Buried by Bankruptcy.

L.A. LAWYERS FIND HUGE UNDERTAKING IN COMPLEX PG&E FILING

This is not your standard bankruptcy case.

For the Los Angeles-based attorneys working on the mammoth Pacific Gas & Electric Co. filing, it's meant long work weeks, extra travel and a crash course in the electricity industry.

Not to mention those ever-increasing billable hours.

"There have been very few utilities that have gone bankrupt before," said Fred Yanney, a Los Angeles partner at Fulbright & Jaworski, which represents some PG&E creditors and is a specialist in utility issues. "Not surprisingly, there aren't a lot of bankruptcy lawyers that have experience in electric utilities going bankrupt. In terms of dollars and magnitude of bankruptcy, this (PG&E case) is probably one of the largest."

It's a potential gold mine for dozens of attorneys, many in Los Angeles and San Francisco, where PG&E is based. But it's also heavy lifting: 12 to 14 hours days instead of the typical nine or 10, seven-day work weeks instead of five, and frequent contact with in-house counsel as well as state and federal regulators.

Government decision-making

Perhaps most confounding is having a case that shifts on almost a daily basis as the political and financial priorities keep changing. In almost no bankruptcy case have the resolutions hinged so much on what is happening in Sacramento or Washington.

"In most bankruptcy cases, lawyers can sit down and figure out, based on the law and the economics and a precedent and looking at the numbers, what would happen if a company liquidated," said David Gill, a partner at Danning Gill Diamond & Kollitz LLP, a Los Angeles firm representing the city of Los Angeles and its. Department of Water and Power in the PG&E case. "In this case, the amount the creditors get is very much controlled by what the federal government decides and what the governor of California and state Legislature decide."

Even attorneys practiced in energy-related matters have not handled a case anywhere near as complicated since California deregulated the power industry in 1998. "Ultimately, your plate gets filled and you can't take on any other matters," said Ed Feo, managing partner of Milbank Tweed Hadley & McCloy, a New Yorkbased firm with a handful of L.A. attorneys representing a committee of creditors that includes Merrill Lynch, Enron and GWF Power Systems.

With more than 30,000 creditors having filed for reimbursement from PG&E, some law firms are limiting the numbers of other bankruptcy cases they can accept.

PG&E estimates that it owes creditors between $9 billion and $10 billion, with the top 20 creditors owed $20 million to $2.2 billion each. While the amount owed typically does not affect the amount of work for attorneys, it does mean that attorneys are held to higher standards by their creditor clients, who are paying significant fees to get repaid.

Very complex work

That can translate to a law firm spending 50 hours to research a question, rather than merely relying on its partners' experience in the field. Those are billable hours, meaning extra revenue for the firm. But attorneys are under the gun to make sure those hours yield tangible results.

"(Clients') expectation of quality of service and level of attention is high," Feo said. "This is something for us that has been a highest priority, and we have to use the best resources we have."

Joe Eisenburg, a Los Angeles attorney with Jeffer Mangels Butler & Marmaro, talks daily with his client, the California Power Exchange, a creditor of PG&E which itself is operating under Chapter 11 bankruptcy protection.

The veteran bankruptcy lawyer, who gets inundated daily with updates on the status of the PG&E case and goings-on in Sacramento and Washington, says it's some of the most complex work he has ever done. "It requires a substantial amount of horsepower and a significant commitment of lawyer time and energy," he said.

Attorneys must learn the rules and regulations of the state's Public Utility Commission and the Federal Energy Regulatory Commission. They have to not only know bankruptcy law but also become expert at debtor and creditor relations, as well as laws governing the electricity industry.

Bankruptcies of regulated companies involve such complicated matters as tariffs -- approved by federal and state regulators -- that make it difficult for creditors to get reimbursed.