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PG&E Legal Bills Already Top $84M in Chapter 11 Case

April 2, 2019 | Posted in : Bankruptcy Fees / Expenses, Fee Agreements, Fee Request, Hourly Rates / Hourly Billing

A recent The Recorder story by Xiumei Dong, “PG&E Legal Bills Already Top $84M for Chapter 11 Case,” reports that four outside law firms have billed Pacific Gas and Electric Co. at least $84 million for legal services related to the company’s January bankruptcy filing.  The utility company disclosed its legal spend in a series of court filings last month, as it sought approval from U.S. Bankruptcy Judge Dennis Montali to continue employing the law firms.  PG&E is seeking to retain Cravath, Swaine & Moore; Weil, Gotshal & Manges; Jenner & Block; and Keller & Benvenutti as its legal advisers for the Chapter 11 proceedings.

PG&E listed more than $50 billion in estimated liabilities when it filed for Chapter 11 protection.  According to the court docket, Montali is scheduled to consider PG&E and the firms’ motions at a hearing April 9.  The utility giant said it has paid Cravath, which is PG&E’s lead coordinating counsel in wildfire-related matters, roughly $75.7 million leading up to the bankruptcy filing.  According to court papers, PG&E’s payments to Cravath included a $10 million retainer from which the firm had drawn only about $3 million.

The firm intends to apply the rest of the retainer to any outstanding amounts for PG&E-related costs that it did not bill for before the filing, or as credit toward any services arising after the filing, the filing said.  In addition to representing PG&E in Chapter 11 proceedings, Cravath has advised the utility for over a year on corporate governance, strategic transaction and financing matters, court documents said.

Last year, PG&E hired a team from Cravath, including chairman Evan Chesler and litigation partners Timothy Cameron, Kevin Orsini and Damaris Hernández, as defense counsel in 200-plus suits stemming from fires in Northern California.  The company also turned to Wilson Sonsini Goodrich & Rosati and Quinn Emanuel Urquhart & Sullivan to handle those cases.

Cravath worked closely with Weil on PG&E restructuring alternatives, but Weil billed far less.  According to another court filing, Weil received over $4.7 million from PG&E in the 90 days leading up to the company’s bankruptcy filing, and also has a remaining balance of $1.5 million on a fee advance from PG&E, which the firm said it will use to pay for the outstanding amounts that it did not bill for before the filing.

PG&E has hired Chicago-based Jenner & Block as special corporate defense counsel for state and federal regulatory matters during the Chapter 11 proceedings.  Jenner & Block is also handling a criminal case involving PG&E, connected to a natural gas explosion that occurred in the city of San Bruno, California, in September 2010.  According to the court filing, PG&E has paid the firm $3.57 million during the year leading up to the Chapter 11 filing.

San Francisco based Keller & Benvenutti is also representing PG&E in bankruptcy court.  Since May 2018, the firm has advised PG&E on legal and financial matters regarding potential liabilities resulting from 2017 and 2018 Northern California wildfires.  Court papers said the firm has received $383,635 in the 90 days before the Chapter 11 filing.

In separate court documents supporting PG&E’s motion, the court papers also revealed the hourly rate of the four firms.  Cravath attorneys are charging at rates of $415 to $1,500 per hour, while Weil attorneys charge $560 to $1,600 per hour.  Jenner & Block attorneys charge PG&E at hourly rates ranging from $400 to $982 and Keller & Benvenutti attorneys are charging at $400 to $800 per hour.