By MONICA DAVEY
DETROIT — This city is learning that it is expensive to go broke.
Even as it wrestles with the $18 billion of debt that has overwhelmed it, Detroit has already been billed more than $19.1 million by firms hired to sort through that debt, search for ways to restructure it, and now guide the city through court. That does not include more costs that the city is expected to bear for the support staff for its state-appointed emergency manager, and for another set of lawyers and consultants to represent city retirees.
“It’s just ridiculous,” Edward L. McNeil, an official with the local council of the American Federation of State, County and Municipal Employees, said of the mounting costs. “The only thing that’s getting done is that these people are getting paid big-time while the citizens of Detroit are getting ripped off.”
The uncharted scale of Detroit’s bankruptcy — it is the largest municipal bankruptcy filing in the nation’s history in terms of both the city’s population and its debt — suggests that it may also become the costliest, experts say. City officials offer no estimate for a final tab, but some bankruptcy experts say the collapse could ultimately cost Detroit taxpayers as much as $100 million. As of last week, 15 firms had contracts with the city that could total as much as $60.6 million, city records show.
Some lawyers and other consultants are accepting discounted fees, and a fee examiner has been appointed to ensure that bills stay within reason. Still, the soaring costs are a jolt to retirees and creditors bracing for cuts to payments they once expected.
Some lawyers from the firm Jones Day, which charged the city $3.6 million for four months of work this year, bill for as much as $1,000 an hour, documents filed with the city show. The firm also forgave the city more than $1.2 million in additional costs during the same period, and accepted fee caps as part of its contract, the records show, resulting in effective hourly rates that are lower.