Marianas Variety

Last updateWed, 27 Sep 2017 12am

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    Tuesday, September 26, 2017-11:20:58A.M.

     

     

     

     

     

‘A consciousness of guilt’

MAINTAINING that Brown Rudnick LLP’s fees are unreasonable and unwarranted, the Office of the Attorney General thinks the 36 percent discount made by the firm was dictated by a guilty conscience.

moneyBrown Rudnick LLP filed an omnibus reply to objections and responses to its application for compensation and reimbursement where it indicated its willingness to provide its client, the Retirement Fund, a 36 percent discount to bring the total requested legal fees down from $750,937.52 to $488,522.

But the AG’s office still thinks that this should be reduced to $112,640.67.

“After paddling its billings with excessive and unnecessary services, Brown Rudnick now tries to relieve its conscience by providing the Fund with a 36 percent discount and requesting that the court overrule all objections,” the AGO said.

In the AGO’s opinion, by shaving off $277,115.66 from its original request for payment, “Brown Rudnick is now trying to look like the good guy by ‘voluntarily’ reducing their compensation and reimbursement request.”

The reduction, the AGO said, was spurred by the firm’s guilty conscience.

In maintaining its objection to the firm’s request for compensation and reimbursement, the AGO argued that the burden to show reasonableness of fees rests with Brown Rudnick; that it did not satisfy their burden to demonstrate reasonableness of fees by providing a discount; that the court need not employ a 20/20 hindsight to see that the requested compensation is not reasonable; and that it is shifting focus from compensation request for excessive services to the government.

According to the AGO, the fact that the government is objecting to the fees does not relieve Brown Rudnick of their burden to show that the requested fees are reasonable.

In explaining its side, Brown Rudnick contends that its burden was to document appropriate hours spent in the litigation and must submit evidence in support of the hours worked while the opposing parties — including the CNMI government — has a burden of rebuttal that calls for submission of evidence to challenge the accuracy and reasonableness of the hours charged.

For the AGO, “While this might be true for civil rights actions, this is not the case in bankruptcy.”

It argued that Brown Rudnick, the professional, still bears the burden to prove entitlement to the requested fees and their reasonableness.

Even without objections, Brown Rudnick would still be required to show that their fees are reasonable.

Further on Brown Rudnick’s discount, the AGO stated, “This pad-and-cut tactic maybe the way of business in corporate bankruptcy, but when it comes to the already limited pool of funds for the current and future retirees it is simply unreasonable.”

The AGO also noted that Brown Rudnick did not specify which services the 36 percent discount serves to exclude.

“Brown Rudnick attempts to dodge the bullet of answering the specific questions raised in the government’s objections,” the AGO said.

Among these objections made by the CNMI government was the question on the reasonableness of the 45.2 hours spent on drafting a one-and-one-half page “boilerplate letter” and another “similarly simple, short reply letter.”

According to the AGO, although it believes the discount is a step in the right direction, the discount is not enough for the court to find the fees reasonable.

It also believes that the court does not need to employ 20/20 hindsight to see the unreasonableness of Brown Rudnick’s fees.

“Determining whether services were reasonable does not require looking back to the circumstances in which the services were rendered,” the AGO said.

It claimed that the bulk of the services rendered by Brown Rudnick was not reasonably likely to benefit the estate given the circumstances.

For the AGO, Brown Rudnick nearly concedes that the Fund’s eligibility to file chapter 11 was doubtful from the beginning.

It also said that the firm knew or should have known that there was a good chance the case would be dismissed.

It also refuted Brown Rudnick’s implying that the CNMI government objected merely because the case wasn’t successful.

“The likelihood of whether the Fund would be deemed eligible comes into play as it sets the stage for determining whether certain services were reasonably likely to benefit the estate at the time they were rendered,” said the AGO.

Meanwhile, in light of the few factual allegations raised in the omnibus reply made by Brown Rudnick, the AGO also asked the court that it grants it leave to file a surreply pursuant to Local rule 9013-1(c ) (2).

A surreply may not be filed without the court granting a leave of court.

Today, U.S. Bankruptcy Court Judge Robert J. Faris holds a hearing on the various applications for compensation and reimbursement filed by the professionals engaged in the Fund’s chapter 11 case.