Latham Is Too Costly for Broke Hospital Using Weil, Trustee Says

A US Trustee is trying to stop a bankrupt hospital network from hiring Latham & Watkins and the firm’s new star restructuring lawyer, saying proposed hourly rates are too high.

Rates that range from $1,680 to $2,650 for partners would hurt Steward Health Care System’s ability to pay vendors after entering Chapter 11 last year, trustee Kevin Epstein told the US Bankruptcy Court for the Southern District of Texas in a filing Thursday.

Steward already has lawyers from Weil Gotshal & Manges working on the case. It wants to add Latham after that firm hired Ray Schrock from Weil in November as global restructuring chair. The hire also included a team of Weil lawyers.

Steward’s case, while complex, “does not require the hiring of another law firm, especially a multinational law firm with significantly high rates such as Latham,” Epstein said. Schrock, Latham, and Weil didn’t immediately respond to a request for comment.

Latham is the second highest-grossing law firm in the US, with $5.68 billion in revenue and $5.51 million in profits per equity partner in 2023, according to figures reported by the American Lawyer. Weil ranked 26th, with $1.82 billion in revenue and $4.64 million in profits per equity partner.

Schrock and colleagues while at Weil had represented Steward and affiliated debtors since January 2024, Schrock said in a filing to support Latham’s entry into the case. The partner rates Schrock proposed for Latham in his filing this month are 5% to 13% higher than the ones he disclosed last May while working for Weil for the same client.

Both firms’ rates exceed the average hourly amounts charged by bankruptcy partners in 2024, according to a Wolters Kluwer survey. They also exceed the average hourly rates charged by New York-based partners and associates, the survey shows.

During the 90-day period leading up to Steward’s Chapter 11 petition on May 6, Weil received $21.6 million for its representation in the case, Schrock said in a filing while he was still at that firm.

Epstein said in his filing that Weil has charged nearly $70,000 in fees to the debtors’ bankruptcy estates. Adding a second firm’s fees would be too much for Steward, he said.

“The debtors should not be allowed to retain an unnecessary professional when they are unable to satisfy outstanding administrative claims,” Epstein said.

The case is Steward Health Care System LLC, Bankr. S.D. Tex., No. 4:24-bk-90213, 1/23/25.