Business of Law

Minibar candy, expensive hotel stays in bankruptcy lawyers' expenses targeted by new guidelines

Bankruptcy lawyers’ fees and expenses are coming under increased scrutiny as the U.S. Trustee Program readies new guidelines that are intended to further control bankruptcy costs in large cases.

The proposed guidelines for lawyers in Chapter 11 cases are expected to be unveiled July 1, and they may include a proposal discouraging reimbursement for overhead such as copies and phone calls, the Wall Street Journal (sub. req.) reports. “The push on costs comes as expenses from flights and hotels to photocopies and minibar candy billed by bankruptcy professionals are under greater scrutiny than ever,” the story says.

The Wall Street Journal includes a chart of expenses that have been questioned by judges or the U.S. Trustee. They include:

• $55,000 for stationery and copying by law firm Slaughter and May in the bankruptcy of MF Global Holdings. The firm voluntarily cut $73,000 from the expense application for those charges and other expenses, but said some of the costs were due to English court-filing regulations specifying use of paper of a particular durability.

• $8,600 for a round-trip business class flight by Proskauer Rose. The firm cut nearly $6,000 from its request to match the estimated cost of a coach flight.

• $3,400 for two three-night stays at the Waldorf-Astoria by restructuring firm Development Specialists in the bankruptcy of Dewey & LeBoeuf. The firm said nearby hotels were sold out, and some staffers were staying at the CEO’s Manhattan residence. The firm nonetheless deducted $1,000 from its bill.

• $54 in minibar charges by consultant San Marino Business Partners. The charges were approved.

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