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The makeover of WorldCom, Inc., came at a hefty price. When it emerged from bankruptcy in April, the company had a new name-MCI, Inc.-and a balance sheet that had shed $35 billion in debt. But it paid about $800 million to consultants in order to reenter the land of the living, according to an MCI spokeswoman. An army of lawyers, accountants, appraisers, tax specialists, and others worked on the 21-month reorganization of MCI, which is based in the Washington, D.C., suburb of Ashburn, Virginia. Under the rules for a Chapter 11 bankruptcy, these advisers hold first rights to the company’s assets. However, the consultants’ fees came in for double scrutiny from bankruptcy judge Arthur Gonzalez, who presided over MCI’s restructuring, and federal district court judge Jed Rakoff, who heard the Securities and Exchange Commission’s suit against the company. Rakoff asked the corporate monitor-a position he created to oversee MCI’s business operations-to review consultants’ billings. But final authority for fee approval rests with Gonzalez, who appointed his own review committee. The panel is behind in its work: Gonzalez’s latest fee order, issued this past March, only covers requests through the end of March 2003. MCI has written its biggest checks to accountants at Deloitte & Touche LLP, KPMG LLP, and PricewaterhouseCoopers LLP. Together, these firms have charged almost $150 million in fees and expenses from July 2002 to September 2003. But MCI’s lawyers have held their own with the auditors. As lead outside counsel in the bankruptcy proceeding, Weil, Gotshal & Manges billed $28.8 million during the July 2002-September 2003 period. Piper Rudnick, which handled a myriad of investigatory matters, charged $21.9 million, and Simpson Thacher & Bartlett, which handled MCI’s defense of the SEC probe and suit, billed almost $8 million. Jenner & Block and Akin Gump Strauss Hauer & Feld each charged slightly more than $14 million. MCI hired 11 other law firms to represent its interests during the bankruptcy. Its board of directors also hired a firm. In addition, examiner Richard Thornburgh-appointed by Judge Gonzalez to investigate allegations of fraud at WorldCom-hired Kirkpatrick & Lockhart, where Thornburgh is of counsel. District court judge Rakoff tackled MCI’s growing expenses first, when he directed court monitor Richard Breeden in March 2003 to review consultants’ billings. In his order, Rakoff noted that “a debtor in the position of [MCI] may not be able to effectively challenge such expenditures.” A month later, bankruptcy judge Gonzalez formed his own fee review committee, which consisted of an MCI in-house attorney, an assistant U.S. trustee, and a representative of the unsecured creditors. The committee hired a forensic firm to review the billings. In August 2003, about a year after the bankruptcy began, the Gonzalez committee issued a report expressing concern for the high number of hours � 31,000 in all-billed by professionals charging more than $500 per hour. For instance, in July 2003, Weil, Gotshal had 25 attorneys bill more than 1,300 hours at $500 an hour or more. The Gonzalez committee recommended a number of cuts when it reviewed the fees and expenses submitted for the most recent period, December 1, 2002, to March 31, 2003. The cuts ranged from $566,000 for Weil, Gotshal, which had billed $6.65 million in fees and expenses, to $280,000 for Simpson Thacher, which had charged more than $2 million. When Gonzalez issued his latest fee order this past March, he gave Weil, Gotshal most of what it asked for, but Simpson Thacher received an amount closer to the committee’s recommendation.

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