06/06/12
On Monday, in a rare show of resistance over a rarer meeting over scrutiny of fees, bankruptcy lawyers told officials of the Justice Department that they do not want to keep a budget, do not want to justify expenses under $500 and do not want to disclose details of their billing practices. Go figure. The bankruptcy lawyers were infuriated with the DOJ thinking of scrutinizing their fees which usually reach hundreds of millions of dollars of taxpayers' money.
During the rare public meeting held on the 7th floor of Washington's Justice Department the issues raised were whether bankruptcy fees are inflated, unjustified or wasteful. People wanted to know whether it was essential for bankruptcy lawyers hired by the DOJ to ride limousines to work and put such expenses, as well as expenses for clothing on their expense accounts. Questions were also raised as to what certain lawyers did exactly to bill at rates of and above $1000 an hour.
The meeting followed after taxpayer resentment over certain recent examples, like the two-and-a-half-year restructuring of the Lehman Brothers where Weil Gotshal & Manges managed to table a bill of $383 million. In the bankruptcy of MF Global Holdings Inc, the estate has already paid $17 million to lawyers in just four months.
Widespread criticism has led the Justice Department to mull bringing in some financial discipline in the U.S. Trustee Program that overlooks bankruptcy proceedings.
Specifically, the U.S. Trustee Program wants to know why the fees of bankruptcy lawyers are usually much higher than top lawyers in other special areas of practice. One possible reason forwarded is that bankruptcy lawyers know that they are unlikely to be challenged in court over fees.
D.J. “Jan” Baker of Latham & Watkins expressed in terse comments that the proposal to find out whether bankruptcy lawyers' fees were wasteful was in itself illegal and wasteful.