Jolly Times Around the Carcass

JAMES J. KILPATRICK

January 08, 1992|By JAMES J. KILPATRICK

WASHINGTON — Washington. -- "The one great principle of the English law,'' wrote Charles Dickens, ''is to make business for itself.''

That sterling maxim came to mind a few days ago. I was reading an article about the LTV Corp. The article evoked the most famous lawsuit in the whole of English literature, the proceeding in Chancery known as Jarndyce v. Jarndyce. It is fully reported in Mr. Dickens' ''Bleak House,'' to which I enthusiastically commend your attention.

The Washington Post article, a nice piece of work by staff writer Brett D. Fromson, provides a splendid example of the Dickens principle in contemporary application. LTV was at one time a major engineering firm. It manufactured missiles, steel, military aircraft, drilling equipment and other such large and expensive objects.

The company fell upon hard times. In July 1986 it filed for bankruptcy. Its liabilities reportedly amount to $11.4 billion. Its assets are placed at $6.6 billion.

At the rate the assets are being depleted by bankers and lawyers, the $6.6 billion will not last for long. This is hauntingly in the tradition of Jarndyce v. Jarndyce. The creditors and shareholders of the ill-fated company have yet to receive the first dime. The lawyers are not so deprived.

Mr. Fromson has no sensitivity. With unforgivable bluntness he observes that the lawyers, bankers, accountants and other advisers ''have been feeding at the trough.'' Gracious! The matter might have been stated with more grace, for he is here speaking of a vast company of professionals whose feelings are easily wounded.

According to a confidential LTV document, Mr. Fromson reports, the company already has paid $162.8 million in bankruptcy expenses, of which $144.5 million is in professional fees. An end is nowhere in sight. ''The largest chunk of the professional fees has gone to the lawyers representing LTV. Davis Polk & Wardwell of New York has received $26 million; Kaye, Scholer, Fierman, Mayo & Handler, also of New York, $10.7 million; and LeBoeuf, Lamb, Leiby & MacRae of Washington, $3.5 million, for a total of $40.2 million.''

Henry Kissinger's consulting firm, retained to advise LTV on the sale of its assets, is knocking down $60,000 a month. It will take in an additional $500,000 if the sale of an LTV subsidiary goes through.

This is the delightful part: The law and investing firms ''also charge hefty fees just for preparing their bills.'' One consultant submitted a bill for 92 hours of labor at $382 an hour, working up the tab. A New York investment firm charged LTV $915.75 an hour for preparing its bill.

Some of the fees, Mr. Fromson reported, are remarkably creative. A Boston law firm billed LTV for ''passive travel.'' When the bankruptcy judge inquired what was meant by ''passive travel,'' the lawyers explained, deadpan, that passive travel is the time a lawyer spends sleeping in his first-class seat as he flies to an LTV appointment.

Getting back to ''Bleak House'': The plot turns on the probate of a will. The case drags on interminably, generation after generation. At last a day is fixed for a final decree. Two characters, Allan and Esther, arrive late at the courthouse. They are puzzled by the high spirits of hangers-on in the hall. Evidently something droll has occurred, something ''that made the professional gentlemen very merry,'' for several young counselors are quite doubled up with laughter.

''We asked a gentleman by us, if he knew what cause was on? He told us Jarndyce and Jarndyce. We asked him if he knew what was doing in it? He said, really no he did not; nobody ever did; but as well as he could make out, it was over. Over for the day? we asked him. No, he said; over for good.''

A jolly crowd rolls out of the courtroom, ''and presently great bundles of paper began to be carried out -- bundles in bags, bundles too large to be got in any bags, immense masses of papers of all shapes and no shapes, which the bearers staggered under and threw down for the time being while they went back to bring more. Even these clerks were laughing.''

Allan asks the lead lawyer: ''Do I understand that the whole estate is found to have been absorbed in costs?''

''Hem! I believe so,'' returned Mr. Kenge.

Critics rank ''Bleak House'' among the five best novels of Dickens. LTV's creditors could read it and weep, for truth, as they say, is often stranger than fiction.

James J. Kilpatrick is a syndicated columnist.

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