The Day – The judge worries about the legal costs of the bankruptcy of the diocese
The federal judge responsible for filing for bankruptcy for the Diocese of Norwich expressed concern on Thursday about the number, cost and role of lawyers and financial experts in the case and their possible effect on the compensation available to those who say they have been sexually assaulted by diocesan priests. and other employees.
At one point, Judge James Tancredi called “shocking” to someone unlicensed to practice law, the rate of $ 490 per hour billed by Ice Miller, the firm of New York hired by the diocese.
Tancredi also warned that if the matter got “out of hand with professional fees,” he would not hesitate to consider implementing measures such as budget caps. He also urged senior diocesan lawyer Louis DeLucia to “deploy staff effectively” to “avoid a tariff shock” at the end of the case.
U.S. fiduciary lawyer Steven MacKey added that the diocese’s decision to hire two law firms – Ice Miller and Robinson & Cole of Hartford – increases legal fees. He said his office would continue to monitor how the diocese spends money on its legal and financial experts to avoid unnecessary costs.
Ice Miller charges the diocese between $ 395 and $ 940 per hour for its lawyers and between $ 240 and $ 490 for paralegal work. Robinson & Cole charges the Diocese $ 550 to $ 800 for its lawyers.
DeLucia said he would discuss the judge’s concerns with his management to see if any adjustments can be made to maximize victims’ recovery. Although he said he understood the judge’s concerns, he said his company’s rates were lower than those of its competitors. He added that much of the money is spent at the start of such cases and also said that there are many charges associated with resolving unforeseen issues raised by the US administrator. He added that the financial experts were needed because the diocese did not have the type of staff needed to compile the information required.
Tancredi made his comments as a dozen lawyers representing the diocese, victims and the US trustee – who oversees the bankruptcy case to ensure bankruptcy laws are respected – participated in one more remote hearing on Thursday. four o’clock so that Tancredi can rule on various motions and orders. These included managing the cash flow of the diocese, paying for insurance and utilities, investing, and hiring legal and financial firms.
In July, the diocese filed for Chapter 11 bankruptcy against more than 60 men who filed lawsuits accusing them of being raped and sexually assaulted as boys by Christian Brothers and other members. staff from the Mount Saint John Academy in Deep River, operated by the diocese. from 1990 to 2002. Mount Saint John was a boarding school for troubled boys with a board of directors headed by retired Bishop of Norwich Daniel Reilly. The diocese is also expected to face additional complaints from people claiming to have been sexually assaulted by clergy in its parishes.
Last month, the diocese placed its assets such as cash, investments, cars and accounts receivable at $ 21.2 million, but did not determine the current value of the 14 properties it owns. In its initial bankruptcy filing, the diocese estimated its assets at $ 10 million to $ 50 million, but its liabilities at $ 50 to $ 100 million. In recent years, settlements paid to individual victims who sued the diocese averaged about $ 1 million each.
In a recent four-month period, the diocese reported that it spent $ 663,508 on attorney fees related to bankruptcy and $ 341,692 on bankruptcy and financial services.
Victims and their supporters, including lawyer Eric Henzy, who represents the victims committee, have expressed concern that the higher the legal and professional costs in the bankruptcy case, the less money there will be. money to distribute to victims.
Henzy said his company, which charges between $ 292 and $ 427 per hour, has reduced its fees by 10%. The diocese pays these costs.
“These people have been going through this for a long time. They want minimum cost and maximum recovery. They want it to happen sooner,” Henzy told Tancredi of the victims. “But there are going to be complications.”
During Thursday’s hearing, Tancredi told lawyers that professional fees decrease the amount of money that can be recovered by victims.
DeLucia said that once the deadline is set and reached for victims to file claims, the diocese will be able to determine the amount of claims and the extent of its exposure. It will also determine the amount of funds that will be available from insurers, parishes and other sources.
The judge also accepted an order that the diocese will publish the start of bankruptcy proceedings and information about filing a claim in three additional newspapers – the Manchester Journal Inquirer, The Middletown Press and the Willimantic Chronicle – in the aim to reach more victims. . It had previously been advertised in newspapers such as The Day, Hartford Courant, USA Today and various Catholic publications.
No deadline has yet been set for filing complaints. You can find information on bankruptcy and filing claims at dm.epiq11.com/case/rcdn/info.