April 29 (UPI) — The Department of Justice on Thursday ordered three law firms representing Purdue Pharma to relinquish $1 million in fees earned in bankruptcy cases related to the company’s involvement in the opioid epidemic.
The Justice Department’s U.S. Trustee Program announced a settlement with law firms Skadden, Arps, Slate, Meagher & Flom LLP; Wilmer Cutler Pickering Hale and Dorr LLP; and Dechert LLP — pending approval by the Bankruptcy Court for the Southern District of New York — to resolve concerns about the adequacy of the firms’ disclosures in the Purdue bankruptcy cases.
The USTP alleged that the law firms failed to “adequately disclose” a joint defense and common interest agreement between Purdue Pharma and members of the Sackler family who own the company.
As a result, the agreement “created obligations” for the firms related to the defense against hundreds of lawsuits regarding Purdue’s drug OxyContin.
During the course of the bankruptcy cases, Purdue invoked the agreement to avoid turning over documents to the official committee of unsecured creditors, while conducting its review of the debtor’s conduct.
“These disclosure violations are particularly concerning because a central question in these cases has been the independence of Purdue from the Sackler families,” USTP Director Cliff White said.
The USTP, however, said there was no evidence the lack of disclosure “was intentional or that there was an effort by any of the firms to mislead.”
“Where there has been failure to disclose a connection in an application even where due to inadvertence, the Bankruptcy Court has the discretion to remedy such a disclosure including, among other things, by requiring all or part of the fees earned by counsel to be disgorged,” the UTSP said.
A representative for Dechert LLC told The Hill the three firms “acknowledge the importance of having robust systems to identify and consider connections to ensure compliance” but did not consider the disclosures as a “connection” at the time.
Purdue Pharma issued a statement declaring it was “pleased” the parties reached a settlement agreement.
“We remain focused on achieving a global settlement that would deliver more than $10 billion in value, including 100% of Purdue’s assets and millions of doses of opioid addiction treatment and overdose reversal medicines, to claimants and communities across the country affected by the opioid crisis,” the company said.