Opinion
Case No. 15 B 35358
04-18-2016
In re: LB STEEL, LLC, Debtor.
Chapter 11
FINDINGS OF FACT AND CONCLUSIONS OF LAW IN SUPPORT OF ORDER GRANTING APPLICATION OF DUANE MORRIS LLP, ATTORNEYS FOR OFFICIAL COMMITTEE OF UNSECURED CREDITORS, FOR ALLOWANCE OF INTERIM COMPENSATION AND REIMBURSEMENT OF EXPENSES
| TOTAL FEES REQUESTED: | $217,993.50 | TOTAL COSTS REQUESTED: | $532.30 |
|---|---|---|---|
| TOTAL FEES REDUCED: | $37,917.50 | TOTAL COSTS REDUCED: | $0.00 |
| TOTAL FEES ALLOWED: | $180,076.00 | TOTAL COSTS ALLOWED: | $532.30 |
(1) Duplication of Services
During the period for which compensation is sought, a host of hearings and Committee calls took place in this case. According to the Duane Morris LLP attorneys for the Official Committee of Unsecured Creditors (the "Committee"), the Committee had an interest in almost every hearing in the case, and, therefore, it was necessary that its counsel attend. However, Committee attorneys Rosanne Ciambrone and Matthew A. Olins both attended a majority of the same hearings, and both billed for the time they spent in attendance. As indicated on the attached, during the months of November 2015, January 2016, and February 2016, Ciambrone billed 9.9 hours and Olins 13.7 hours of time for attending court hearings at which both attorneys were present. Likewise, Ciambrone and Olins both participated in weekly calls with the Committee during the months of December 2015, January 2016, and February 2016. Ciambrone billed 9.2 hours and Olins 10.6 hours of time for these calls. For the call on December 8, 2015, both Committee attorney Keri L. Wintle and Ciambrone participated, billing 0.6 hour and 0.5 hour respectively. Additionally, both Committee attorney John Robert Weiss and Ciambrone attended an office conference with Debtor's counsel and DSI on February 23, 2016, for which Weiss billed 1 hour and Ciambrone 0.5 hour.
In addition, the time entries indicate that multiple Committee attorneys appear to have performed the same work in connection with the retention of Livingstone Partners LLC ("Livingstone") as investment banker for the Debtor. As shown on the attached, both Ciambrone and Olins reviewed Livingstone employment issues on November 8, 2015, billing 0.9 hour and 1.4 hours respectively. Both attorneys subsequently did additional work on those issues in November 2015, for which Ciambrone billed 5.9 hours and Olins 3 hours.
The Court denies the allowance of compensation for services that duplicate those of another professional or paraprofessional. See 11 U.S.C. § 330(a)(4)(A)(i). In particular, reduction in fees is warranted if multiple attorneys from the same firm appear in court on a motion or argument or for a conference, unless counsel adequately demonstrates that each attorney present contributed in some meaningful way. In re Pettibone Corp., 74 B.R. 293, 307 (Bankr. N.D. Ill. 1987) ("A debtor's estate should not bear the burden of a duplication of services. If found in the record, such duplication shall be disallowed by the court as unnecessary.").
As indicated above, both Ciambrone and another Committee attorney, most often Olins, attended the same hearings, weekly Committee calls, and office conferences, and Committee counsel has not established that each attorney in attendance contributed in a meaningful way. Additionally, both Ciambrone and Olins appear to have done the same work with respect to issues involving Livingstone's retention. The Court has allowed the time billed by attorney Ciambrone for these matters, as she was the lead attorney and senior counsel for the Committee. All of the remaining time entries billed by Committee attorneys for these matters, as outlined herein, are disallowed.
Of note, on many occasions in connection with the entries discussed above, Olins lumped his time, failing to provide detailed breakdowns of tasks relating to the same matter. The Court may impose a penalty for "lumping." In re Wildman, 72 B.R. 700, 709 (Bankr. N.D. Ill. 1987) (noting that "[a]pplicants may not circumvent the minimum time requirement or any of the requirements of detail by 'lumping' a bunch of activities into a single entry" and that "[e]ach type of service should be listed with the corresponding specific time allotment"). In lieu of imposing an additional specific penalty here, however, the Court has simply disallowed the total amount billed by Olins for each of the lumped time entries in this category due to the unnecessary duplication of services, as indicated on the attached.
(2) Conflicts Check: No Benefit to Estate
Committee counsel spent a considerable amount of time in connection with its conflicts analysis before being retained in this case. Committee attorneys billed a total of 19.8 hours for performing this work in November 2015. The Court denies requests for fees relating to services that do not benefit the estate or that are not necessary to the administration of the case. 11 U.S.C. § 330(a)(4)(A). An attorney's internal work, prior to retention, to determine whether the attorney's firm satisfies the disinterestedness requirement of § 327 of the Bankruptcy Code does not provide benefit to the estate and is not compensable. See In re ACT Mfg., Inc., 281 B.R. 468, 490 (Bankr. D. Mass. 2002). All of the time entries billed by Committee counsel for work related to conflicts analysis, as indicated on the attached, are disallowed. As above, the Court has disallowed the total amount billed by Committee counsel for each of the lumped time entries in this category.
(3) Special Counsel: No Benefit to the Estate
In this case, Special Counsel was hired by the Committee as conflicts counsel to represent the Committee in the investigation and evaluation of potential claims, objections, and/or proceedings that might have been brought against the Debtor's secured lender, MB Financial Bank (the "Bank"). According to Ciambrone's affidavit attached to the Committee's application to employ Duane Morris LLP ("DM"), DM has in the past represented and currently represents the Bank. Special Counsel was retained because, although the Bank waived any conflict that DM's representation of the Committee might pose, that waiver did not include DM's initiation of any lawsuit against the Bank or DM's representation of the Committee in any such lawsuit.
Committee counsel billed a total of 18.6 hours in connection with identifying the appropriate special counsel and then working with the firm that was retained. The estate should not be required to pay for that work as a result of a conflict that Committee counsel had with the Bank. Additionally, given Special Counsel's limited role in this case, the compensation sought for time spent on conflicts counsel issues is excessive, and Committee counsel has not provided any justification to the Court for those unreasonable amounts. For these reasons, and because the fees relating to these services do not benefit the estate, the Court disallows the time entries billed by Committee counsel for work related to conflicts counsel, as indicated on the attached. Dated: April 18, 2016
/s/_________
Janet S. Baer
United States Bankruptcy Judge
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