Judge calls for outside expert in Archdiocese of New Orleans bankruptcy case | New Orleans

Facing opposition from high-paid lawyers on both sides of the Roman Catholic Archdiocese of New Orleans' expensive and lengthy attempt to restructure through bankruptcy, a federal judge announced Tuesday that he would hire an outside expert to assess whether the church and its debtors – including victims of clergy abuse – can work out a viable settlement plan.

“People are tired. They are frustrated,” Bankruptcy Judge Meredith Grabill said from her bench after asking lawyers for the archdiocese and a creditors' committee to give them a few more weeks to work out two competing reorganization proposals.

These lawyers have been charging $500 or more per hour — and as much as $800 — for the past four and a half years, adding to the legal and consulting fees the church had to pay as of Tuesday, which totaled about $40 million.

Mark Mintz of the Jones Walker law firm, which represents the archdiocese, and Andrew Caine of the Pachulski Stang Ziehl & Jones law firm, which represents the creditors' committee, said they had worked hard to reach an agreement – and would present separate proposals to reorganize the church's books in a few weeks.

Mintz, Caine and Douglas Draper – who represents institutions affiliated with the archdiocese, such as individual churches and local Catholic schools – complained that hiring an outside expert would be too expensive.

Draper asked why the judge needed an outside expert at all.

“Isn’t that your job?” Draper asked Grabill.

This earned him a rare rebuke from Grabill, who was largely respectful of the archdiocese during its bankruptcy.

“That's intense,” she said. “Now we're worried about the cost?”

The judge said her more direct approach to pushing for a settlement was motivated by several recent events. First, the Louisiana Supreme Court overturned an earlier decision and ruled that it was constitutional for victims of child sexual abuse to be given the opportunity under state law to pursue civil claims, regardless of how long ago the abuse allegedly occurred.

That meant that about 500 people who claimed that clergy and archdiocesan staff abused them as children could file lawsuits against the church. Mintz and other archdiocesan lawyers have repeatedly tried to argue that the survivors' claims are too old to be legally valid, which would have paved the way for a much more favorable settlement for the church.

These survivors now make up the vast majority of creditors in the bankruptcy proceedings – and a majority of them will have to agree to any reorganization plan negotiated by the church and the creditors' committee.

The lawyers representing dozens of these creditors – who, unlike lawyers for the church and the creditors' committee, are not paid until their clients collect their debts – were then forced to take the sworn testimony of Lee Eagan, a businessman who is pro bono managing the archdiocese's bankruptcy finances.

As WWL Louisiana and the Guardian exclusively reported, Eagan testified in early July that he was mentally impaired by a car accident and that he objected to lawyers for abuse victims during negotiations without cause. He also admitted to paying all of the archdiocese's legal fees, but not those of the church's in-house lawyer because she is married to a partner in the law firm who collects millions in bankruptcy fees.

The survivors' lawyers then filed a motion with the court requesting the appointment of a trustee to replace New Orleans Archbishop Gregory Aymond as decision-maker for the church's financial affairs – who in turn would also succeed Eagan.

That motion was followed by others – from one of the church's insurers and from the U.S. trustee who oversees bankruptcy proceedings on behalf of the U.S. Department of Justice – demanding that Grabill withhold 20 percent of legal and consulting fees until a final settlement is reached.

Grabill said she would issue an order with more details soon, but she said from the bench that she planned to appoint an independent expert within 45 days to review the case and prepare a report within two months that would be made public.

“I am prepared to spend a little money to revive confidence in this process – or to strengthen it for the first time,” she said. “This is our opportunity. We will use it.”

Although Draper had questioned why the judge needed outside expertise, a lawyer representing some abuse victims said he and his clients supported Grabill's decision to bring in an outside expert.

Frank D'Amico said: “I think the judge is aware that this will go a long way in motivating people and giving the plaintiffs the assurance that this is a transparent process, that the court wants to do the right thing and that they can be assured that the right thing will be done.”