Oct. 23 (Bloomberg) -- Fees could reach a record $1.4 billion for lawyers, accountants and other professionals working on the Lehman Brothers Holdings Inc. bankruptcy, the largest in U.S. history.

The biggest winner will be New York-based law firm Weil, Gotshal & Manges, Lehman's adviser, with an estimated $209 million in fees, said Lynn LoPucki, who teaches bankruptcy law at Harvard University in Cambridge, Massachusetts. His projections are based on fees paid for other large bankruptcies, including the most expensive to date, Enron Corp.

Lehman, with debt of about $613 billion, will need a bankruptcy judge's approval for about $906 million in charges for professional services, LoPucki said. By comparison, court- approved expenses for the bankruptcy of Enron, the world's largest energy trader until its 2001 collapse, totaled $757 million, of which $149.4 million went to Weil.

``We're breaking new ground in the size of the fees,'' LoPucki said in an interview yesterday. ``Lehman is such a large case that there is a lot of money there. It's like the guy who robbed the banks because that's where the money was.''

LoPucki said the debtor will pay an additional $524 million of fees, most of which don't need prior court approval. These include fees to secured lenders and claims agents, as well as auditing fees unrelated to the restructuring.

Law firm Milbank, Tweed, Hadley & McCloy, also based in New York, could make as much as $58 million in its role advising the creditors' committee in the case, said LoPucki, who calculated the fees with Joseph Doherty, the director of the Empirical Research Group at the University of California, Los Angeles, law school, where LoPucki also teaches.

Estimating Fees

The two have developed a method for estimating professional fees for bankruptcy cases. Their data is based on actual fees paid in 101 large bankruptcy cases from 1998 through 2007.

Weil spokesman Mike Ford and Milbank spokesman Dennis Dunne didn't respond to requests for comment.

Lehman creditors, meanwhile, stand to recover about $398 billion from a liquidation of the firm's assets, according to an estimate by Greenwich, Connecticut-based Nyppex Private Markets Research.

Lehman creditors may prefer an expensive procedure with larger returns over a quick liquidation that brings in less money, said Stephen Lubben, a professor at Seton Hall Law School in Newark, New Jersey. He calculated that court-approved fees in the case will be about $770 million.

`Lehman Bondholders'

``The fees are really coming out of the pocket of Lehman bondholders,'' he said. ``They're the ones who will get the benefit or suffer the costs.''

Scaled to the size of the Lehman case, the fees ``don't seem excessive,'' Lubben said.

Lehman asked Oct. 8 for court approval to pay Weil, led by bankruptcy partner Harvey Miller, $650 to $950 an hour for partners and counsel; $355 to $595 for associates; and $155 to $295 for paraprofessionals.

Milbank, as adviser to the creditors' committee, has requested $700 to $950 per hour for partners; $650 to $850 for of counsel; $275 to $670 for associates and senior attorneys; and $155 to $325 for legal assistants, according to court papers filed on Tuesday.

Fee Requests

Quinn Emanuel Urquhart Oliver & Hedges, the law firm acting as special counsel to the creditors' committee, asked for $660 to $950 an hour for partners, $380 to $950 for other lawyers and $250 to $280 for professional staff.

Houlihan Lokey, as investment banker to the creditors' committee, requested $500,000 per month for the first six months and $400,000 for each month after. Houlihan also asked for deferred fees of 0.05 percent of the first $30 billion of unsecured recoveries and 0.035 percent of all unsecured recoveries in excess of $30 billion, according to the filings.

Weil has represented Lehman in financial matters for 24 years, according to a court filing. In the year before Lehman's Sept. 15 bankruptcy filing, Weil received $51.8 million from the investment bank and its affiliates for legal work unrelated to its financial crisis last month, the firm said in the filing.

Miller, 75, has represented debtors including Texaco Inc., Global Crossing Inc. and Sunbeam Corp., according to the firm's Web site. Weil, a 1,200-lawyer firm, has more than 100 lawyers in its bankruptcy practice. Weil advised the debtors in the bankruptcies of Enron and WorldCom Inc., the next biggest.

Enron's bankruptcy plan was confirmed in July 2004. Weil requested $164 million in the Enron case and was paid $149.4 million. A class action lawsuit against Enron's bankers that was resolved this summer generated legal fees of $688 million.

U.S. Bankruptcy Judge James Peck in Manhattan is scheduled on Nov. 5 to consider professional fees.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Linda Sandler in New York at lsandler@bloomberg.net; Lindsay Fortado in New York at lfortado@bloomberg.net.

Last Updated: October 23, 2008 14:28 EDT