Lehman professional fee committee request approved by bankruptcy court

By Rebecca Melvin

New York, May 13 - A petition by Lehman Brothers Holdings Inc. to establish a fee protocol and appoint a committee with an independent chairman to review professional fees in its bankruptcy cases was given verbal approval by the U.S. Bankruptcy Court for the Southern District of New York on Wednesday.

The fee committee and protocol were put forward in response to recent media reports that suggested professionals are taking advantage of the bankruptcy process by forwarding exorbitant fees, which are not being properly vetted as required under the bankruptcy code, Lehman counsel, Harvey Miller, of Weil, Gotshal & Manges, said.

Miller said the amounts of compensation requested are not unreasonable, and should not be viewed as something akin to "professionals looting the debtors' estates."

The purpose of the fee committee is to provide the court with additional information regarding fee applications and to give the public a heightened level of comfort with the review and approval of fee applications, judge James M. Peck said upon approving the motion.

Peck added that the appointment shouldn't be viewed as his having any concerns about the reasonableness of the professional fees to this point.

The fee committee will include one representative from each of the debtors, the unsecured creditors committee, the U.S. Trustee, and an independent chairperson.

Due to the new committee appointment, fee applications on the calendar Wednesday were pushed to June 24 to be part of a later Lehman omnibus hearing.

There were 16 professional fees interim applications contested on the agenda, including those of Weil Gotshal, investment bank Lazard Freres & Co. and FTI Consulting.

In Weil Gotshal's first interim fee application, the law firm is seeking total fees of $55.14 million and expenses of $1.34 million, for the Sept. 15, 2008 to Jan. 31, 2009 period.

Lead attorney Harvey Miller commands an hourly rate of $950 an hour, according to the request filed with the court.

Lazard Freres is requesting $6.6 million in compensation and $33,468 in expenses for the Dec. 17, 2008 to Jan. 31, 2009 period, of which $5.98 million has already been paid. So the net requested is just $651,990.

FTI Consulting, which has been retained by the official unsecured creditors committee, has requested compensation of $5.26 million and expenses of $148,516, for the Sept. 17, 2008 to Jan. 31, 2009 period.

Among other professionals requesting fees are Jones Day; Ernst & Young; Curtis, Mallet-Prevost, Colt & Mosle; and Quinn Emanuel Urquhart Oliver & Hedges.

Peck said he viewed the new fee committee as important to the process, especially due to public attention on the Lehman cases, and that the committee should demonstrate that the review of professional fees is unimpeachable, offering the public a view of the process without adding a layer of inconvenience to the bankruptcy process, which is already burdened by complexity.

New York-based Lehman Brothers was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008 Its Chapter 11 case number is 08-13555.

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