Accord May Come Soon on Legal Fees

The creditors in Orange County’s bankruptcy are negotiating with county officials over who will pay more than $2 million in legal and consulting fees on their behalf.

County bankruptcy attorney Bruce Bennett said Sunday that the two sides came close to agreeing this weekend on what the county should pay to the attorneys and financial advisers who are working for the county’s Official Committee of Creditors. He hopes to make an announcement about an agreement this week, he said.

The committee, appointed by U.S. Trustee March J.K. Tiffany in December to represent the county’s more than 20,000 creditors, filed a request Friday asking a U.S. Bankruptcy Court judge to approve a plan to reimburse its legal and consulting fees. The committee wants to charge the county $2 million initially, and may ask for more payments by June 30, according to court documents that became available Sunday.

Attorneys for the committee could not be reached for comment, but Bennett said two of them, Patrick A. Murphy and Robert Jay Moore, told him Saturday they plan to withdraw their request today in order to continue negotiating with the county.

“I think later in the week something sensible will come out of this,” Bennett said.

In another development in the county’s bankruptcy, representatives of the Committee for Employees Organizations and attorneys for the county are scheduled to meet Tuesday with Bankruptcy Court Judge John E. Ryan in his chambers for a settlement conference, John Sawyer Sr., chairman of the committee, said Sunday.

Sawyer said Ryan may decide how to resolve the disputes between the two sides over the layoff of 152 county employees and how future layoffs should be handled. Both sides met over the weekend but reached no agreement, Sawyer said.

“There’s a lot of give-and-take and a broad area to cover,” Sawyer said. “The county has things it wants and we have things we want and I don’t know if we can agree.”

Among the firms that would be paid the initial $2 million in disputed fees are Murphy, Weir and Butler of Los Angeles; the Santa Ana firm of Marshak; and Goe and Latham and Watkins of Los Angeles. The committee is also asking for payment for its financial advisers, Chanin & Co. and Sutro & Co., according to the filing.

The committee argued in its filing that it would be unfair to make their professional advisers wait for payment until after the bankruptcy is resolved. According to the committee, the county is paying its own team of consultants and lawyers for work as it is undertaken.

The county has already been hit with more than $12 million in attorneys’ and accountants’ fees for the bankruptcy. The cost is threatening to put several county expenditures on hold, including $2.5 million previously set aside for a law enforcement communications system and $2.1 million for county employee sick-leave payoffs, according to the county administrative office.