By Joel Warner
By Michael Roberts
By Alan Prendergast
By Michael Roberts
By Michael Roberts
By Amber Taufen
By Patricia Calhoun
By William Breathes
The sharks are biting at Colorado's Ocean Journey. Not the sharks inside the fish tanks, but the sharks along Seventeenth Street, who are circling the aquarium even as it bleeds red ink.
In March, a tearful Doug Townsend, head of the aquarium, told the public that it would close on April 2...unless, of course, a tidal wave of financial support suddenly appeared. In the weeks following his announcement, children emptied their piggy banks, aquarium volunteers opened their wallets, and residents of one Denver neighborhood handed over the proceeds of a community garage sale. In all, Ocean Journey netted $72,000 from such small donations. And then bigger fish jumped in: The Barbara Bridges Family Foundation donated $1 million on the condition that Ocean Journey raise an additional $2 million; an aquarium diver pitched in $500,000; and Hensel Phelps Construction Company gave $250,000.
Even with those generous donations, Ocean Journey knew it wouldn't be able to stay afloat for long. But there was still hope: bankruptcy! When Ocean Journey announced on April 1 that it would file for Chapter 11, it was no April Fool's joke. While the nonprofit reorganized, aquarium employees could keep their jobs, and those generous kids would know that their allowances hadn't gone to waste.
And then the sharks started circling.
On the advice of its longtime lawyers at Holme Roberts & Owen (HRO), Ocean Journey hired LeBoeuf, Lamb, Greene & MacRae to handle its reorganization. The prestigious firm, which has offices in Paris, Johannesburg and Beijing, to name a few truly world-class cities, has one of the biggest bankruptcy practices in the country.
LeBoeuf's Denver office, on retainer with Ocean Journey, has already collected $185,000. The firm's law clerks are billing out at $85 an hour, the paralegals are charging $100 an hour, and the lead partner on the case is raking in $395 an hour -- that's $6.58 a minute, more than most of Ocean Journey's young visitors will make in one hour at their first jobs.
And that's supposed to be a bargain. Carl Eklund, lead partner at the Denver office of LeBoeuf, Lamb, Greene & MacRae, couldn't be reached for comment, but in a motion to the United States Bankruptcy Court, he explained that the firm's rates for Ocean Journey are "reduced from its ordinary and customary hourly rates for cases of this nature."
"It's outrageous, isn't it?" says bankruptcy attorney Douglas Jessop. "What's really astounding is how expensive litigation is in general. But as in medicine, you can go to a general practitioner, you can go to a specialist or you can go to thespecialist.
"LeBoeuf probably charges the highest going rate in town, but Carl Eklund can do in a fraction of the time what someone who charges half that can," adds Jessop, who charges $250 an hour. "Mine is a boutique firm, so I can afford to be more competitive price-wise. If you look at it this way, the bondholders are probably paying attorneys in New York $500 to $600 an hour, and they have minions working on it. So it's all relative."
And those aren't the only legal fees the aquarium will pay. Although HRO doesn't specialize in bankruptcy -- which is why its attorneys referred Ocean Journey to LeBoeuf -- the aquarium decided it wanted HRO to help with certain parts of the reorganization, such as negotiating how the $57 million in bond debt will be restructured and handling any contributions that come in while the bankruptcy is in progress. For that, HRO collected $80,000 on retainer, with rates comparable to LeBoeuf's: The partners bill out at up to $395 an hour, while the paralegals command anywhere from $110 to $145 an hour.
Although the law firm had already secured payment, HRO still had to seek permission to work on the case. And the court initially denied HRO's application, saying that it wanted to prevent the appearance of a conflict of interest. Not only do two HRO attorneys -- Charles Maguire and Manuel Martinez -- sit on Ocean Journey's board of directors, but HRO has also represented five of the aquarium's twenty largest creditors: the City and County of Denver, Downtown Denver Inc., Dain Rauscher, Qwest Communications and AT&T Media Services. In fact, HRO itself is one of Ocean Journey's creditors.
In his May 21 order, Judge A. Bruce Campbell wrote: "The [Charles] Maguire affidavit candidly catalogues HRO's many connections with parties in interest in this case. The affiant then concludes that he does not believe that 'HRO's representation of the creditors identified...on unrelated matters, or the other involvement of HRO on behalf of (this debtor) results in or constitutes...an issue concerning HRO's disinterestedness in this case....' In this conclusion, Mr. Maguire's belief is incorrect."
But HRO didn't give up. The firm quickly filed a motion to reconsider the denial, and at a hearing on June 19, the judge agreed to let HRO assist Ocean Journey with tax- and nonprofit-related matters. (HRO's Maguire did not return calls from Westword.) The judge's decision won't result in any savings, however. "The money equals out in the end, because what we don't spend on HRO for those things, we'll spend on LeBoeuf," says Ocean Journey spokeswoman Kimberly Langston.
The large donors who came to Ocean Journey's rescue were well aware that some of their contributions might go toward bankruptcy costs. "We knew going into this that it was going to be expensive, and we knew they wanted the best attorneys," says Bruce Kelley, the Ocean Journey diver whose family donated $500,000. "Right now, those legal fees are just as important as any other operating expense. They're high, but they're commensurate with the legal fees I'd expect in a case like this."