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The surface has barely been scratched in the Pacific Gas and Electric Co. bankruptcy case, but law firms are already asking for millions in attorneys’ fees. Five firms, plus the accounting firm PricewaterhouseCoopers, have asked Northern California’s bankruptcy court to award them nearly $7 million in fees and expenses incurred since the San Francisco-based PG&E filed for bankruptcy in April. The requests, which generally cover work done until June 30, mean PG&E is racking up monthly legal bills in excess of $2 million. Led by partner James Lopes, San Francisco-based Howard Rice Nemerovski Canady, Falk & Rabin, which represents PG&E in the bankruptcy proceedings, has racked up the largest bill, totaling more than $3.7 million. A distant second is Heller Ehrman White & McAuliffe, also based in San Francisco, which represents the utility in regulatory and litigation matters. The firm’s fees and expenses total nearly $1.7 million. In bankruptcy proceedings, lawyers representing a debtor or other parties can ask the court for payments before the case is resolved. Firms are able to recover most of their ongoing fees on a monthly basis. A portion of the request — in this case 10 percent of the fees requested, which will later be increased to 15 percent — is held back pending an official review every four months by Judge Dennis Montali, who is presiding over the bankruptcy. The first official review will likely be held in September, at which time any party in the case, including U.S. Trustee Linda Stanley, may object to the fee requests. “Just because we don’t object to the monthly requests doesn’t mean we waive our rights to object later,” Stanley said. Stanley said her office has already received more detailed expense reports than those filed with the court and is reviewing them. She added that her office has already sought explanations or clarifications from firms. Also requesting compensation is New York-based Milbank, Tweed, Hadley & McCloy, which represents a court-appointed committee of creditors. The firm says in April alone it tallied about $409,000 in fees and expenses. PricewaterhouseCoopers, the financial consultant that Milbank hired for the case, is seeking about $890,000. San Francisco-based Keker & Van Nest is also involved with PG&E as special counsel, and is seeking more than $130,000. Robert Van Nest said his firm is investigating power purchases that PG&E made for “potential claims.” The figures do not include any retainers paid by PG&E in advance of its bankruptcy filing. Ultimately, all the fees in the bankruptcy case will be paid by PG&E. However, fees for work outside the bankruptcy case must also be approved by Montali. The unusual monthly fee requests are allowed in bankruptcy proceedings under In re Knudsen Corp., 84 B.R. 668, a 1988 decision by the 9th U.S. Circuit Court of Appeals Bankruptcy Appellate Panel that allows lawyers to receive interim payments. However, the process is not always used. Stanley said it is more common in large Chapter 11 cases, such as PG&E’s. She pointed to Howard Rice’s $3.7 million bill as a reason. “You can’t expect a law firm to be carrying that kind of balance,” Stanley said.

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