%1

Following a defeat at the U.S. Supreme Court last summer, Baker Botts proposed a change in the way it charges for bankruptcy work, hoping to cover its financial bases if a chapter 11 client later sues the firm after emerging from bankruptcy. However, Bankruptcy Judge Brendan Shannon in an order on Monday shot down a modified fee structure in Baker Botts’ application to serve as lead debtors’ counsel for New Gulf Resources LLC, an Oklahoma-based energy company that filed for chapter 11 protection on Dec. 17, American Lawyer reported today. The order follows a letter ruling from the judge late last week rejecting the firm’s fee proposal. In its application to represent New Gulf in the bankruptcy, Baker Botts sought to build in a layer of financial protection while also respecting the Supreme Court’s June 15 ruling in Baker Botts v. Asarco, which restricted the firm’s ability to recover bankruptcy litigation costs.

The judge in Energy Future Holdings' (EFH) bankruptcy case recently approved the latest interim professional fee applications totaling more than $77 million, which were presented to the court by the numerous professional firms involved in the litigation, Texas Lawyer reported yesterday. Bankruptcy Judge Christopher S. Sontchi approved the omnibus order awarding the interim allowance of certain professional fees and expenses. Originally filed on April 29, 2014, Texas-based EFH's mega-case involves an army of attorneys and other professionals. Judge Sontchi recently granted the interim allowance of compensation for services rendered and reimbursement of expenses largely, but not exclusively, for the fourth interim fee periods. His recent order gave a sizeable boost to the total professional fees and expenses that EFH has been ordered to pay during the bankruptcy.

Hundreds of dollars in car-service charges, meals costing $50 a head and overly expensive copying charges are among the expenses that a government watchdog is targeting in supermarket operator A&P’s bankruptcy case, the Wall Street Journal reported today. U.S. Trustee William K. Harrington recently filed court papers raising questions about thousands of dollars in expenses that several law and consulting firms incurred for their work on A&P’s liquidation. Charges must be “reasonable,” Harrington points out, and detailed explanations must be provided to help the judge and others evaluate the bills rather than forcing the judge and others to embark “on a treasure hunt” for crucial information. The trustee questions 17 pages’ worth of fees and expenses charged by A&P’s lead bankruptcy lawyers at Weil, Gotshal & Manges that he says lack detail, would be considered overhead and lack substantiation, among other causes for concern.

Legal and professional costs in the Diocese of Gallup’s Chapter 11 bankruptcy case exceeded $3.5 million through Dec. 31, new filings in the case show, the Albuquerque Journal reported yesterday. Most legal costs will remain unpaid until a reorganization plan has been approved by presiding U.S. Bankruptcy Judge David T. Thuma. Attorneys agreed on the financial terms of a settlement in mediation talks in December, but details of the plan remain under discussion. The Diocese of Gallup became the ninth Roman Catholic diocese to file for chapter 11 protection in 2013 in response to civil lawsuits filed against the diocese on behalf of alleged victims of sexual abuse by priests.

The day of the $1,500-an-hour lawyer has arrived as partners at some of the nation’s top law firms are approaching — and, in a few cases, surpassing — that watershed billing rate, the Wall Street Journal reported today. Despite low inflation and weak demand for legal services, rates at large corporate law firms have risen by 3 to 4 percent a year since the economic downturn, according to Citi Private Bank’s Law Firm Group. The rate creep has boosted law firms’ revenue at a time when many of them are under pressure from lower-cost legal-service providers and corporate clients that are keeping more legal work in-house. Revenue at law firms rose 4 percent last year, according to Wells Fargo Private Bank’s Legal Specialty Group, though demand rose just 0.5 percent.

Bankruptcy Judge Mary F. Walrath in Delaware categorically barred lawyers from circumventing the Supreme Court’s opinion in Baker Botts LLP v. ASARCO LLC by refusing to approve a retention application requiring the debtor to compensate committee professionals for successfully defending their fees, according to an analysis by Bill Rochelle in ABI’s Rochelle Daily Wire. In June, the Supreme Court held 6-3 in ASARCO that debtors’ counsel in bankruptcy cases cannot be paid for successfully defending their fee requests. In Delaware, the reorganization of Boomerang Tube LLC became a test case to decide whether lawyers could sidestep ASARCO by incorporating the reimbursement of defense costs into a retention agreement approved up front by a bankruptcy judge. In a footnote at the very end of her opinion, Judge Walrath in substance said that no form of artful drafting, even by the debtor’s lawyers, will pass muster because using estate funds to pay fee defense costs “are not reasonable terms of employment of professionals.” To read the full analysis, sign up for complimentary access to ABI’s Rochelle Daily Wire.