OAG slams Boston law firm’s alleged pad-and-cut tactic

The CNMI government slammed the Retirement Fund’s Boston-based counsel yesterday for allegedly resorting to “pad-and-cut tactics” for demanding $750,937.82 in payment and then reducing that to $488,882, passing it off as a 36-percent “discount.”

Assistant attorney general Teresita J. Sablan, counsel for the CNMI government, asked the U.S. District Court for the NMI Bankruptcy Division to further reduce the $488,882 being asked by the Brown Rudnick law firm to just $112,640.67.

“It is simply unreasonable to charge the retirees nearly half a million dollars for Brown Rudnick’s decision to play the odds in Chapter 11 [bankruptcy petition],” said Sablan in court papers.

The Boston law firm’s original application claims that the Fund owes it $750,937.82 as compensation for professional services and reimbursement for expenses covering the period of April 17, 2012, when the Chapter 11 was filed, through June 13, 2012.

The CNMI government, the Commonwealth Ports Authority, and two members of the Official Committee of Unsecured Creditors objected to the amount, describing it as unreasonable.

The OAG wants the court to reduce Brown Rudnick’s compensation and reimbursement by 85 percent-to just $112,640.67.

Jeremy B. Coffey of the Brown Rudnick LLP law firm earlier this week notified the court that additional negotiations between Brown Rudnick and the Fund further cut the total bill to $488,822, which translates to a further discount of $277,115.66 or 36 percent from the already discounted amounts.

In court documents filed by the OAG yesterday, Sablan said that Brown Rudnick’s voluntary “discount” appears to be nothing more than “consciousness of guilt.”

Sablan said that after padding its billings with excessive and unnecessary services, the law firm now tries to relieve its conscience by providing the Fund with a 36-percent discount and requesting that the court to overrule all objections.

“That does not sit right with the government. This pad-and-cut tactic may be the way of business in corporate bankruptcy, but when it comes to the already limited pool of funds for the current and future retirees, it is simply unreasonable,” she said.

Moreover, Sablan said, the law firm does not identify which services the 36-percent discount serves to exclude.

“By applying the discount, Brown Rudnick attempts to dodge the bullet of answering the specific questions raised in the government’s objections,” she said.

Sablan cited that Brown Rudnick claimed it spent 45.2 hours and charged the retirees $21,470 for drafting a one-and-a-half page boilerplate letter and a similarly simple and short reply letters.

“Should the discount be construed as excluding these letters from the requested compensation?” Sablan asked.

A hearing on the fees being demanded by Brown Rudnick and other lawyers involved in the bankruptcy proceedings will be held at 9:30am today, Friday.