\u201cTapped out\u201d Detroit is facing a $380 million deficit, but the firm hired to restructure the city\u2019s finances pays its lawyers $1,000 an hour because \u201cthat\u2019s the going rate\u201d.<\/p>\n
The company hired to restructure Detroit\u2019s financing, Jones Day, has stacked up a $1.4 million bill, according to a report by another law firm AM Law Daily, which obtained the figures. The report added that lawyer David Heiman has billed the city $149,419 for 153 hours of legal work since March, reports a WWJ, a local TV channel.<\/p>\n
AM Law Daily said that the 153 hour or six week total amounts to more than one-third of what Jones Day is owed under their contract to city authorities.<\/p>\n
Charlie Langton, a legal analyst at WWJ – a CBS owned Detroit based TV channel \u2013 said that the man who approved the $1.4 million fee used to work for Jones Day, raising the possibility of a conflict of interest.<\/p>\n
\u201cEmergency manager Kevyn Orr approved the fees totaling about $1.4 million, but what makes this even more controversial is that the law firm getting all the money is Jones Day \u2013 that\u2019s Orr\u2019s former law firm. Oh, you want some more controversy? That $1.4 million is just for six weeks of work,\u201d Langton said.<\/p>\n
\u201cDetroit is going bankrupt and that\u2019s the going rate,\u201d he added.<\/p>\n
Orr is a bankruptcy expert who was hired in March by the state to sort out Detroit\u2019s perilous finances, which are running into a $380 million deficit, but which in the long-term could hit $17 billion. Orr is asking bond owners to accept steep mark downs on what they\u2019re owed as a short term way of easing the debt burden.<\/p>\n
The report details that the costs were connected to advice on restructuring, labor and pension analysis and chapter 9 advise relating to the US Bankruptcy Code. Orr says that top lawyers are needed because of the amount of money that\u2019s at stake and has defended the fees he\u2019s charging. <\/p>\n