Big Attorney Fees for O'Melveny in New Century Legal Woes
The government probe and bankruptcy of subprime lender New Century Financial Corp. is translating into some big legal fees.
O’Melveny & Myers has earned more than $12.5 million in six months for restructuring work and representation of the company in an investigation by the Justice Department and the Securities and Exchange Commission, the Recorder reports. Lawyer Alejandro Mayorkas is billing $705 an hour for his time doing white-collar work for the firm.
New Century’s legal problems began when it announced in February that it would restate earnings because of problems with money set aside to repurchase bad loans.
Randall Burrows, managing director at Navigant Consulting Inc., told the Recorder that O’Melveny’s rates seem reasonable since the issues are complex and work-intensive. “It kind of makes me want to go back to practicing law,” said Burrows, a former McKenna & Cuneo partner.
Bankruptcy examiner Michael Missal and his law firm, K&L Gates, are also earning big fees, the article says. The firm has submitted five fee applications for $8.5 million. Missal himself bills at $725 an hour, but he is taking a voluntary 10 percent fee reduction.
O’Melveny’s legal advice is becoming an issue in the bankruptcy case. Missal has submitted report findings under seal to the court about New Century’s cash handling practices; New Century says the report should not be made public because it will reveal information protected by the attorney-client privilege, the Associated Press reports.
Delaware bankruptcy judge Kevin Carey called the privilege argument a “smoke screen” yesterday and said the report would soon be released.