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Bankruptcy Fees in Twin Cities Archdiocese Case Draw Criticism

August 5, 2015 | Posted in : Bankruptcy Fees / Expenses, Coverage of Fees, Expenses / Costs, Fee Award, Fee Request, Hourly Rates

A recent Wall Street Journal story, “Judge Chides Lawyers on Twin Cities Archdiocese Bankruptcy Fees,” reports that a Minneapolis bankruptcy judge criticized legal fees and expenses that have accrued over the course of the Archdiocese of St. Paul and Minneapolis’s bankruptcy case.

Though he ultimately approved the fee request, Judge Robert Kressel of the U.S. Bankruptcy Court in Minneapolis said he was “stunned” and “frankly a little angry” over legal fees and expenses, which court documents show were approaching $1.8 million as of May 31.  That includes the archdiocese’s professionals and those hired by the victims group, whose fees the archdiocese is obligated to cover.  “Airlines were reorganized for a fraction of this,” he said.

The Archdiocese of St. Paul and Minneapolis filed chapter 11 bankruptcy protection in January and has since been working to reach a settlement with alleged clergy sexual abuse victims, its parishes and its insurance carriers.  Lawyers working on the case have to share the same limited pools of funds that the archdiocese’s creditors—primarily the abuse victims—are counting on for compensation.

Charlie Rogers, a lawyer with Briggs & Morgan who represents the archdiocese, said the firm’s average billing for the case was $300 an hour, which he said is standard for the area.  Rogers emphasized the size and complexity of the case, which involves nearly 250 claims from alleged victims and 187 parishes.  Rogers also said his firm has taken part in 20 mediation sessions to date and has produced 150,000 documents.

Robert Kugler, a lawyer with Stinson Leonard Street who represents alleged victims, said mediation sessions and working with victims involves a lot of work outside of the view of the bankruptcy court.  “There’s a great deal going on that Your Honor doesn’t see,” he told the judge.

Other diocesan bankruptcies, like the Archdiocese of Milwaukee’s case, have stretched on for years, racking up huge legal bills.  The Milwaukee archdiocese has spent about $18 million in legal and professional fees for itself and a committee representing victims since the inception of its chapter 11 case more than four years ago, according to a spokesman.

The Archdiocese of Milwaukee is currently offering a fraction of that figure—$4 million plus another $500,000 to provide lifetime therapy—to pay about 125 of the more than 500 people who have sought compensation.  Alleged abuse victims say that isn’t enough, and the two sides remain mired in litigation.