$140 million and counting: Legal bills scrutinized in PG&E bankruptcy

Legal bills and other fees arising from PG&E Corp.’s bankruptcy already total an estimated $140 million and the case is on track to rank among the most expensive proceedings of its kind, according to federal officials.

Attorneys for acting U.S. Trustee Andrew Vara made that claim in court papers last week as they raised a series of concerns regarding the billing practices of law firms that represent the company, its subsidiary Pacific Gas and Electric Co. or the major committees of creditors, including victims of wildfires caused by PG&E.

The federal lawyers said law firms working on the PG&E case had submitted applications for payment that “reflect numerous instances of questionable billing judgment and overstaffing.” Oftentimes, law firms “appear to have simply disregarded” local guidelines, the trustee’s attorneys said Friday.

As many as 22 attorneys from one firm billed for the same internal meeting or conference call in some instances, and firms have sent “large numbers” of lawyers to attend the same court hearing without providing “any explanation or justification” for why so many people had to be paid, according to the trustee.

irms also logged some “implausibly high numbers of billable hours” for individuals in a single day, including at least one case of a single person billing for a full 24 hours, the trustee’s attorneys said. Other problems the trustee’s team flagged included attorneys who billed for too much air travel time when they were not actually working and fees claimed by “recent law school graduates who had not yet been admitted to the bar of any jurisdiction, but who were billed at the same rate as admitted attorneys.”

The trustee noted that similar concerns could apply to non-legal professional expenses as well.

The trustee’s comments came in a response supporting a motion from the PG&E case’s official fee examiner, Bruce Markell, who has proposed a process for reviewing bills from lawyers and other professionals working on the case. One of the examiner’s proposals is to prevent attorneys from billing for travel time when they do not work.

U.S. Bankruptcy Judge Dennis Montali is set to consider the issue at a hearing Monday.

The federal trustee’s concerns were backed by the Utility Reform Network consumer group, which wrote in its own filing that PG&E’s bankruptcy fees “could easily eclipse those incurred … in any case in history.” The group described the billing issues described by the trustee as “egregious.”

UCLA School of Law Professor Lynn LoPucki, who has expertise in bankruptcy proceedings, said he could not judge whether the fees charged by the law firms involved in the PG&E case were too high. But he said it was “kind of appalling” to see the alleged level at which firms were “ignoring … the rules of their own local court.”

PG&E filed for bankruptcy protection in January because of its mounting liabilities after its power lines caused a series of major wildfires in recent years, including the historically deadly and destructive 2018 Camp Fire.

Even before seeking protection under Chapter 11 of the U.S. Bankruptcy Code, PG&E’s own legal bills were sizable: The company paid at least $84 million to four outside law firms in the year leading up to its bankruptcy filing. And attorneys for PG&E aren’t the only ones involved now — lawyers for official creditors’ committees are also seeking payment from the company’s estate.

A group of law firms representing PG&E in the bankruptcy case pushed back on the fee examiner’s proposal, saying their fees were appropriate and Markell had exceeded his authority, among other arguments.

PG&E spokesman James Noonan said in an email that the company had hired “expert advisers to help guide us through the complex Chapter 11 process — and help shape the business for the future” so PG&E can stay focused on its customers, wildfire safety goals and other priorities.

A spokesman for the committee representing wildfire victims had no comment.