Fear not for the attorneys handling the Chapter 11 case of RG Steel.
The steel mills at Sparrows Point and elsewhere may be closed and facing an uncertain future, but the lawyers are taking good care of themselves.
So good that they are billing the bankrupt company as much as $1,090 an hour and charging in increments of 0.1 hour (every six minutes) of work.
Federal law gives the payment of lawyer’s fees priority over nearly every other party in a bankruptcy case – including Baltimore City and County, collectively owed $11.8 million, and the 3,000 steelworkers laid off at Sparrows Point, Warren, Ohio, and Wheeling, W.Va.
Willkie Farr & Gallagher LLP of Manhattan took full advantage of that stipulation yesterday.
The law firm submitted a bill of $1,350,137 for its first month as company co-counsel (May 31-June 30), with another $31,795.83 in expenses.
Papers filed at U.S. Bankruptcy Court in Wilmington revealed that four lawyers billed more than $600,000 in fees for June – and that summer interns each received $275 an hour.
Altogether, Willkie Farr said it used 44 firm members (8 partners, 20 associates, 9 legal assistants and 7 summer interns) to work on the case, racking up 2,199.5 billable hours.
Leading the list of rainmakers was Shaunna D. Jones, a New York University Law School grad who recently became a partner in the firm. She billed $163,530 for 207 hours at $790 an hour.
She was followed by Andrew Sorkin ($163,215 for 251 hours and 6 minutes), senior partner Matthew A. Feldman ($142,790 for 131 hours) and Daniel I. Forman (141,277.50 for 245 hours and 42 minutes).
The lawyers helped draft a bonus plan for RG Steel’s ten top managers to share up to $20 million in bonuses if the bankrupt steel company is successfully sold.
Other Willkie Farr lawyers feasting on RG Steel’s woes: Weston T. Eguchi ($100,667), David I. Gise ($96,876), Andrew S. Mordkoff ($83,960), Joshua M. Troy ($74,360) and Brian E. O’Connor ($51,121).
The New York lawyers were aided by the local co-counsel, Morris, Nichols, Arsht & Tunnell LLP of Wilmington, which has not submitted its first month’s bill yet.
In recent years, as bankruptcy lawyers rocketed to the top of the fee ladder among corporate lawyers, there has been criticism of both the amount and the “opacity” of their professional charges.
The Executive Office of the U.S. Trustees, which administers the country’s bankruptcy courts, are proposing new rules for bankruptcy judges to use in approving lawyer’s fees.
In a speech last month, Cliff White, director of the trustees office, said, “The amount of professional fees incurred in the bankruptcy process is extraordinarily large by any measure. Public confidence in the bankruptcy system is sometimes shaken by reports of fees that run into the hundreds of millions of dollars in cases in which employees have lost their jobs, pension fund investors have largely been wiped out and creditors have been paid pennies on each dollar of debt.”
(White was referring to the $399 million in fees by the law firm handling the Lehman Brothers bankruptcy.)
In the RG Steel case, U.S. Bankruptcy Judge Kevin J. Carey ruled that RG Steel will pay 80% of the submitted legal fees under an “interim compensation plan,” plus 100% of expenses.
It is unclear whether the law firms will be able to bill the company the remaining 20% at a later date.
Fair and Reasonable
Willkie Farr defended its fees as “fair and reasonable” given “the complexity of these cases; the time expended; the nature and extent of the services rendered; the value of such services; the skill and experience that WF&G has demonstrated in the bankruptcy field; and the costs of comparable services in cases other than cases under the Bankruptcy Code.”
The law firm said that it addressed many litigation matters, met with the Official Committee of Unsecured Creditors, identified executory contracts and unexpired leases for rejection as well as prepared cure schedules of executory contracts in connection for the planned sale of the company’s steelmaking mills in Maryland, Ohio and West Virginia.
The law firm also noted that filing this bill cost $79 in court fees and 0.1 hours in billable time. “WF&G intends to seek compensation in connection with preparation and filing of this Application at a later date,” it told Judge Carey.