Posted Jun 13, 2012 11:00 am CDT
Proposed rules requiring more scrutiny of attorney fees in large bankruptcy cases are drawing opposition from large law firms.
Lawyers “responded with hostility” to the proposals at a Justice Department meeting last week, Reuters reported. The proposals by the DOJ’s U.S. Trustee Program would require lawyers to disclose billing rates in other specialties, to draw up budgets at the beginning of cases, and to justify cost overruns, according to Reuters and the Wall Street Journal. The rules would apply to Chapter 11 bankruptcies of companies with more than $50 million in assets and liabilities.
According to Reuters, “The airing of ideas took place amid tales of limousine rides and clothing put on expense accounts, and in the face of questions about what exactly lawyers do to bill at rates up to and above $1,000 an hour.” One recent bankruptcy filing revealed that former Solicitor General Theodore Olson of Gibson, Dunn & Crutcher charges $1,800 an hour.
Lawyers have claimed the budgets could reveal their legal strategies too soon, and the fee information could be used by competitors to gain unfair advantage, according to the Wall Street Journal account.
The New York Times is siding with the Justice Department. BigLaw firms that are opposing the transparency proposals are “out of touch with economic realities,” the newspaper says in an editorial. “Worse, in resisting improvements in accountability, they undermine public confidence in the integrity of the bankruptcy process,” the newspaper says.