FOR THE NORTHERN DISTRICT OF CALIFORNIA
EMPIRE MUSHROOM FARM CORP., No. 1-87-01127
Memorandum of Decision re Fees of Rosen, Wachtell & Gilbert
This case is realatively fresh in the court's mind, as extensive hearings were conducted
regarding two competing plans of reorganization, one filed by the debtor and the other by a
creditor. After considerable litigation, the court confirmed the creditor's plan on October 20,
1989, and ordered the professionals in the case to file fee applications.
Counsel for the debtor, who drafted and argued the debtor's proposed plan, sought fees of
about $20,000.00; counsel for the creditor which proposed the plan confirmed by the court
sought fees of about $19,000.00. These requests were in the range the court expected. The
court was very much surprised, however, to see a fee request from the law firm of Rosen,
Wachtell & Gilbert, a former counsel of the debtor which withdrew some time ago, seeking over
$128,000.00 in fees and costs. Not only was this request three times as much as the combined
fees of both sides of the active litigation, but the court could not recall a single thing the Rosen
firm had done in the case.
After hearing the explanations of one of the members of the Rosen firm and reviewing his
declaration, the court sees that much of the time spent by the Rosen firm was on matters which
did not involve court activity, such as negotiating with creditors or drafting a plan which was
never filed. However, even after full review the court is not convinced that the firm's efforts
justify such a large fee. The burden is of course on the applicant to convince the court that the
fees it seeks are appropriate. In re Nashville Union Stockyard Restaurant
(Bkrtcy.M.D.Tenn.1985) 54 B.R. 391, 396.
Counsel for the plan proponent has filed a detailed objection to the Rosen fee application, and
many of the points raised have merit. For instance, the Rosen firm seeks over $6,000.00 for
obtaining approval of an unopposed and routine refinancing, over $7,000.00 for an unsuccessful
and patently improper attempt to have other professionals appointed retroactively, and almost
$6,000.00, a figure higher than the total fees of an attorney who made a substantial contribution
to the case, just for preparing its fee application. In addition, there appears to have been
significant intraoffice billings without sufficient justification.
While each of the points addressed above justifies a substantial reduction, the court feels that
it is more appropriate to approach the matter by applying the standards set forth in Kerr v.
Screen Extras Guild
(9th Cir.1975) 526 F.2d 67, 69. This is because the real problem here is
that the Rosen firm approached this case as if it were a much larger case, where the extensive
efforts of a large metropolitan firm could be justified. In fact, the case is much smaller (the
confirmed plan calls for a sale of all assets for $1.5 million) and could have been (and in fact was)
better handled by a smaller firm. Approval of even half of the Rosen fee application would put
a larger dent in the unsecured creditors' dividend than is justified by any benefit those creditors
received from the firm's efforts.
The court finds that this case required no special skill which the Rosen firm possessed, nor
did it present any novel issues of law. The actual results of the Rosen firm's activities which
benefitted the estate were minimal. Awards in similar cases in this area are much more in line
with those fees sought by and awarded to counsel for the plan proponent than those sought by
the Rosen firm.
Upon considering all of the above factors, the court concludes that a total fee of $35,000.00
is appropriate to compensate the Rosen firm for its services in this matter.
Nowhere in the breakdown of costs sought by the Rosen firm is there any disclosure as to
what was being photocopied, or how much was being charged per page. The Rosen firm having
failed to meet its burden regarding this expense, the court will disallow all photocopying charges
and award total costs of $7,059.51.
The Rosen firm will accordingly be awarded the total of $42,059.51 for fees and costs, less
those amounts it received on account. The Rosen firm shall submit an appropriate order, which
David Chandler, counsel for the plan proponent, shall approve as conforming to this decision.
Dated: January 10, 1990 _______________________