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Boy Scouts bankruptcy involves ‘staggering’ legal fees

According to the New York Times, fee applications for lawyers and other professionals involved in the bankruptcy of the Boy Scouts of America have been shockingly high. So far, the applications have surpassed $100 million. At least one lawyer is charging $1,725 an hour.

To be sure, the case is not your run-of-the-mill bankruptcy. The main reason the Boy Scouts are in bankruptcy at all is that the organization is being held responsible for long-term, systemic abuse against boys in its care. As the organization reorganizes, money must be reserved for former scouts who have filed suit against it under New York’s Child Victims Act.

That said, the fees are unusually high, both in terms of hourly rates charged and in terms of the number of lawyers and other professionals who are working on the case. U.S. Bankruptcy Judge Laurie Selber Silverstein, who is hearing the case, called the total “staggering.”

An insurance company that is responsible for paying the victims, has officially asked that some of the legal fees be held back until they can be thoroughly reviewed.

Every dollar that is spent on legal fees and related expenses is a dollar that won’t go to the victims of abuse.

“It’s sickening,” said a lawyer for the insurance company. “This is the legal system off the rails – simply off the rails. This money all could have been used to solve the problem.”

Little progress towards resolving the problem has been made, according to the Times.

The Times found in court filings that the law firm representing the Boy Scouts has 14 lawyers who are billing more than $1,000 an hour.  The firm, White & Case, refused to comment to the Times but, in the filings, it defended the fees as reasonable considering how complex the case is, how many hours are required to properly work the case, and the cost of comparable work.

Boy Scouts bankruptcy will establish a trust for victims

Allegations of sexual abuse began surfacing decades ago, but the organization kept those allegations private until recently, when lawsuits exposed them. Those files showed that the organization knew of many allegations but took few or inadequate measures to keep kids safe.

The Boy Scouts filed for bankruptcy last year with the plan of offering a trust to compensate these victims. The organization estimates that the victims will likely require between $2.4 billion and $7.1 billion, based on the current claims. A committee representing the victims, however, estimates that $100 billion will be needed to compensate the tens of thousands of likely victims.

Hopefully, the bankruptcy judge will put a halt to these extravagant legal fees, which allegedly include lawyers making $600 an hour even though they just completed law school.

By August, when the deadline to file new claims arrives, the fee requests could reach $150 million.

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