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DOJ Balks at J&J Unit’s Plan to Hire Katyal at $2,500-an-Hour (1)

May 23, 2022, 4:21 PMUpdated: May 23, 2022, 5:58 PM

The Department of Justice’s bankruptcy watchdog is opposing a bankrupt Johnson & Johnson unit’s proposal to retain former acting solicitor general Neal Katyal at nearly $2,500 an hour to work on its Chapter 11 case.

LTL Management LLC, which was created by the healthcare giant to house and limit its liability from its talc products, is proposing to retain Katyal, a partner at Hogan Lovells US LLP, at a rate as high as $2,465 an hour, the US Trustee said in its objection.

Hogan Lovells’ hourly rates for its partners are “significantly higher” than the rates of the seven other law firms LTL Management has retained, the US Trustee said.

LTL hasn’t shown the rates are reasonable or in the best interest of the bankruptcy estate, the Trustee said.

Katyal would act as special appellate litigation counsel for LTL, according to LTL’s application to hire Katyal.

Hogan Lovells didn’t immediately reply to a request for comment.

Earlier this month, the U.S. Court of Appeals for the Third Circuit agreed to hear several appeals by asbestos victims who are trying to end LTL’s bankruptcy.

The Third Circuit’s review will include the New Jersey bankruptcy court’s decision earlier this year denying tort claimants’ motion to dismiss the Chapter 11 case. The tort claimants argue LTL’s bankruptcy—which would address lawsuits from its talc product users who allege they developed cancer—was filed in bad faith.

LTL told the bankruptcy court it needs experienced counsel in connection with the appeals. Hogan Lovells “provides exceptional appellate litigation services,” LTL said.

In light of the appeal’s complexity and “anticipated intensity,” hiring Hogan Lovells is “appropriate and warranted,” LTL said.

The US Trustee argued that law firms LTL has already retained, such as Jones Day and Skadden Arps Slate Meager & Flom LLP, have helped the company and are familiar with the case. But their hourly rates are lower, it added.

The case is In re LTL Mgmt. LLC, Bankr., Bankr. D.N.J., No. 21-30589, objection 5/20/22.

(Story updated with additional reporting throughout.)

To contact the reporter on this story: James Nani in New York at jnani@bloombergindustry.com

To contact the editor responsible for this story: Roger Yu at ryu@bloomberglaw.com