Geneva legal fees challenged

A creditor in the Geneva Steel bankruptcy case is challenging what he says are sky-high legal fees, with some lawyers commanding as much as $650 per hour.

Michael Hutchings, an attorney representing Anderson Development LLC, which is seeking to purchase Geneva's remaining assets, has filed a motion objecting to nearly $700,000 in legal fees to be paid to Kaye Scholer, a firm with offices in New York and Chicago.

According to court documents, in one four-month period, Kaye Scholer charged Vineyard-based Geneva more than $46,000 in so-called "non-productive" travel time, or time spent by two attorneys sitting in a taxi or on an airplane, in which no work was done. The $46,000 charge of non-productive travel time was in addition to $17,458 in plane fare expenses during the same period.

"I've never heard of such a thing," said Hutchings, who added that he does not charge for non-productive travel time.

Geneva has paid more than $5.2 million in total legal fees to at least eight different law firms since January 2002, when Geneva filed for Chapter 11 bankruptcy protection.

Kaye Scholer, Geneva's leading firm, has been paid $2.8 million for its legal work. The firm has requested nearly $700,000 in additional fees and expenses for the last four months of 2004.

"These attorneys' fee rates are exorbitant," Hutchings said. "It's certainly not the going rate in Utah. I certainly question the need for having an attorney from Chicago doing all this work, especially when they have competent local counsel that bill at half the rate."

Yet William Barrett, a partner and bankruptcy specialist at Barack Ferrazzano, a Chicago law firm uninvolved in the Geneva case, says a rate of $600 per hour is not unusual for lead attorneys, especially in large bankruptcy cases.

"Larger creditors or banks are largely represented by firms centered in New York, Chicago or Los Angeles," said Barrett, who represented Kmart Corp. in its bankruptcy case. "The company usually wants counsel with experience dealing with those firms, dealing with cases of that size. Usually to find that experience they end up in one of the largest markets."

At least 16 attorneys at Kaye Scholer worked on Geneva's case in the final four months of 2004. During that period, one attorney, Stephen Garcia, billed 568.55 hours at an hourly rate of $630. Other attorneys billed as much as $650 per hour. The firm's blended rate was $509 per hour.