© 2012 The Texas Lawbook.
By Natalie Posgate
Staff Writer for The Texas Lawbook
AMR Corp. may be in bankruptcy court, but the lawyers advising American Airlines and its creditors in the Chapter 11 proceeding are raking in the money – about $100 million so far.
More than a dozen lawyers working regularly on the bankruptcy are charging $1,000 or more and three are billing at $1,150 an hour, according to court records from the United States Bankruptcy Court Southern District of New York, where the case is being litigated. Thirteen additional attorneys have an hourly rate between $900 and $975.
According to monthly fee statements filed as of Wednesday in the bankruptcy court, lawyers have charged $120.9 million in legal fees and expenses to AMR since the Fort Worth-based company filed for bankruptcy protection 11 months ago. Between 10 percent and 20 percent of that total, varying from month to month, is for legal work unrelated to American’s reorganization and restructuring, according to court records and lawyers familiar with the case.
Some of the law firms that are directly involved in the bankruptcy, such as New York-based firms Weil, Gotshal & Manges and Debevoise & Plimpton, are billing AMR for legal fees ranging from $2 million to $5 million per month.
As of August, Weil has charged $38 million and Debevoise has billed $24.5 million in fees and expenses. The five law firms that have billed AMR the lion’s share are based in New York and Los Angeles, including Dewey & LeBoeuf, which billed $4.6 million before it also went bankrupt this spring.
When AMR filed for Chapter 11 protection last November, company officials said it did so in the Southern District of New York because the judges there have the most experience handling large, complex bankruptcies.
But other bankruptcy lawyers said that AMR’s outside legal advisers also benefited from the decision because the judges in the Southern District of New York are more willing to approve higher fee requests from outside counsel.
That prediction has come true, according to the monthly filings with the bankruptcy court.
Twenty-five lawyers, according to court filings, are billing $1,000 an hour or more – a dozen of them are working almost daily on the case.
While Weil, which currently has four lawyers billing $1,075 an hour, is a New York-based firm, several of its lawyers working for AMR practice in Dallas or Houston. For example, corporate law partner Tom Roberts, who splits his time between New York and Dallas, has represented AMR on various transactional matters for several years. Roberts, whose hourly rate is $1,075, was one of the lead lawyers representing Houston-based Kinder Morgan in its $23 billion acquisition of El Paso Corp. earlier this year.
According to Weil’s August monthly fee statement, two of its partners – Mary Korby in Dallas and Alfredo Perez in Houston – are currently billing at $1,000 an hour or more. Stephen Youngman, a Weil partner in Dallas, is charging $950 an hour.
The hourly rates being charged to AMR have become the talk of bankruptcy and corporate lawyers in Dallas and Fort Worth.
“How does a lawyer survive on such a petty amount as $950?” joked one prominent Texas bankruptcy lawyer who is closely following the proceeding but asked not to be identified. “Part of the Texas bankruptcy bar is stunned at these kind of staggering rates. Part of the bankruptcy bar here is disappointed that this case and the legal fees are going to New York instead of staying here in Texas.
“But I promise you, every lawyer in town is envious and wishes they were involved in this case and charging these kind of rates,” he said.
That being said, the Weil and Debevoise partners do not have the highest billing rates of the lawyers involved in the case. That distinction goes to three partners at New York-based Skadden, Arps, Slate, Meagher & Flom, which represents the creditors committee.
Three Skadden partners are billing $1,150 per hour, while four others from the firm are charging $1,090 an hour. Skadden has made $14.5 million overall since the case began in November 2011.
Interim fee applications show that the highest paid lawyers so far include Debevoise securities partner John Curry, who billed $1,846,871.25 from Nov. 29 to July 31. Right behind Curry is fellow Debevoise corporate restructuring partner Jasmine Ball and Skadden corporate restructuring partner Jack Butler, who in the same time frame charged $1,799,128.50 and $1,728,220 respectively.
While AMR’s bankruptcy proceedings dominate the legal fees being charged the airline, lawyers representing American in non-bankruptcy litigation have been keeping some Texas firms busy.
An example is American’s lawsuit against flight reservation and data business Sabre Holdings Inc., which reached a settlement Wednesday in a Fort Worth district Court. Houston-based litigation boutique Yetter Coleman is the lead trial counsel for American and is also representing the airline in a separate but related lawsuit against Sabre, Travelport LP and Orbitz Worlwide, Inc. Other Texas firms involved in these lawsuits include Harris, Finley & Bogle and Weil.
According to Weil’s second compensation period billing statement, the firm’s work on these combined matters accounted for more than 50 percent of Weil’s fees and expenses for the second compensation period, which billed AMR a total of $17,977,612.97 worth of work between April 1 and July 31.
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