3 BigLaw Firms to Return $1M in Purdue Pharma Bankruptcy Legal Fees

Three large law firms have come to an agreement reducing fee applications by $1 million in their bankruptcy representation of Purdue Pharma after a U.S. trustee alleged a failure to disclose a common interest agreement.

Purdue Pharma OxyContinPhoto Credit: Shutterstock

The three firms included in the agreement are: Dechert; Wilmer Cutler Pickering Hale; and Skadden, Arps, Slate, Meagher & Flom.

According to the settlement agreement with the U.S. Department of Justice’s U.S. Trustee Program, each firm maintains that there was adequate disclosure of the common interest agreement, however they agreed to surrender up to $1 million in pending and future fees.

The trustee cited Bankruptcy Rule 2014, which requires disclosure of any connections with other parties in interest in the bankruptcy. The trustee claims the firms failed to do so when they did not communicate a joint defense and common interest agreement with the Sackler family, the owners of Purdue Pharma at the time.

Purdue Pharma, the maker of the prescription pain medication OxyContin, signed the agreement in May 2018 after pending lawsuits against opioid makers were consolidated into multidistrict litigation. After Purdue filed for bankruptcy in September 2019, the law firms agreed to represent Purdue Pharma without disclosing the agreement.

The trustee argued that the agreement should have been disclosed because the bankruptcy case was filed to implement a global settlement involving the debtors, the Sacklers and various plaintiffs. The common interest agreement had been invoked to withhold documents in discovery.

The trustee noted there was no finding that the failure to disclose was intentional or that there was any intent to mislead the Sacklers.

The law firms stated there is a common practice of not disclosing common interest agreements under Bankruptcy Rule 2014, but they agreed to resolve the matter “in the interest of expediency”, the settlement agreement said.

According to Bloomberg Law, Purdue Pharma agreed to pay $8.3 billion to settle federal probes of its promotion of OxyContin. The Sacklers agreed to contribute $4.2 billion to the bankruptcy estate as part of a settlement.

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