Open Books on Bankruptcy Suits

Orange County taxpayers deserve more information about how their funds are being spent in lawsuits aimed at recovering money lost in the county’s bankruptcy.

Former California Treasurer Thomas W. Hayes is in charge of using a $50-million fund established to pay for lawsuits against Wall Street firms that the county blames for the bankruptcy filing more than two years ago. Hayes referred requests for information on expenditures from the fund to Bruce Bennett, one of the bankruptcy lawyers.

Bennett said his firm has billed for $3.5 million for the five months after the county emerged from bankruptcy last June. But he declined to itemize the charges or explain Hayes’ billing policy. He contended that doing so would reveal the county’s strategy in its legal battles.

Others disagree, and the public, which is paying the bills, is entitled to more reassurances than it has received. The Board of Supervisors, school districts and other public agencies that hired Hayes should insist on it.

No one is questioning the competence or integrity of Hayes and Bennett, but care is needed with the public’s money. After all, scrutiny of other bankruptcy bills showed that after one meeting, three lawyers filed bills giving different statements on the session’s length.

Firms have also insisted on having two or more lawyers present at some meetings, with each being paid full rates of hundreds of dollars an hour. That’s the sort of inefficiency more disclosure can avoid.