The eventual bankruptcy sale of Mercy Iowa City to the University of Iowa involved several legal issues, but the Acting US Trustee on the case is objecting to the fees billed by a Chicago law firm.

The Cedar Rapids Gazette reports the number Acting U.S. Trustee Mary R. Jensen objects to is the nearly $923,000 that McDermott Will & Emery of Chicago accumulated over just the first three weeks of the bankruptcy case — from Aug. 7 to 31. Besides charging a blended rate of over $1,270 an hour, McDermott also received a pre-petition retainer of nearly $762,000.

In a statement on her examination of attorney fees to determine whether services were reasonable and necessary, Jensen found, among other things, that McDermott paid itself over $18,000 for pre-petition fees, despite agreeing to waive those expenses when retained to work on the sale.

The Gazette also reports that US Bankruptcy Judge Thad Collins noticed the large number of attorneys appearing for Mercy during the case’s first hearing in August and warned that he’d be reviewing their fees.


Trustee Jensen wrote that McDermott’s fee application is, quote, “replete with duplication of effort and overstaffing with multiple attorneys reviewing, revising, and conferencing on multiple issues.”

McDermott’s original application listed six attorneys to work on the case; the bill for the first month of fees included 24 different attorneys.

The University of Iowa is not responsible for attorney fees as part of the bankruptcy sale agreement. They are covering Mercy’s operating losses after December 1st to allow it to stay open until the sale officially closes.

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