First, Pacific Gas and Electric Co paid some $84 million to four outside law firms in the year leading up to its January bankruptcy filing, according to court papers. Now, the California Public Utilities Commission (CPUC) is asking for a three-year funding to allow outside counsel to represent the agency as PG&E makes its way through bankruptcy court in San Francisco.
Law firm spend
PG&E disclosed the legal payments in a series of court filings this month seeking approval from US bankruptcy court judge Dennis Montali to continue employing the law firms. In the filings, PG&E’s lawyers said the amounts were reasonable. The vast majority of the total legal payments, totally $75.7 million, went to Cravath, Swaine & Moore, a New York firm that is PG&E’s lead coordinating counsel in wildfire-related matters. Payments to Cravath included a $10 million retainer from which the firm had drawn only about $3 million by the time of the bankruptcy filing, court papers state. The firm will use the rest of the retainer to pay for any PG&E-related costs that it did not bill for before the filing, and anything left over will help pay for some of the firm’s costs arising after the filing. The next-highest sum disclosed in the court papers was paid to Weil, Gotshal & Manges of New York. The firm received $4.7 million in the 90 days leading up to the company’s bankruptcy filing.
The regulator’s funding would also cover a financial expert to work with the commission’s lawyers, according to a March 26 budget change proposal from regulators. The proposal needs to be approved by both chambers of the state Legislature, where a committee hearing is expected by the end of the month. The commission’s $28 million figure is based in part on what it spent on professional help during PG&E’s last bankruptcy case in the early 2000s, according to Prosper. With an outside counsel and financial adviser, regulators would be able to “develop a sophisticated response to the many discrete problems that arise in bankruptcy with long-term implications, such as asset sales, rejection of contracts, labor issues, and the assumption of long term debt,” the commission request said. Regulators say they would also be well positioned to shape the reorganization plan PG&E will develop in order to exit bankruptcy protection, which it sought in January because of its mounting wildfire liabilities. The commission said it needs to bring in attorneys with expertise in business restructurings and bankruptcy law who can “evaluate complex financial transactions and the financial condition of large publicly traded corporations.” The commission explained, “CPUC regulatory attorneys cannot provide that type of advice or develop the expertise or professional relationships needed to assist on such matters.” The commission request added, “The counsel who have these skills work at nationally recognized firms and their market rate fees reflect their expertise.”