“People are tired. They are frustrated,” bankruptcy judge Meredith Grabill said from the bench, after hearing attorneys for the archdiocese and a committee of creditors urge her to give them a few more weeks to come up with two competing proposed reorganization plans.
Those attorneys have billed upwards of $500 an hour – and as much as $800 an hour – for the last four-and-a-half years, contributing to about $40m in legal and professional fees the church has had to pay as of Tuesday.
Mark Mintz, from the Jones Walker law firm that represents the archdiocese, and Andrew Caine, from the Pachulski Stang Ziehl & Jones firm representing the creditors committee, argued they have been working hard on a settlement – and are mere weeks away from presenting separate proposals to reorganize the church’s books.
Mintz, Caine and Douglas Draper – who represents institutions affiliated with the archdiocese, such as individual churches and local Catholic schools – complained that hiring an outside expert would be too expensive.
Draper questioned why the judge needed an outside expert at all.
“Isn’t that really your job?” Draper asked Grabill.
That earned a rare rebuke from Grabill, who has largely been deferential to the archdiocese during the course of its bankruptcy.
“This is rich,” she said. “Now we’re worried about cost?”
The judge said her more hands-on approach to push for a settlement was prompted by several recent events. First, the Louisiana supreme court reversed an earlier decision and ruled that it was constitutional for state laws to allow victims of child sexual abuse to pursue civil claims no matter how long ago the abuse allegedly occurred.
That meant that about 500 people claiming archdiocesan clergy and staff had abused them as children had standing to bring lawsuits against the church. Mintz and other attorneys for the archdiocese have repeatedly tried to argue the survivors’ claims were too old to have legal standing, which would have paved the way to a much cheaper settlement for the church.
Now, those survivors make up the vast majority of the claimants in the bankruptcy – and a majority of them will have to approve of any reorganization plan negotiated by the church and the creditors committee.
Attorneys representing dozens of those claimants – who, unlike the lawyers for the church and creditors committee, don’t get paid for their work until their clients collect – then got to take sworn testimony from Lee Eagan, a businessman who has been managing the bankruptcy finances for the archdiocese as a volunteer.
As WWL Louisiana and the Guardian reported exclusively, Eagan testified in early July that he had been cognitively impaired by a car accident and would contradict attorneys for abuse survivors during negotiations for no reason. He also acknowledged approving all the archdiocese’s legal fees rather than the church’s in-house lawyer because she is married to a partner at the law firm collecting millions in bankruptcy fees.
The survivors’ attorneys then filed a motion asking the court to appoint a trustee to replace New Orleans’s archbishop, Gregory Aymond, as the decision-maker on church financial matters – which in turn would also replace Eagan.
That motion led to others – from one of the church’s insurers as well as from the US trustee who oversees bankruptcy cases on behalf of the federal justice department – calling for Grabill to impose a holdback of 20% of legal and professional fees until a final settlement were reached.
Grabill said she would issue an order with more details soon. But she said from the bench that she planned to hire an independent expert to assess the case in 45 days and write a report – which would be made public – within two months.
“I’m willing to spend a little bit of money to reinvigorate – or instill for the first time – confidence in this process,” she said. “This is our shot. We’re going to take it.”
Despite Draper having questioned why the judge needed expertise from the outside, an attorney representing some abuse survivors said he and his clients supported Grabill’s decision to bring in an outside expert.
Frank D’Amico said: “I think the judge sees that this is going to go a long way into motivating people and to giving confidence to the claimants that this is a transparent process, that the court is wanting to do the right thing and that they can rest assured that the right thing is being done.”