Saturday, November 21, 2009

ONGOING COVERAGE: SPOKANE DIOCESE BANKRUPTCY

Diocese sex case lawyers cut bills

Proposal aims to end fee dispute

John Stucke
Staff writer
September 20, 2007

Lawyers in the Roman Catholic Diocese of Spokane bankruptcy case have agreed to shave about 5 percent from their legal bills, freeing up an extra $400,000 for payouts to clergy sex abuse victims.

The agreement, if approved by U.S. Bankruptcy Court Judge Patricia Williams, would end a fee dispute among several law firms and the U.S. Trustee's Office centering on how much the firms should be paid.

With an independent trustee preparing to distribute money to victims, the lawyers have been reshaping their fee requests – one of the last remaining issues in a complex and controversial bankruptcy filed in December 2004.

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Bishop William Skylstad brought the diocese into bankruptcy protection to shield its assets and parishes from an onslaught of civil trials and claims stemming from childhood sex abuse by priests and other diocese agents decades ago.

Spokane was the third diocese in the United State to file for bankruptcy protection. A plan to keep the diocese intact and end the bankruptcy came together after a group of priests and laity calling itself the Association of Parishes agreed to contribute about $10 million to the final $48 million settlement.

Money continues to be raised from the pews to meet that pledge.

Lawyers on the case worked at hourly rates below what they normally charge, though the wages still ranged from $200 an hour to more than $300 an hour. In all, professionals billed the diocese more than $10 million for services ranging from legal advice to accounting work and appraisals.

In bankruptcy court, the company – or in this case the diocese – pays its own legal bills and also the legal bills of creditors with sex abuse claims.

The agreement is designed to help the attorneys with five firms present a deal to the judge and avoid detailed and public arguments over fees. The firms include Paine Hamblen Coffin Brooke & Miller and Gordon Murray Tilden, which worked on behalf of the diocese; and Pachulski Stang, Esposito George & Campbell, and Riddell Williams, which worked on behalf of creditors' committees.

In all, the five firms agreed to seek about $8.3 million in fees after the agreed-upon reduction. They also are charging the diocese about $482,100 in expenses for such things as airplane tickets, hotel rooms and meals.

Another law firm, Foster Pepper, which represents individual victims, along with the U.S. Trustees Office acting as a watchdog for the government, also signed the agreement.

The agreement cancels today's meeting with a federal mediator in Reno. It also includes language that the court-appointed trustee overseeing the disbursement of funds to victims will not sue Paine Hamblen to recover fees paid by the diocese for a year's work leading up to the bankruptcy.

The trustee, Seattle attorney Gloria Nagler, will be in receipt of about $37 million by an Oct. 1 fund deadline. Another $10 million is due by year's end, said diocese attorney Shaun Cross.