A recent Detroit Free Press story, “Detroit’s Legal Fees Could Top $100 Million for a Chapter 9 Bankruptcy,” reports that the City of Detroit has been billed nearly $1.4 million in legal fees by Jones Day for the first six weeks on the job.  The restructuring could result in the largest municipal bankruptcy in U.S. history.  The Chapter 9 case could cost more than $100 million, said Douglas Bernstein, partner with Plunkett Cooney in Birmingham.  “It is certainly one of the reasons that you want to get a resolution more quickly, because the longer it goes, the more money gets burned by paying professionals,” Bernstein said.

Though no city as large as Detroit has ever declared bankruptcy, some comparisons exist, such as Orange County, Calif., which accumulated $86 million in bills during its 18-month stay in bankruptcy that ended in 1996, according to reports.  Jefferson County, Ala., which is still in bankruptcy, has spent nearly $20 million in legal fees since August 2011, according to reports.

In the bidding process, Jones Day prevailed over 13 other law firms.  Among them were Detroit-based Dykema, Butzel Long, Jaffee Rait, and Plunkett Cooney.  Jones Day, in its 209-page bid (pdf), gave the city a discount price; the pre-bankruptcy work would normally cost at least $5 million but is capped at $3.35 million, plus a maximum of $575,000 per month if the city enters bankruptcy, according to its bid.  Detroit’s emergency manager, Kevyn Orr, is a former Jones Day partner.