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Nearly Bankrupt Detroit Pays Lawyers Almost $1,000 An Hour

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Charlie-Langton Charlie Langton
My real job is an attorney. I have been practicing law for nearly 25...
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DETROIT (WWJ) - Why is the city of Detroit paying lawyers nearly $1,000 an hour?

“Well, Detroit is going bankrupt and that’s the going rate,” said WWJ legal analyst Charlie Langton.

According to a recent report, the law firm hired to oversee Detroit’s restructuring has already racked up a $1.4 million bill. AM Law Daily, which obtained the figures, says lawyer David Heiman has billed the city $149,419 for 153 hours of legal work since March.

“Emergency Manager Kevyn Orr approved the fees totaling about $1.4 million, but what makes this even more controversial is that the law firm getting the money is Jones Day — that’s Orr’s former law firm. Oh, you want some more controversy? That $1.4 million is just for six weeks of work,” Langton said.

The report says the costs were associated with sophisticated restructuring advice, labor and pension analysis, and Chapter 9 planning. Orr has defended the expense, saying top lawyers are needed because of what’s at stake.

“That advice may come in handy because on Wednesday, Kevyn Orr must deal with the demand from the police and fire pension board to force the city to pay an unpaid $30 million pension contribution,” Langton said.

AM Law Daily  says the six-week total amounts to more than one-third of what Jones Day is due under contract.

Orr is a bankruptcy expert hired in March by the state to fix Detroit’s finances, which are running a $380 million deficit this year. He says long-term debt could top $17 billion and is asking bond-holders to accept steep markdowns on what they’re owed.

Following a closed-door meeting with creditors last month, Orr said Detroit is “tapped out.” He said there’s still a 50-50 chance the city will file for a municipal bankruptcy.

MORE: Detroit Emergency Manager Proposes Plan To Creditors

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