WHITE PLAINS, N.Y. (Legal Newsline) - The lawyers representing Purdue Pharma in its Chapter 11 bankruptcy proceedings have submitted their first two bills to the court and they show how expensive this multibillion-dollar restructuring will be: Nearly $8 million for seven weeks of work, with one partner billing almost a half-million dollars for the month of October alone.
Purdue entered bankruptcy on Sept. 16 after it became clear it couldn’t sustain the cost of defending itself against thousands of lawsuits accusing the OxyContin manufacturer of causing the national opioid crisis. The case in the New York court of U.S. Bankruptcy Judge Robert Drain has quickly become a fee bonanza for lawyers and other professionals as they try to work out a restructuring plan under which Purdue most likely will be turned over to some type of public corporation and run for the benefit of claimants.
The process won’t be cheap, however. In its first two monthly bills submitted to the court, Purdue’s lead bankruptcy counsel, Davis Polk & Wardwell, said its partners, associates and other professionals racked up 9,866 hours between Sept. 16 and Oct. 31 at an average rate of $986.06 in October after a 20% discount from what it termed “reasonable compensation.”
Marshall Huebner, a top partner in charge of the reorganization, submitted a bill for 259 hours in October, or more than 50 hours a week, at $1,645 an hour for a total of $426,384. Other big billers included partners Timothy Graulich (233 hours at $1,645 an hour) and Eli Vonnegut (217.2 hours at $1,585 an hour). All told, partners earning more than $1,400 an hour billed 1130.5 hours in October and 589.9 hours in September, accounting for around 40% of total billing.
The bills also reveal the high cost of employing even junior lawyers in New York. Associates who passed the bar this year are being billed at $645 an hour with attorneys of the 2015 vintage being billed at more than $1,000 an hour. In October, 11 partners and some 80 associates worked on the case, many for more than 10 hours a day.
Vonnegut, of Davis Polk, didn’t respond to a request for comment.
The legal bills will grow when Purdue starts paying lawyers for the entities suing it. In an order this week, Judge Drain approved payment to outside lawyers working for the ad hoc committee of claimants: plaintiffs with lawsuits against the company including individuals, representatives of children born to addicts and various organizations. Those lawyers include are Brown Rudnick, Gilbert LLP, Kramer Levin and Otterbourg PC. Under the order, they can submit bills for their time and expenses.
The detailed billing records illustrate how much time a complex corporate bankruptcy can consume. Lawyers reported working as much as 21 hours a day analyzing legal questions and drafting briefs, with many associates clocking in 10- to 17-hour days in October. Partners billed for activities including reviewing press reports, writing emails and drafting a Supreme Court brief in opposition to the State of Arizona’s unusual attempt to pursue its claims outside of bankruptcy in the nation’s highest court.
The firm listed more than $60,000 in October expenses including $30,400 for research, $14,000 for copies at 10 cents a page, $5,000 for meals and $4,877 for travel. The food charges ranged from $2,368 for a “Purdue Pharma Conference Meal” to scores of delivery orders and cafeteria meals for $10 to $20 apiece. Lawyers also expensed a number of nights at the Ritz-Carlton hotel near the bankruptcy court in White Plains at $370 to $400 a night as well as train fare back and forth to Manhattan.