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Even in well-trodden bankruptcy, with public data and hearings, the value of lawyers is frustratingly hard to figure out

An article in the Economist, Sept. 12, 2009 at 82, cites projections that the lawyers and others who will be awarded fees in the bankruptcy of Lehman Brothers might reap nearly $1 billion, “well above the $757 million they received after Enron’s demise, the record for a bankruptcy case.” Then comes the zinger.

“It is frustratingly hard to say how much value for money these professionals provide.” That statement should give pause to proponents of value billing.

Chapter 11 reorganizations follow well-understood paths; the firms that represent creditors committees and debtors in large bankruptcies are very skilled and possessed of deep experience; specialized judges assess fee requests and ponder the studied objections of creditors and others. Even so, the article makes clear it is very difficult for judges to assess whether the debtors and other parties receive equivalent value in services for the huge fees awarded.

My question is simple. If value for fees in such an experienced and public setting remains “frustratingly hard to say,” what expectation can we hold that invoking “value” will reveal some talismanic clarity when ordinary law departments hire ordinary law firms for less familiar services?