Posted Apr 23, 2013 10:02 pm CDT
Kaye Scholer has agreed to give up $1.5 million in legal fees and revamp its policies and procedures concerning applications for bankruptcy work to settle a U.S. Trustee’s office claim that the law firm failed to make necessary disclosures in a major Chapter 11 case.
The settlement announced Monday in federal court in Manhattan requires Kaye Scholer to give up nearly one third of the past and future fees the law firm expected to earn by representing the GSC Group investment firm as debtor’s counsel, the Am Law Daily (sub. req.) reports.
The trustee had contended that Kaye Scholer and a financial adviser to GSC known as the Capstone Advisory Group failed to disclose to the court an independent contractor arrangement with a key Capstone “employee” that could have resulted in inflated costs, among other issues.
Attorney Andrea Schwartz represented the trustee’s office. She told the court Kaye Scholer has agreed to have an independent expert to review its policies and procedures and train its lawyers about any changes within four months of finalizing them. Additionally, the law firm has agreed to have an internal committee vet and sign off on Kaye Scholer’s disclosures in future applications for bankruptcy work, the Am Law Daily recounts.
The committee will include a Kaye Scholer bankruptcy partner not involved in the case in which the law firm is seeking a role, as well as a member of the firm’s ethics committee.
Kaye Scholer partner Aaron Rubinstein said during a break in Monday’s hearing that the firm is pleased with the settlement and believes it benefits all parties involved.
ABAJournal.com: “US Trustee Seeks Clawback of $10M in Fees from Kaye Scholer, Financial Adviser in Bankruptcy Case”