Brown Rudnick Fights J&J Unit Over $4 Million Bankruptcy Tab

Nearly seven months after Johnson & Johnson’s talc liability unit was thrown out of bankruptcy court, Brown Rudnick LLP awaits a Houston judge’s ruling to see if the subsidiary must cover a $4.3 million legal bill.

The firm’s tab would add to the tens of millions of dollars in professional fees that the company already paid for the six-month-long bankruptcy proceeding.

Judge Christopher M. Lopez of the US Bankruptcy Court for the Southern District of Texas said a dispute over Brown Rudnick’s fee request and the legal ethics of the law firm’s decision to switch its client representation during the Chapter 11 case for Red River Talc LLC “warrants a well-reasoned decision.”

“This is going to take me a while to write,” he told lawyers at the close of a lengthy court hearing Oct. 21.

Lopez in March dismissed Red River’s Chapter 11 bankruptcy over a multitude of flaws in the company’s multibillion-dollar talc litigation settlement proposal. It marked the third time a J&J subsidiary was blocked from using bankruptcy to address the health-care giant’s exposure to some 60,000 suits alleging its iconic baby powder and other consumer talc products were tainted with cancer-causing asbestos.

Left unresolved at the time were a number of pending retention applications and bills for Brown Rudnick and other firms advising an official committee of cancer patients. Under bankruptcy law, a Chapter 11 debtor is required to pay the fees and expenses of an officially appointed committee.

‘Hot Potato’

Forced in July by a higher court to address the pending fee issues, Lopez wrestled with thorny questions Oct. 21 over whether Brown Rudnick should have been permitted to represent the committee even though, up until November 2024, the firm represented a coalition of plaintiffs opposed to J&J’s use of the bankruptcy system to address talc liabilities.

Red River has accused Brown Rudnick of dropping its representation of the coalition like a “hot potato” as its unpaid fees ballooned to over $5 million to assume a role on the committee, which supported the J&J bankruptcy strategy.

In addition to “representing clients with diametrically opposed interests in the same bankruptcy case,” Brown Rudnick was duplicating work being done by the committee’s lead counsel at Paul Hastings LLP, the J&J unit argued.

“We believe there should be no dispute that they were materially adverse,” Red River attorney David Torborg of Jones Day told the court on Tuesday. “They had a conflict and they weren’t disinterested.”

The dispute comes down to whether the committee’s hiring of Brown Rudnick passes muster under US bankruptcy law and legal ethics rules in Texas, said University of Nevada, Las Vegas law professor Nancy Rapoport.

“Firms have to follow both of those,” she said.

Former Nevada bankruptcy judge Bruce Markell, now a Northwestern Pritzker School of Law professor, said the main question appears to be whether a law firm can “basically switch positions” without being conflicted.

It depends on whether the the move “materially affected” Brown Rudnick’s ability to advocate for its client, he said.

Situations like this are why “most judges don’t like fee matters,” he added.

Principle or Vendetta

Brown Rudnick has pushed back, saying it followed all applicable rules when it was asked to take on a co-counsel role for the committee last year because it was “uniquely qualified to facilitate discussions and negotiations between the supporters and opponents of the debtor’s plan.”

There was hope that the “right counsel,” could be helpful for the goals of creditors in the case, Brown Rudnick attorney Jeffrey L. Jonas said at the hearing. “We stand by the work and stand by the retention.”

Jonas said he found it “perverse” that Jones Day, which was paid more than $25 million for representing Red River in bankruptcy without court approval of its retention application, was arguing against Brown Rudnick’s fees.

Citing documents recently produced by Red River, Jonas said Jones Day’s fees are part of roughly $70 million in Chapter 11 fees the company has paid.

The arguments “seem mean spirited” and seek to “provide a windfall to J&J,” he said.

The objection however is not “some vendetta against Brown Rudnick,” Torborg told the court. The firm was conflicted and otherwise duplicated the work of Paul Hastings, he said.

Red River has said it will pay for more than $8 million in fees and expenses requested by Paul Hastings.

Both committee firms have faced opposition to their hiring from the Justice Department’s bankruptcy monitoring division, the US Trustee Program, over alleged conflicts stemming from unpaid bills owed by other creditors in the case.

Red River also opposed a motion by the creditor committee to retain and pay FTI Consulting Inc. $2 million, saying the restructuring adviser over-billed for its services and was otherwise conflicted because its wholly owned subsidiary worked for the coalition.

Lopez encouraged the parties to continue to negotiate before he renders a decision on the dispute, warning that the fee requests will be closely examined even if the retention applications are approved.

“I can tell you everybody’s bill is too high,” he said.

The case is In re Red River Talc LLC, Bankr. S.D. Tex., No. 24-90505, hearing 10/21/25.