CHICAGO - Lazard Freres & Co. LLC, which represented retirees in the Detroit bankruptcy, said it agreed to a 37% cut in its fees as part of court-ordered mediation to settle a fee dispute with the city.
Lazard disclosed its final fee in a court filing Jan. 15. It's the first in several filings detailing the discounts agreed to by firms involved in the historic Chapter 9 case.
The city's attorneys, consultants and advisors charged a total of $170 million for the 18-month bankruptcy. U.S. Bankruptcy Judge Steven Rhodes ordered all firms into mediation to hammer out discounts to bring down the total cost. The firms are expected to release fee details on the bankruptcy website on Jan. 16.
Jones Day, the city's lead attorney, was paid $58 million, the single highest tab.
In its filing, Lazard said its 37% cut reduced its final fee to $5.56 million from $8.44 million. The original contract featured a $175,000 monthly fee and a $6 million bonus when the case was over.
Lazard said the bonus, also called a transaction or success fee, is typical for investment bankers in a bankruptcy, as opposed to an hourly fee.
The firm agreed to waive its fees for the months of November and December 2014 and take an additional $3 million cut.
Lazard justified the $5.6 million fee by saying its contribution meant the retirees "were able to substantially improve their treatment from the first to the eighth amended [plan of debt adjustment] while at the same time preserving the city's re-investment initiatives and the plan's feasibility."
The firm represented the Official Committee of Retirees in the case. Segal Co., which provided pension and health benefits actuarial advice to the retiree committee, said in a separate filing that it cut its $3.9 million fee by $99,000.