Detroit — November 24, 2014 at 7:05 am

While Detroit contended with largest municipal bankruptcy, its lawyers were robbing it blind


The price tag for the attorneys and associated staff that are handling Detroit’s bankruptcy is expected to hit at least $200 million. However, some terrific reporting by WXYZ in Detroit is turning up some scandalous things. The law firms who are running the show are ringing up incredibly large tabs for things like receiving emails, reviewing press coverage, and one is even paid to take a chauffeured car in from another state.

There’s this:

A report on our first review looked at an attorney for Detroit retirees who are taking pension cuts. That attorney was billing just to walk to court.

Another attorney is taking chauffeured cars to Detroit from another state.

And this:

We’ve found that someone with the initials GMK who works for Conway MacKenzie consultants charged the city $297.50 to sit in the auditorium of Detroit Mayor Mike Duggan’s State of the City address last February 26. The event was free and was carried live on and Channel 7.

We also found the Jones Day law firm — the primary bankruptcy attorneys for Detroit — paid to have Emergency Manager Kevyn Orr chauffeured around New York City for a day last April to do media interviews. The cost was $589.73. Orr was a partner with Jones Day before he was appointed to run Detroit by Governor Rick Snyder in March of 2013.

Kilpatrick and Associates, a law firm in Auburn Hills, charged just to RECEIVE email. That cost was $20 a pop in July of last year. Right below that, on the same bill, taxpayers were charged another $40 to read the emails and write back.

And this:

As you are reading this news and watching video news reports, think about getting paid, $400, $600, $700 an hour. That’s what some attorneys billed in the Detroit bankruptcy bonanza in a one week. […]

Denton in New York city who represented the official Committee of Detroit Retirees, billed a total of $228,000 through June of this year for reading news, analyzing it and issuing news releases.

It said in court papers, it was in a media war with the city over pension and health care cuts and they had to “inform its constituents of its efforts and to influence certain case events.

They were not alone. The banking giant Lazard also in New York City billed for “reviewing recent press” a half hour a day nearly every day. But good luck figuring out the bill. The city paid Lazard a flat fee. This year is was $175,000 a month.

And this:

On December 3, 2013 the Detroit federal courtroom was packed with high-priced attorneys as Judge Steven Rhodes ruled Detroit was eligible for bankruptcy. Outside, retired city workers and union leaders were devastated that their pensions could be cut.

Now, with bankruptcy close to the end, the cuts did happen for retirees. And for many attorneys in the case, it was the exact opposite. As they were arguing over how much to cut city workers and how much to stiff other creditors, we found dozens of attorneys jacked up their rates charging taxpayers even more.

As we reviewed more than ten thousands pages of bills we couldn’t help but notice those filed by Jones Day hand-picked by Governor Rick Snyder. That firm had rates increases of 9% and 10%.

Dentons, the big New York firm that represented the official retirees committee also had increases of 4% to 6%. A Lexis-Nexis review for 2014 shows a national average of law firm rate increases is 4%.

Both firms told the court-appointed Fee Examiner that their rates were not so bad because Jones Day cut theirs by 10% for Detroit and Dentons charged a lower rate that they billed other clients.

It’s a good job if you can get it. And, by burying it in thousands upon thousands of pages of billings, you might even get away with some of it.

[Image credit: Pixabay]