It pays to work for a financially crippled city.
In Jones Day's first month and a half acting as Detroit's chief restructuring counsel, lawyers from the firm billed the city $1.37 million, according to copies of billing statements obtained by The Am Law Daily through a public records request.
The six-week total amounts to more than one-third of what Jones Day is due under a contract signed in mid-March that is set to expire September 15. If the firm continues billing at that pace, it will hit the maximum $3.35 million it is to be paid well before the pact's six-month term is up. Perhaps mindful of that, the firm—which has at least 19 partners, one counsel, and 28 associates working on the assignment—omitted what it says is $425,575 in "discretionary write-offs taken after internal review" before submitting its bills. An additional nearly $363,314 had to be deducted for amounts that went over predetermined caps, according to the records.
The firm's first series of bills, which cover the period from March 15 through the end of April, provide little in the way of specifics about what advice Jones Day has been giving city officials and Detroit's emergency manager Kevyn Orr, a former Jones Day partner.
What the heavily redacted documents do reveal are 13 subject areas on which the firm has focused, including general restructuring advice, labor and pension analysis, water and sewer analysis, debt restructuring issues, and Chapter 9 contingency planning.
Orr has had a hectic few months since becoming Detroit's emergency manager in early March. On June 14 he made a tough sell to the city's creditors, laying out the depths of the city's fiscal woes and offering a plan that would leave some creditors receiving no more than 10 cents on the dollar on what they owed. At the time, Orr estimated the city's total liabilities at as much as $20 billion, and announced that the city would stop repaying debts that aren't backed by a guaranteed revenue stream, the Detroit Free Press reported.
The city has also been grappling with the disappearance of its City Council president, Charles Pugh; the appointment of a new police chief whose proposed $225,000 salary has drawn withering criticism; and the prospect of a new regime taking over City Hall following Mayor Dave Bing's May 14 announcement that he will not seek reelection when his term concludes at the end of the year.
Jones Day is staffing its work for the city heavily with partners, many of whom it identified in a March pitch laying out its case for why it should get the restructuring assignment. (The Am Law Daily reported in June about how Jones Day beat out 13 other law firms to win the role.) The 19 partners and one counsel identified in the March and April bills accounted for 1,285 hours of work; a total of more than two dozen associates racked up 1,202 hours.
Among senior Jones Day lawyers working on the matter, Cleveland-based bankruptcy and restructuring partner David Heiman topped the lists for both most hours spent (153) and largest amount billed by one individual ($149,419). Only corporate restructuring associate Daniel Merrett, who put in 160 hours and billed $84,131, logged more time.
Earlier this year, Heiman told The Am Law Daily that the Detroit work was "quite expansive" for the firm, though he declined to go into details about what the team had been working on. At the time, he said the firm wanted to convey to the city during the pitch process that the assignment "was viewed by us as a critically important project, not only for Detroit but as a representation or microcosm of some of the ills of American cities." Heiman could not immediately be reached Wednesday.
Other lawyers billing substantial amounts of time on Detroit's behalf, with hourly rates of as much as $1,000, include restructuring partner Corinne Ball, whom The American Lawyer featured on its cover in September 2009 for her work on Chrysler's bankruptcy (131.5 hours); Atlanta-based restructuring partner Jeffrey Ellman (149); Washington, D.C.–based employee benefits partner Evan Miller (118); and bankruptcy partners Heather Lennox (89) and Bruce Bennett (83.5).
Jones Day lawyers have been trying to reduce travel to Detroit unless absolutely necessary, Heiman said earlier this year. In March and April, the firm spent $9,152 on airfare, $1,752 on hotels, and $1,432 on additional travel expenses.
In the few nonredacted line items included in the records, Jones Day lawyers report attending meetings with Detroit representatives and the city's other outside advisers, including attorneys with Miller Canfield. The Detroit-based firm has done work for the city for years and is also under contract to advise on its restructuring. The firm's bills were not yet available through a records request.