Firms Rake In $60 Million Bankruptcy Bonanza

By Tom Schoenberg
Legal Times
New York Lawyer
May 6, 2005

The hourly tab for a tax lawyer: $825. A corporate litigator: $810. A pack of law clerks and summer associates: $240 an hour, each.

And that's just at Willkie Farr & Gallagher.

In one of the largest bankruptcies in Maryland history -- a multibillion-dollar series of cases filed by companies affiliated with California's Pacific Gas & Electric Co. -- more than a dozen firms have billed $60 million in legal fees over the last year and a half.

In fact, because of its size and complexity and the relatively easy time firms have had with their fee requests, some lawyers believe the PG&E claims will set a standard for how future bankruptcies are managed in Maryland.

Whatever the case, the bankruptcy is providing a window on how much top firms are charging to handle such claims -- and how much creditors and debtors are willing to pay to make them go away.

And as with any large bankruptcy, a battalion of lawyers was enlisted to represent the companies and their creditors.

New York's Willkie Farr and Whiteford, Taylor & Preston were hired to represent the National Energy Group, while Philadelphia's Blank Rome was tapped by USGen. On the other side, Kaye Scholer was brought in to represent the creditors committee in the National Energy case. Reed Smith did the same in the USGen case.

Additional firms were hired to handle specific litigation and regulatory matters. For example, Foley Hoag was picked as special counsel to USGen for environmental, labor, real property, state regulatory, commercial litigation, tax, and patent matters. Winston & Strawn was hired by USGen and National Energy for regulatory work in both cases.

All told, more than 16 firms entered the fray. The lawyers have helped their clients cut jobs, sell off power plants and wriggle out of contracts. In the meantime, they have logged thousands of billable hours and millions of dollars in legal fees.

For instance, during an eight-month period in 2004, 37 partners at Blank Rome worked on the case, billing 8,707 hours at rates ranging from $295 to $675 an hour. The top biller was Marc Richards, a partner in Blank Rome's New York office who clocked 1,182.7 hours at $560 an hour and another 149.5 hours at $595 an hour. (The firm raised its rates during the billing period.) Richards did not return calls seeking comment.