Lawyer's $2,465 hourly rate draws objection in J&J talc bankruptcy case

Attorney Neal Katyal is seen in front of the U.S. Supreme Court building after arguing a case before the court in Washington, U.S., November 4, 2014. REUTERS/Gary Cameron
  • Trustee balked at Neal Katyal's fee
  • J&J spinoff in talc liability fight wants Katyal and his law firm Hogan Lovells on board for appeals

(Reuters) - The United States is objecting to a Johnson & Johnson subsidiary’s bid to add Hogan Lovells partner Neal Katyal to its legal team in a high-stakes bankruptcy case, citing his hourly rate of $2,465 — a possible new legal industry high.

Johnson & Johnson is using the proceedings to try to resolve claims that its baby powder and other talc-based products caused cancer. The company, which maintains the products are safe, in October assigned thousands of talc lawsuits to a new subsidiary, LTL Management LLC, and placed it in bankruptcy.

The U.S. trustee in the Chapter 11 case on Friday asked a federal bankruptcy judge in New Jersey to block LTL from retaining Katyal, calling his hourly rate “significantly higher” than that of partners from the seven other law firms already involved in the case.

LTL asked the judge for approval to add Katyal to its legal team earlier this month, citing his and Hogan Lovells' expertise in federal appeals. Multiple talc claimants have appealed the February ruling that allowed LTL's bankruptcy to move forward.

Partner billing rates at large law firms are considered competitive business information and are typically not public. But they are disclosed in some court filings, especially in bankruptcy cases where a debtor's legal fees must be approved by a judge.

Katyal’s hourly rate would rank among the highest publicly available figures in the legal industry. Former U.S. attorney general Eric Holder Jr, a partner at Washington, D.C.-based Covington & Burling, last year billed at $2,295 an hour according to a contract the firm signed with an Oregon university to conduct a workplace culture investigation.

Lynn LoPucki, a professor at the University of California at Los Angeles School of Law who tracks bankruptcy cases, said Monday that Katyal's rate of nearly $2,500 is the highest he has seen.

Katyal, a former acting U.S. solicitor general who has argued dozens of cases before the U.S. Supreme Court, declined to comment on the objection Monday. Hogan Lovells did not immediately respond to requests for comment. The trustee, Andrew Vara, declined to comment through a Justice Department spokeswoman, and representatives for Johnson & Johnson did not respond to requests for comment.

According to the trustee’s objection, the hourly rate among LTL’s lawyers from Jones Day topped out at $1,350. Skadden, Arps, Slate, Meagher & Flom charged as high as $1,195; Weil, Gotshal & Manges' top rate was $1,579; and Orrick Herrington & Sutcliffe's was $1750. Lawyers from King & Spalding and Shook, Hardy & Bacon are also representing LTL.

The trustee previously sought to disqualify both Jones Day and Skadden from LTL's legal team because they represent Johnson & Johnson in other matters, but the effort was unsuccessful.

Top approved billing rates in bankruptcy cases have been creeping toward the $2,000 mark over the past year. Kirkland & Ellis’ partner hourly billing rate hit $1,895 in three separate 2021 bankruptcies, while Simpson Thacher & Bartlett partners charged up to $1,850 per hour in the bankruptcy of Chilean bank holding company Corp Group Banking SA last year.

The case is LTL Management LLC, U.S. Bankruptcy Court for the District of New Jersey, No. 21-30589.

For LTL: Greg Gordon of Jones Day

For Talc Claimants Committee I: David Molton of Brown Rudnick; Melanie Cyganowski of Otterbourg; Daniel Stolz of Genova Burns; Brian Glasser of Bailey & Glasser; Lenard Parkins of Parkins Lee & Rubio; and Jonathan Massey of Massey & Gail

For Talc Claimants Committee II: Cullen Drescher Speckhart of Cooley

Read more:

$2,000 an hour for a bankruptcy lawyer? 2022 could be the year

Inside J&J’s secret plan to cap litigation payouts to cancer victims

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Karen Sloan reports on law firms, law schools, and the business of law. Reach her at karen.sloan@thomsonreuters.com