Professional Fees (Long Cannibalization)

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$1725/hour = CHA CHING!

What a month ya'll. We can't remember the last time that restructuring fees have gotten so much public and mainstream scrutiny. Last week we noted how The New Yorker took shots at restructuring professional fees in Puerto Rico. This week, Dow Jones Newswires took a look at Seadrill Ltd. and noted that Kirkland & Ellis LLP collected over $47mm in the 12 months prior to the case filing. Shareholders denied an equity committee must love that. Elsewhere, The New York Times gets into the game and asks in a MUST READ "Why Companies Like Toys 'R' Us Love to Go Bust in Richmond, Va." Which, of course, was interesting because they basically took the foundations of our piece here and raised by going "all in," alleging that Virginia is now a favorable venue because of blah ("rocket docket"), blah (debtor-favorable precedent) and BOOM (homies are getting P.A.I.D.). Here's the NYT dropping the bomb: "But perhaps one of the biggest draws, according to bankruptcy lawyers and academics, is the hefty rates lawyers are able to charge there. The New York law firm representing Toys “R” Us, Kirkland & Ellis, told the judge that its lawyers were charging as much as $1,745 an hour. That is 25 percent more than the average highest rate in 10 of the largest bankruptcies this year, according [to] an analysis by The New York Times." Points for creativity: jurisdictional arbitrage is our new favorite form of professional revenue generation. Of course, "the huge fees can eat into the money that is left over for small creditors - typically vendors, suppliers and pensioners." Did someone say "pensioners"? Happy holidays.
 

Disruption (Google, Apple, Facebook, Amazon)

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Though somewhat redundant given prior pieces he's written, Benedict Evans doubles-down on why so much disruption is going to come from the Big Four. In a word: scale. In another: mobile distribution. Still, it seems - maybe in light of the recent Russian ad-buying scandal - that people are more focused than ever on the Big Four (Five, if you want to include Microsoft ($MSFT)). Indeed, here, The New York Times highlights how even massive companies like Snapchat ($SNAP) andUber are struggling to deal with the behemoths. On point, Google, which has previously invested in Uber, announced earlier this week a $1b investment in Lyft. Snapchat, meanwhile, much to the chagrin of pundits, is marketing an $80 dancing hot dog costume for Halloween. On one hand, it's brilliant to create consumer products based on your digital product. On the other hand, however, when your target market is the millennial, an $80 price point for a Halloween costume strikes as a, uh, a bit rich maybe...?