Bankruptcy lawyer billed Detroit $34K for Florida travel
One of the city's highest-paid bankruptcy lawyers charged Detroit almost $34,000 to travel between the bankrupt city and his Florida vacation home.
Attorney David Heiman, a $1,075-an-hour partner at the city's bankruptcy law firm, Jones Day, also billed the city for private cars to ferry him between Detroit and his home in Cleveland, Ohio, and transportation between Florida airports and his vacation home near Fort Myers, Florida, according to bills reviewed by The Detroit News.
The expenses could be scrutinized during closed-door negotiations that start Wednesday in federal court over the reasonableness of more than $140 million in legal fees charged by the city's lawyers and consultants.
Mayor Mike Duggan is concerned that escalating legal fees could eat up money needed to revitalize Detroit, and U.S. Bankruptcy Judge Steven Rhodes has ordered the city and its team of professionals to participate in private negotiations that could result in lower bills.
Heiman, 69, is one of the city's highest-paid bankruptcy lawyers and has received a $100-an-hour raise since Detroit filed bankruptcy in July 2013.
Two other Jones Day partners bill at that same $1,075 hourly rate: Corinne Ball and Bruce Bennett.
The hourly rate is not necessarily out of line. Attorney Kenneth Klee, who handled the bankruptcy case of Jefferson County, Alabama, billed $1,050 an hour and two partners charged $950, according to al.com, an Alabama news organization.
Heiman has charged the city at least $33,837 for traveling to and from his Florida vacation home — that's more than the average annual pension of retired Detroit police officers and firefighters ($30,607) and almost twice as much as a non-uniform retiree's pension.
'Nickels and dimes'
The expenses are a small slice of the $52.3 million Jones Day has charged the city, but the principle frustrates one Detroit retiree who has followed the bankruptcy case and fees charged by the city's legal professionals.
"Hell, so many other people are stealing stuff, so why not?" said David Honsberger, 70, a retired Detroit Police Department accountant who has objected to the city's debt-cutting plan. "The answer is this shouldn't be. Somebody should be asking if he kind of overbilled the city."
But Wayne State University law professor Laura Bartell said the money spent flying Heiman to and from his vacation home is "nickels and dimes in the context of millions of dollars in fees."
"If he was necessary and that's where he was located and had to come to Detroit, then had had to come from there," she said. "If this were not a bankruptcy case and this lawyer was at his vacation home and he had to go to some meeting, he would charge for that plane trip."
Detroit Emergency Manager Kevyn Orr, a former Jones Day attorney, told reporters during Oakland County's annual Business Roundtable breakfast Tuesday that he is not involved in reviewing the bills, but does not believe Jones Day has excessively billed Detroit.
"Given the magnitude of what I'm dealing with, if I didn't have Jones Day, I might have had to hire six to eight additional firms," Orr said.
"Imagine sitting six different firms around the table to negotiate a document."
It was unclear Tuesday exactly how much the city's professionals have been paid since Detroit filed bankruptcy in July 2013.
Jones Day spokesman Dave Petrou would not discuss why Detroit was charged to fly one of their partners about 11 times to and from his Florida vacation home.
"We never discuss client matters like that," Petrou said Tuesday, adding that the firm's fees are subject to confidential mediation.
Christmas Eve work
Heiman's travel expenses — and numerous Florida trips — are detailed in thousands of pages of bills filed in federal court.
The veteran bankruptcy attorney lives in a $569,000 contemporary-style home in Cleveland and has charged Detroit for numerous trips to and from there.
Late last year, as the temperatures plummeted, Heiman started filing bills for travel to and from Florida.
That's because Heiman owns a vacation home overlooking the eighth hole of the private West Bay Beach and Golf Club in Estero, Florida.
Heiman paid $580,000 for the 3,000-square-foot home nine years ago. The three-bed, three-bath home has a pool and is about a half hour south of Fort Myers.
Heiman flew to and from the Florida vacation home approximately 11 times, according to the law firm's bills.
Bills from one dramatic day of Detroit's bankruptcy shed light on Heiman's travel habits.
It was Christmas Eve 2013.
Heiman was in Detroit, on short notice.
Chief U.S. District Judge Gerald Rosen, the bankruptcy case mediator, had ordered the city, banks and bond insurers to attend negotiations in Detroit on Christmas Eve — a date specifically chosen to motivate parties to reach a settlement over a troubled debt deal.
Heiman flew into Detroit from Fort Myers on Dec. 23, according to the lawyer's bills.
That night, Heiman ate dinner with Jones Day partner Corinne Ball and sent the $80 bill to Detroit.
The next day, with the holiday looming, Heiman helped reach a $165 million settlement with two banks around noon on Christmas Eve before the various lawyers scrambled to leave Detroit and head home.
Heiman spent five hours in mediation on Christmas Eve. At the time, Heiman's hourly rate was $975 so he charged the city $4,875 to help broker the Christmas Eve deal.
Heiman checked out of his $183 hotel room in downtown Detroit and was spotted outside federal court by The News before heading to the airport.
"We are very pleased and hope that this is a change that Judge Rhodes is happy with," Heiman told The News before climbing into a taxi.
After leaving court, Heiman hopped a plane to Florida. The round-trip ticket cost the city $1,139.
Heiman originally was supposed to fly into an airport near his vacation home but the flight was changed to Fort Lauderdale. The change cost $324.
When the plane landed, Heiman needed a ride to the airport near his Florida vacation home. So he spent $135 renting a car — and sent the bill to Detroit.
Since lawyers involved in the case are paid for non-working travel, Heiman billed the city $2,291 for time spent getting from Detroit to his vacation home.
Grand total of the Christmas Eve trip: $9,027.
Taxis, private cars
Three weeks after Heiman landed in Florida and headed inside his gated vacation home, Detroit's bankruptcy judge rejected the $165 million settlement Heiman helped negotiate on Christmas Eve.
"The court ... will not participate or perpetuate hasty and imprudent financial decision-making," Rhodes said at the time. "It's just too much money."
A spokesman for Detroit's mayor declined comment about any bankruptcy legal fees or expenses.
Duggan and the city's law department earlier said additional money spent on legal fees and expenses leaves less cash for the city's revitalization.
Bankruptcy was big business for Detroit's taxi industry. Some months, Jones Day lawyers spent more than $9,000 on taxi cabs.
Some lawyers also used private car services to travel to bankruptcy court in Detroit and to closed-door negotiations elsewhere.
Heiman was not alone in using chauffeured private cars. Since Detroit filed bankruptcy, Heiman has charged the city almost $5,000, according to Jones Day's bills.
A review showed Heiman used car services to drive between Cleveland and Detroit, typically after flights were canceled or because meetings ran late. The costs ranged as high as $475.
The private car expenses are not unusual, Bartell said.
"Generally, if one is taking the service, it frees up one's time to work while they are being driven," Bartell said.
rsnell@detroitnews.com
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Detroit News Staff Writer Christine Ferretti contributed.