A recent Texas Lawyer story, “Bank of America Claims Akin Gump’s Legal Fees Excessive,” reports that Bank of America describes Akin Gump as one of the “preeminent” U.S. bankruptcy law firms, but is nonetheless complaining that the firm is charging “excessive and unreasonable” fees for representing the official creditors’ committee in Cal Dive International Inc.’s Chapter 11 case.
The law firm of Akin Gump is acting as the co-counsel to the official committee of unsecured creditors in the bankruptcy suit. On July 15, 2015, Akin Gump filed the first interim application for interim allowance of compensation and reimbursement of expenses. In the application, the law firm is seeking total compensation of $973,628 for its work on the case during this period. In addition, the firm is seeking $20,000 for expense reimbursement.
Bank of America, the "DIP agent" for the lenders under the DIP [debtor in possession] facility agreement, recently submitted its objection to Akin Gump's application for compensation. In the objection, Bank of America criticized Akin Gump's handling of the case.
For example, Bank of America stated in the objection, "Committee counsel billed over 300 hours on their retention application—incurring in excess of $100,000 in fees—including over 150 hours spent on conflicts checking. In comparison, the debtors' lead counsel spent approximately 35 hours on their own retention application. The DIP agent believes that the fees incurred for time spent on conflicts checking are inappropriate."
Bank of America also comments that "the payment of fees pursuant to the first interim application could deplete the amounts available under the approved budget, and thereby negatively impacting the debtors' ability to administer these Chapter 11 cases."
According to Bank of America, "The first interim application, if allowed in full, would deplete estate funds to the point of risking a default under the DIP facility agreement. The DIP agent and the DIP lenders have not agreed to—and will not—advance additional funds to administer these cases."
In its objection, Bank of America requests that the court allow the first interim application only to the extent of $576,512.67, which reflects reductions in fees, in the amount of (a) $217,087.50 for duplicative efforts, (b) $138,517.83 for inappropriate amounts billed in pursuit of the DIP objection, and (c) $41,510, for inappropriate billing incurred in connection with committee counsel's retention application, for a total of $397,115.33 in reductions.