PG&E trustee in fees row with five firms

The bankruptcy case for California’s Pacific Gas and Electricity Company (PG&E) – one of the most complex in US history – has turned into a row over legal fees.

The five US firms at the heart of the action have all had their bills disputed by US trustee Linda Elstrom Stanley.
New York’s Milbank Tweed Hadley & McCloy, which scooped the work advising the creditors’ committee against competition from five rivals, has had its bill for $2.2m (£1.54m) disputed. That sum is for work since April, and the firm has had six partners on the case.
The firm was criticised for putting highly-priced partners on the regulatory and legislative matters. The trustee wants $200,000 (£140,040) knocked off the firm’s bill.
Milbank Tweed lead partner Edwin Feo said: “The US trustee suggests that these fees were unnecessarily incurred. In doing so the trustee implies that, in helping the committee work toward a successful plan for PG&E’s recovery from a complex regulatory failure, Milbank should not have undertaken to research and analyse the regulatory and legislative processes that were at the root of this failure, or to analyse current regulatory and legislative changes. This would have been irresponsible.”
PG&E is being represented by San Francisco firm Howard Rice Nemerovski Canady Falk & Rabkin, among others. The firm is lead bankruptcy counsel and has already billed the client $4.4m (£3.08m) since April. The firm faced minor criticism from the trustee.
The debtor’s other counsel include Heller Ehrman White & McAuliffe, which is handling litigation and regulatory work, and has racked up $2.1m (£1.47m) in fees.
Heller Ehrman’s bill is being disputed on the grounds that more than $200,000 (£140,040) of its billing was done by law students, staff and paralegals, and the trustee says that, legally, administrative work cannot be billed.
The firm’s lead partner Peter Benvenutti said: “In my view it’s a misinformed and somewhat naive objection.”
The firm agreed to reduce its fees by $50,000 (£35,010), but said that it was as a result of a conversation with the client before the objection was raised.
Other firms acting for the debtor include Skadden Arps Slate Meagher & Flom, which has billed $400,000 (£280,080) so far, and Cooley Godward, which has billed $300,000 (£210,060). The trustee also wants both of their bills reduced.