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The fees may be good, but lawyers at O’Melveny & Myers have had a rough few weeks representing one of the nation’s largest failed subprime lenders, New Century Financial Corp. Its outside restructuring attorneys at O’Melveny misled a bankruptcy examiner about funds that may belong to creditors, according to a blistering report by the examiner unsealed this month. And the bank’s outside counsel had to apologize to U.S. Bankruptcy Judge Kevin Carey for a discovery “mishap” in which more than 700,000 e-mails weren’t turned over to the bankruptcy examiner. O’Melveny blamed an “outside vendor” for the problem in a Jan. 14 filing. “The debtors recognize that such errors, even if unavoidable in the context of such a process, cause inconvenience to participants in proceedings of this nature, and accept full responsibility,” wrote O’Melveny lawyers Ben Logan and Suzzanne Uhland, along with local counsel in Delaware. Bankruptcy examiner Michael Missal’s report and O’Melveny’s response were submitted to Carey last fall and unsealed Jan. 17. Missal, a Kirkpatrick & Lockhart Preston Gates Ellis partner in Washington, says O’Melveny attorneys “were not forthright” in their dealings with him, causing the examiner to needlessly spend more than $800,000, plus whatever amount O’Melveny billed for litigating the issue. All told, O’Melveny has charged more than $12 million in six months of work on New Century’s wide-ranging legal issues, according to the firm’s fee applications.
Dan Levine is a reporter with The Recorder , an ALM publication.

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