Detroit's "Emergency Manager" Approves $1.4 Million Payout to Bankruptcy Lawyers–His Old Firm


Even in debt-ridden Detroit, it pays to be well-connected, reports CBS Local Detroit:

the law firm hired to oversee Detroit's restructuring has already racked up a $1.4 million bill…."Emergency Manager Kevyn Orr approved the fees totaling about $1.4 million, but what makes this even more controversial is that the law firm getting the money is Jones Day – that's Orr's former law firm. Oh, you want some more controversy? That $1.4 million is just for six weeks of work," [local radio station WWJ legal analyst Charlie] Langton said.

….. has defended the expense, saying top lawyers are needed because of what's at stake….

Orr is a bankruptcy expert hired in March by the state to fix Detroit's finances, which are running a $380 million deficit this year. He says long-term debt could top $17 billion and is asking bond-holders to accept steep markdowns on what they're owed.

….Orr said Detroit is "tapped out." He said there's still a 50-50 chance the city will file for a municipal bankruptcy.

Reason on Detroit. Reason's advice to another fiscally troubled midwest city, Cleveland.

NEXT: Two Killed by Bomb Near Mosque in Pakistan

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Market failure!!! Greedy corporations!!!

  2. Tough luck, Detroit.

    Once you fall far enough that the lawyers get their talons into you, they are going to tear the flesh from your bones.

    That’s why you should have worked very hard to not fall that far.

    Remember that next time.

    1. Detroit works hard! That’s why the unions agreed to such lavish terms and why the Big Three agreed to federal bailouts, because they work hard!

  3. Six weeks of work nets that kind of paycheck and the city still has a 50/50 shot at going bankrupt?

    Detroit is “tapped out.”

    You don’t say.

  4. Is it too late to just cut this city off and sink it into Lake Erie? We could use that space to connect Erie with Huron maybe. It’s win-win.

    Detroit is the poster-child for what happens when a populace just doesn’t care about local government corruption. I’m starting to think that they see scandal-ridden histories as a requirement for anyone in power.

  5. Delta City can’t come soon enough.

    1. They already built it. It’s just in Oakland County instead of the ruins of Detroit.

  6. I wonder if the attorneys advised the city to tear up the municipal employees’ contracts and decertify their unions.

  7. If the city goes bankrupt, how far to the back of the line of creditors looking to get paid do you suppose that law firm will fall?

    1. First place.

      The lawyers always get paid.

    2. IANAL, but I’m agreeing with our favorite Swiss insurance guy. The priority list for bankruptcy unsecured claims may be found at 11 USC 507, here, and under it, administrative claims come second (behind domestic support and the Trustee’s expenses.) Secured claims come before all of these, however. IIRC, this law firm’s expenses should fall under admin claims under 503(b)(4). So pretty high up the list, above stuff like employee wages and salaries. But yeah, the lawyers always get paid. Who do you think writes the laws, after all?

      This assumes that the Administration won’t jump into this like they did with GM. (cue laughter)

      1. As long as they put a rubber ass over The Fist it’ll be worth it.

  8. The other day I saw a PSA for the UNCF. It featured an adolescent boy outlining his plans to go to college, get a degree in Political Science, then become a lawyer so he could get elected mayor of Detroit.

    What a shame, he seemed like such a nice young man.

    1. He is probably far to well-meaning to ever become mayor of Detroit.

Please to post comments

Comments are closed.