Court Reduces Millenkamp UCC Counsel’s Requested $1.2M Fees by 36%, Holds Fees Unreasonable in District of Idaho

Relevant Document:
Decision

On April 27, Judge Noah G. Hillen issued a decision finding the fees sought by O’Melveny & Myers, counsel to the Millenkamp official committee of unsecured creditors, to be unreasonable. Judge Hillen reduced O’Melveny’s fees by about 36%, to approximately $763,000 from about $1.2 million, and reduced the firm’s costs and expenses to about $28,000 from $36,000. “The Court cannot find that OMM’s rates are reasonable in [the District of Idaho], even in a large case such as this one,” and “concludes OMM’s requested compensation is not wholly reasonable in light of the role it played,” writes the judge.

In July 2024, Judge Hillen expressed skepticism about O’Melveny’s rates when the firm was retained and noted that the firm’s hourly rates are higher than debtors’ counsel’s rates. At a hearing in December 2025, Judge Hillen again criticized O’Melveny’s fees, ordering the firm to submit supplemental briefing to support its fee request.

Judge Hillen held that the applicable market rates should be those charged in the District of Idaho because O’Melveny failed to present evidence that local counsel was unwilling or unable to serve as counsel for the committee. The judge acknowledged that the bankruptcy was larger and more complex than typical cases filed in the district but said the court cannot approve a relevant market rate that extends beyond the district without such evidence relating to local counsel.

Noting that O’Melveny’s rates were more than three times the rates charged by debtors’ counsel and that its paralegals billed at higher rates than the market rates for local attorneys, Judge Hillen found that the firm’s rates “dramatically exceed those of debtors’ counsel” and are “difficult to justify on the basis of complexity or responsibility alone.”

Judge Hillen further observed that creditor Conterra Holdings’ counsel charged rates that were approximately half of O’Melveny’s rates despite being based outside the District of Idaho and handling larger claims.

Judge Hillen also found O’Melveny’s rates unreasonable “in light of the role it played” in the bankruptcy, pointing out that “the heavy lifting to adapt and modify debtors’ plan was done by debtors’ counsel” and that the committee was left “somewhat on the sidelines to monitor the discussions in order to protect the interests of the Committee’s members.”

The committee was not required to “investigate prepetition transactions between the debtors and their insiders, assess potential causes of action against the insiders, or evaluate avoidance actions,” Judge Hillen wrote.

The fact that O’Melveny’s fees fell within the debtors’ monthly cash collateral budget is irrelevant to the reasonableness analysis, Judge Hillen added.

“Pursuant to the Court’s duty under § 330 to assure the reasonableness of professional fees to be paid by a debtor in bankruptcy, the Court has reviewed the invoices submitted by OMM in detail and has determined that the hours and rates sought are not supported by the circumstances of this case,” concludes the judge. “Accordingly, the Court will reduce the hourly fees to more closely align the fee award with what is reasonable in a case such as this in the District of Idaho.”

Judge Hillen also reduced certain of O’Melveny’s costs and expenses after finding them to be unreasonable, rejecting charges for computerized legal research, text editing and proofreading. Costs associated with computerized legal research such as Westlaw and Lexis-Nexis are part of a law firm’s overhead rather than compensable expenses, and text editing and proofreading are services “encapsulated in the hours and fees charged by attorneys and other professionals,” Judge Hillen held.

The opinion notes that the debtor already paid O’Melveny about $838,000 in legal fees “and therefore has overpaid fees” by approximately $75,341. The debtor has already paid about $23,940 in costs and expenses to O’Melveny but still owes a balance of about $4,395, resulting in a net overpayment by the debtor of about $71,000.

Prior to the court’s ruling, O’Melveny had already agreed to reduce its fees by $225,000, $125,000 of which resolved an objection from the U.S. Trustee and $100,000 of which resolved creditor Land View’s objection.