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January 18, 2013

Bankruptcy judge penalizes McKool Smith P.C. firm financially for overbilling Lon Morris College

TYLER —

A federal bankruptcy judge has docked the law firm representing the Lon Morris College bankruptcy estate some $14,000 for over 30 man hours of alleged LMC over-billing.

In an order handed down Thursday, Federal Bankruptcy Judge Bill Parker reprimanded McKool Smith representatives for "excessive" charges against the bankrupt college — before awarding the firm a separate $85,529.90 for work performed for LMC between July 2 and Sept. 30.

"The court finds that the reduction of 30.5 attorney hours is justified for excessive time having been billed for the work described or for which the benefit to the estate is unclear or undemonstrated — particularly in light of higher-compensated professionals," the judge wrote in his ruling.

The judge noted that 6.3 of those hours were billed at rates of $575 an hour; 11.30 of them at $415 an hour; and 12.90 of them at $350 an hour.

What repercussions Thursday's ruling could have, if any, are currently unknown. McKool Smith attorney Hugh Ray III did not return a request for comment Friday.

According to his professional profile, Ray has "helped author rules of professional conduct in Texas."

McKool Smith Founder and Chairman Mike McKool said he had no connection with the case and could not shed light on the ruling.

LMC Chief Restructuring Officer Dawn Ragan also could not be reached to comment.

In his ruling, the judge went on to explain he docked two additional hours submitted by the firm — this time billed at $415 an hour — "because the applicant fails to demonstrate an identifiable, tangible, and material benefit to the bankruptcy estate arising from the services rendered."

Judge Parker also instructed McKool Smith to go back to the drawing board with an additional 1.60 of the submitted hours, billed at $350 an hour.

The judge said that particular work "should be compensated at the listed paraprofessional rate for services more properly characterized as paraprofessional services."

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