Bankrupt Airline Faults Dewey for $644,000 in Unnecessary Work
During the final six months before its dissolution, Dewey & LeBoeuf billed $4.6 million in fees and expenses for work as special counsel to bankrupt American Airlines parent company AMR Corporation. Now, AMR attorneys are trying to trim $644,000 off that bill, citing what they view as unnecessary diligence completed by a partner as he prepared to leave then-floundering Dewey, as well as overpriced FedEx bills and charges for first-year associates prohibited by a contract covering the assignment.
In an eight-page objection filed Thursday in Southern District Bankruptcy Court in New York, AMR lays out the allegedly extraneous charges submitted by Dewey, which represented the airline in several litigation and antitrust matters unrelated to the bankruptcy.
Legal fees in the AMR bankruptcy have quickly accumulated since the case began in November 2011. More than 20 law firms were on the payroll in February, with lead counsel at Weil, Gotshal & Manges earning more than $38.9 million in its first year on the case.
AMR counsel also objected Thursday to $226,794 in fees requested by Jenner & Block, which serves as counsel to a committee of American Airline retirees. According to the filing, Jenner has already agreed to drop $133,806 of that amount, leaving $71,028 in question.
Dewey submitted its final AMR bill to the court a year ago, covering the period from Nov. 29, 2011, through May 19, 2012. When Dewey sought bankruptcy protection just days after its last AMR billing date, the firm's role in the case was taken by former Dewey antitrust partner MJ Moltenbrey to Paul Hastings, Moltenbrey confirmed Friday.
The proposed cuts listed in the Thursday filing include $57,222 billed by former Dewey partner Eamon O'Kelly for 74.8 hours spent "reviewing documents and working on discovery materials in order to 'get up to speed'" on an antitrust case brought by American against Travelport and Orbitz in Texas federal court. During the period in question, "it appears that this partner was actively seeking to leave Dewey & LeBoeuf and engaged in employment negotiations with another firm," AMR's objection says.
O'Kelly became the 38th partner to leave Dewey in 2012 when he decamped for Arent Fox at the end of last March. Because of his departure, AMR's counsel at Weil Gotshal argue the hours billed "were not necessary or beneficial." Reached Friday, O'Kelly declined to comment. A representative for Dewey's secured lender trust, which is tasked with prosecuting the fee application, could not be reached for comment Friday. Weil partner Alfredo Perez in Houston, who prepared the objection, did not immediately respond to a request for comment.
Another 1,646 hours billed by five Dewey associates are also being questioned because of an agreement that, "absent exceptional circumstances," AMR "will not pay for first year associates on any matter." AMR proposes cutting the entire $584,436 in fees attributed to the group.
The five junior lawyers have since moved to five different firms: Elizabeth Zane to Orrick, Herrington & Sutcliffe in Washington, D.C.; Maja Zerjal to Proskauer Rose in New York; Michael Herring to Cooley in D.C.; Susan Zhu to Paul Hastings in D.C.; and William Weaver to Jones Day in D.C. (Weaver declined to comment. The other four did not immediately return requests for comment).
A hearing on the Dewey objections is scheduled for Thursday.