it's turning out to be more complex than originally thought, but still).

On the day that UBS announced plans to cut another 8,700 jobs - about 11% of its workforce - as it faces up to yet another multi-billion dollar loss, we've been reminded of the harsh human consequences the banking crisis has had for some. But if you're in the insolvency business, this is clearly a time to fill your boots...

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