The high cost of going broke.
For the record, other lawyers and bankruptcy experts insist that these numbers are not as egregious as they sound, given the complicated circumstances of a municipal bankruptcy as unprecedented as Detroit's. Still, if you're a taxpayer in the city (or a pensioner who can't get paid), this has got to hit you right in the gut: Detroit was billed $200,000 for just two weeks of work by one restructuring consultancy, another $3.6 million by a different law firm spanning four months of work, and $200,000 by the auction house Christie's to appraise works at the Detroit Institute of Arts that no one wants to sell.
The city's bankruptcy court judge appointed a fee examiner to keep an eye on the mounting costs associated with going broke. And Detroit is paying that guy $600 an hour (a discount from his regular rate of $675). Via Monica Davey in the New York Times:
His bill for August seeks $28,407.85 for his work so far, in addition to more than $14,000 for his law firm and $5,000 more for a consulting financial firm.
Oh, and that $200,000 for two weeks of work by the firm Conway MacKenzie – that included $26,000 for the expertise of a financial analyst who graduated from college last year.
All told, it's unclear what the bankruptcy will cost the city, but it will certainly be far more than the $13 million Vallejo, California spent extricating itself from a similar bind. Davey reports that as of last week, the city had contracts with 15 firms variously involved in helping it through the process, cumulatively worth as much as $60.6 million. Part of the challenge, she writes, is that there are only so many lawyers and analysts expert in the rare occurrence of municipal bankruptcies. And the city must contend with creditors who have no shortage of highly paid lawyers on their side.
Remember back when pundits warned that Detroit's bankruptcy would encourage other cities to skip down this same path? The deeper Detroit wades into this mess, the more bankruptcy looks like the most painful of all last remaining options.
Top image of a fake for-sale sign posted by an activist in Detroit's Belle Isle park: Rebecca Cook/Reuters.