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Fee Requests in Boy Scouts Bankruptcy Exceed $100M

May 12, 2021 | Posted in : Bankruptcy Fees / Expenses, Fee Request, Hourly Billing, Hourly Rates, Practice Area: Bankruptcy / Restructuring

A recent ABA Journal story by Debra Cassens Weiss, “Fee Applications in Boy Scouts Bankruptcy Exceed $100M; Judge Calls Total ‘Staggering’” reports that the court overseeing the Boy Scouts of America bankruptcy case has appointed an examiner to review fees that have become a point of contention.  Professional and attorney fee applications filed with the court exceed $100 million, and the total could reach $150 million by August, according to the New York Times.

The total includes fees sought by professionals working on behalf of the Boy Scouts of America and sexual abuse victims but does not include fees that will be paid to victims’ lawyers on a contingency basis.  The fee applications also include legal work that would be done for the Boy Scouts of America even if the group had not filed for bankruptcy, including trademark litigation with the Girl Scouts, fee examiner Justin Rucki told the New York Times.

U.S. Bankruptcy Judge Laurie Selber Silverstein of Delaware called the $100 million total “a staggering number” during a virtual March 17 hearing in which she urged the parties to reach a resolution.  “Every dollar to professional fees is a dollar that comes out of some creditor’s pocket,” Silverstein said.

One lawyer billed $267,435 in just one month, according to the New York Times. Another billed at $1,725 per hour.  Associates with little experience are billing more than $600 per hour.  Fourteen lawyers at White & Case, which represents the Boy Scouts of America, are billing at more than $1,000 per hour.  Lawyer fees of more than $1,000 per hour are almost routine in complicated bankruptcy cases, according to Lynn LoPucki, a professor at the University of California at Los Angeles School of Law, who spoke with the New York Times.  White & Case has said the billing rate is reasonable given the complexity of the case.

One of the insurance companies involved in the litigation, the Century Indemnity Co., has proposed that Silverstein hold back 20% of legal fees pending a review.  Tancred Schiavoni, a Century Indemnity Co. lawyer, criticized high billing rates, as well as the number of highly paid people working on the case.  Paul Mones, a lawyer representing about 400 clients, said that the fees and number of professionals working on the case are proportional to the case complexity.  Insurers are just looking for ways to limit their exposure, Mones told the New York Times.