Archdiocese of New Orleans bankruptcy among oldest, costliest in U.S., documents say

NEW ORLEANS (LA) [New Orleans, LA]

April 24, 2024

By Stephanie Riegel

A group of clergy sex abuse survivors in the Archdiocese of New Orleans bankruptcy case is asking U.S. Bankruptcy Court Judge Meredith Grabill to limit the legal fees that the church’s law firm, Jones Walker, is billing to the case.

Citing skyrocketing legal and professional fees on both sides, the abuse survivors claim in a new court filing that Jones Walker is dragging out the long-running case by padding its time sheets, making money off the church while abuse survivors wait for a settlement.

“Jones Walker has bloated its time, engaged in redundant work, and enjoyed maximum payment by ensuring that 54 of its lawyers (30 partners and 24 associates) billed the Archdiocese during this bankruptcy,” a lawyer for the survivors says in court documents filed April 19. “Every dollar paid to Jones Walker is one less dollar paid to the abuse survivors.”

According to court records, more than $36.3 million has gone to lawyers and other experts, like accountants and actuaries, since the case was filed. Of that amount, Jones Walker has received nearly $15.5 million, while lawyers representing the committee of abuse survivors has received nearly $13.5 million. The rest has gone to other lawyers and professionals.

The accusations come as the long-running case approaches its fourth anniversary. The nation’s second-oldest diocese filed for bankruptcy court protection on May 1, 2020, amid mounting claims of child sex abuse by local clergy, some stretching back decades. In the years since, some 550 credible claims have been filed against 300 clergy members.

The local case is the second-costliest and third-oldest of the nearly 40 still-unsettled bankruptcy cases filed by U.S. dioceses and other religious organizations since the early 2000s, according to the court document. Though both sides in the local case are negotiating towards a settlement that could cost the church at least $100 million, no plan has yet been proposed — much less confirmed — by the court.

“This is one of the oldest and costliest bankruptcies of a religious organization in the country with or without a plan being confirmed,” the court document says.

Jones Walker declined to comment, citing pending litigation.

In a prepared statement, the archdiocese said: “The Archdiocese of New Orleans remains committed to a conclusion of these proceedings in order that the victims in this matter can receive some semblance of healing. We are heartened by recent progress in our negotiations, and remain prayerful that all parties remain focused on similar outcomes.”

Costlier and slower

Though survivors have complained about excessive attorney fees in the past, the recent court filing seeks to hammer the point by comparing the local case with those filed by other dioceses and church organizations around the country in recent years.

At $36.3 million, fees and expenses in the New Orleans case are three times costlier to date than in similar bankruptcy cases, court documents show. Fees and expenses in Santa Fe’s case, settled in 2019, cost less than $5 million. In St. Paul/Minneapolis, settled in 2018, fees and expenses were $20.5 million; and in Milwaukee, settled in 2015, they were $23 million.

“The only religious bankruptcy which has not had a plan confirmed and is more expensive than this bankruptcy is the Diocese of Rockville Center (New York),” the lawyers argue.

After four years and more than $106 million in legal and professional fees, the Rockville Center case was recently dismissed by the court without a successful reorganization plan.

Court documents also highlight the slow pace of the local case in comparison to others, which have concluded within 2.6 years on average. The local case is the third-oldest — behind the Diocese of Rochester and the Diocese of Buffalo — that does not have a confirmed settlement.

“However, both of these older bankruptcies have cost significantly less,” court documents say. The Rochester case has cost nearly $13.3 million in legal fees so far; the Buffalo case, nearly $14.8 million.

‘Vague, redundant’

Notably absent from the recent court filing is the fact that the high-priced law firms representing the committee of abuse survivors — Los Angeles-based Pachulski Stang and the local office of Locke Lord — have cost the Archdiocese of New Orleans almost as much to date as Jones Walker — $13.5 million compared to $15.5 million. Last year, Grabill approved a fee increase for both firms, upping their hourly rates to $800 for Pachulski Stang and $600 for Locke Lord. Jones Walker is billing the archdiocese at a discounted rate of between $300 and $500 an hour. 

But the recent court document, filed on behalf of survivors by a separate group of plaintiff attorneys who are not part of the official committee and are not being paid by the archdiocese, claim Jones Walker is racking up billable hours for doing work that appears to be “vague, redundant, unnecessary and/or excessive.” It also accuses the firm of assigning more expensive partners to the case than is necessary.

The attorney who filed the motion, Soren Gisleson, did not return a call seeking comment. The filing came in response to Jones Walker’s request earlier this month for nearly $890,000 in fees and expenses covering the period from Nov. 1 to Feb. 29.