Attorney David Chesley's Criminal Defense Blog

Detroit, Nearly Bankrupt and Paying its Lawyers $1000 an Hour

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Detroit, currently facing a $380 million deficit is paying its lawyers $1,000 an hour because as Charlie Langton, a legal analyst at WWJ (A Detroit based TV Channel) explains it “that’s the going rate.”

Jones Day, the company hired by Detroit government to restructure its finances has already stacked a bill of $1.4 million according to a report made by another law firm, AM Law Daily. The report also added that a single lawyer, David Heiman, has billed Detroit $149,419 for 153 hours of work since March of this year.

Charlie Langton of WWJ said that Kevyn Orr, the man who approved the $1.4 million bill, used to work for Jones Day, making this a possible conflict of interest. “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 all 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.”

“Detroit is going bankrupt and that’s the going rate,” Langton added.

Kevyn Orr is a bankruptcy expert who was hired in March to fix Detroit’s finances. Orr says that Detroit’s debt could top 17 billion dollars in the long run and asks bond-holders to accept steep markdowns on what is owed to them.

“Tapped Out” is how Orr described Detroit after a meeting with creditors. He continued to say that there is a 50-50 chance that the city will have to file for municipal bankruptcy.

Orr is defending the fees, stating that top lawyers are needed because of what is at “stake.” The reports from AM Law Daily showed that the cost of the bill Orr approved were connected to advice on restructuring, labor, pension analysis, and chapter 9 plans.

Langton had this to say about the reports “That advice may come in 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.”

Detroit, once the center of the US car production in the 50’s, has since shrunk in population by 60%, leaving thousands of buildings vacant, and many in dangerous conditions.

Michigan Governor, Rick Snyder said this in reference to the city of Detroit “There’s probably no city that’s more financially challenged in the entire United States.”

(a few of the thousands of vacant buildings in Detroit)

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