Philly Orchestra's legal fees mount in bankruptcy case

The Philadelphia Orchestra Association accumulated $682,568 in legal fees and other expenses associated with its bankruptcy petition in the first six weeks after the filing, court documents show.

These fees, added to others in the run-up to the Chapter 11 filing, bring the tab to more than $1.6 million.

In its strategic plan, the association estimated that professional costs in the case would total $2.9 million, plus $3 million for settlement with creditors and $2.5 million to allow for a potential decline in ticket sales and donations.

A likely half-year's worth of billable hours lies ahead, as the case is not expected to exit bankruptcy before the end of the year. An association spokeswoman could not immediately say whether the orchestra was adjusting expectations for what the bankruptcy would cost.

Barry E. Bressler, a Philadelphia lawyer who handles bankruptcy cases at Schnader Harrison Segal & Lewis, estimated that the orchestra's bankruptcy ultimately will cost it $10 million in professional fees.

Tuesday's filings show that Dilworth Paxson L.L.P., the association's bankruptcy counsel, deployed 14 lawyers and two paralegals, whose professional fees of between $150 and $750 an hour totaled $369,482.50. The work is described as relating to various filings, conferences with the client, creating a database of the endowment documentation records, analyzing the orchestra's contractual relationships, attending board meetings, evaluating pension obligations, and other matters.

Additionally, the law firm, in its initial application to the court for payment for work between April 16 and May 31, is asking for reimbursement of $18,832.08 for messenger services and postage, meals, and other expenses.

Dilworth has previously pointed out that it has made a $75,000 charitable donation to the association.

Alvarez & Marsal, the association's bankruptcy adviser, for the six-week period claimed compensation of $218,358 and expenses of $15,780.73. Its five professionals list a fee schedule of between $265 and $500 per hour - rates discounted about 30 percent, according to Joseph A. Bondi, managing director. "Professionals in this case are mindful that this is a not for-profit organization in financial straits, and are discounting their fees," he said.

The firm representing the association in contract talks with musicians is showing a $60,115 bill for the hours of three lawyers. Curley, Hessinger & Johnsrud spent its time on employment, benefit and pension matters, and also on the bankruptcy. It is claiming no additional expenses.

In the documents filed Tuesday, all three firms requested interim payments of 80 percent of the professional fees and 100 percent of expenses incurred during the initial six-week period after the association's (and the Academy of Music's) April 16 Chapter 11 petition. Under bankruptcy rules, the other 20 percent is requested on a quarterly basis.

The charges are in addition to fees collected in the months before the filing. Those fees - $428,945 paid to Dilworth, $432,955 to Alvarez, and an April 15 payment of $60,000 to Brian Public Relations - come to $921,900.

The total $1,604,468 in fees ($921,900 before April 16, $682,568 since) is only part of what has been spent on the case.

Not included are legal fees and expenses for the committee of unsecured creditors, and additional consultants, such as actuaries, retained by the association to provide research for the legal case and related contract negotiations.

Also not reflected in the filings are costs incurred by other organizations compelled to hire lawyers in response to the association's challenges to contracts with them. Among those are Peter Nero and the Philly Pops, the American Federation of Musicians, and the Kimmel Center.


Contact music critic Peter Dobrin at 215-854-5611 or pdobrin@phillynews.com. Read his blog, "ArtsWatch," at www.philly.com/artswatch