Bitcoin miner accuses K&L Gates of botching bankruptcy claim, overbilling
April 17 (Reuters) - (Billable Hours is Reuters' weekly report on lawyers and money. Please send tips or suggestions to D.Thomas@thomsonreuters.com, opens new tab)
A bitcoin mining company has sued K&L Gates and one of its bankruptcy partners, alleging that the law firm overcharged legal fees while failing to perform a simple bankruptcy task, leading to a $24 million lawsuit against the bitcoin miner.
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The lawsuit from Gryphon Digital Mining, filed Monday in Manhattan federal court, opens new tab, seeks an unspecified amount of damages from K&L Gates after the firm allegedly failed to file a claim on its behalf in the bankruptcy case of Core Scientific Inc.
"Proofs of claim are routinely filed out of an abundance of caution simply to preserve a party's rights. It is Bankruptcy 101," the lawsuit said.
Gryphon said it paid K&L Gates more than $2.7 million in legal fees and alleged that most of the fees were "unnecessary and are not supported by any proper accounting or billing records."
The lawsuit named the firm and Robert Honeywell, a New York-based partner who specializes in bankruptcy litigation, as defendants. Honeywell and a spokesperson for the firm did not immediately respond to requests for comment.
Gryphon's lawyers at Miller Barondess did not immediately respond to a request for comment.
Gryphon retained K&L Gates in August 2021 as the company was planning to merge with Sphere 3d Corp, another bitcoin miner. Although the merger was called off months later, a contract the two companies had signed remained in effect.
In September 2021, Core reached a $35 million deal with Gryphon to provide the infrastructure to host 71,000 of Gryphon's cryptocurrency mining machines. K&L Gates represented Gryphon in that deal as well.
Core filed for bankruptcy in December 2022. Gryphon alleged in its lawsuit that K&L Gates never monitored the proceedings and missed an April 2023 deadline for filing a proof of claim. Gryphon later retained lawyers from Hogan Lovells.
Sphere later sued Gryphon in Manhattan federal court for $24 million. Among other things, Sphere accused Gryphon of breaching its fiduciary duty by failing to file a claim in the Core bankruptcy.
Gryphon and Sphere settled in March 2025. The company said it was "forced to forego millions of dollars in valuable counterclaims in exchange for resolving Sphere's $24 million breach of fiduciary duty claim that arose from K&L Gates' mistake."
--Law firms that negotiated more than $60 million in antitrust settlements with aerospace giant RTX's Pratt & Whitney unit and other companies have asked a federal judge to award them $20.2 million in legal fees.
In a court filing, opens new tab, Quinn Emanuel and DiCello Levitt said the fee request was fair and reasonable given the complexity of the case and the risks they took in pursuing it. RTX denied any wrongdoing in agreeing to settle.
The lead Quinn Emanuel partner on the lawsuit, Daniel Brockett, who heads the firm's financial institution litigation practice, normally charges $2,030 an hour, according to billing records submitted, opens new tab with the petition. Quinn Emanuel recently disclosed in an unrelated case that some of its top partners are billing $3,000 an hour.
--Another group of law firms, including Cohen Milstein and Quinn Emanuel, asked a U.S. judge, opens new tab in Manhattan this week to award them $35.5 million in legal fees and expenses in an antitrust lawsuit against Wall Street banks.
The request, stemming from $71 million in settlements, includes $23.4 million in expenses. The plaintiffs' lawyers called the requested amount "a small fraction of the huge amounts that class counsel invested in this case" over nine years.
The suit alleged an illegal boycott of a specific type of emerging trading platform. U.S. District Judge Paul Oetken declined to allow the suit to proceed as a class action. An expert for the plaintiffs had estimated class-wide damages of $4.5 billion.
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