A recent Detroit Free Press story, “Judge Appoints $600/Hour Attorney to Monitor Excessive Fees in Detroit Bankruptcy,” reports that U.S. Bankruptcy Judge Steven Rhodes appointed a fee examiner to monitor legal fees in Detroit’s Chapter 9 bankruptcy.  Rhodes named Robert M. Fishman of the Chicago-based law firm Shaw Fishman Glantz & Towbin to ensure the city’s legal fees and consulting bills don’t become exorbitant.  Fishman will also be charged with making sure the attorney fees are public information.  Experts have estimated Detroit’s legal fees could top $100 million if the case drags out.

The move was widely expected after the city agreed to pay for the fee examiner’s costs.  Attorneys and staff members at Fishman’s law firm will provide assistance.  Fishman can also contract Fort Lauderdale, Fla-based accounting firm Soneet R. Kapila and Kapila & Company to help monitor attorney fees.

Fishman’s typical hourly rate is $675.  He is discounting his hourly rate to $600 for Detroit.  Rhodes capped the average rate of Fishman attorneys and staff who will work on Detroit’s case at $430 per hour.  He capped the average rate of Kapila associates who will work on the Detroit case at $300 per hour.

NALFA member Pat Gallagher was quoted in the Detroit Free Press story.  "All of the people involved in disputes at this level are paid at the top scale," said Lansing attorney Byron (Pat) Gallagher Jr., who has served as an expert witness in disputes over legal fees.  "As a percentage of what's involved in any of these cases, the fees will be a small part of the dispute."

Rhodes scheduled a Sept. 10 hearing on a proposed order requiring attorneys and consultants to file monthly invoices with the fee examiner, who would be required to file a report on his findings at least once every three months.  If he believes fee are too high, Fishman could recommend a hearing at which Rhodes would consider action. 

The city’s main bankruptcy firm, Jones Day, has already written off millions in bills it does not expect to be paid, officials said.  Hourly fees for Jones Day bankruptcy attorneys range from about $425 to more than $1,000 according to the law firm’s contract with the city.

NALFA also reported on this case in “Detroit’s Legal Fees Could Top $100M in Chapter 9 Bankruptcy”