§ 136.6 — Debtors’ Attorneys’ Fees before BAPCPA

Revised: June 17, 2004

[1]

In Chapter 13 cases, fees are awarded to debtor’s counsel under 11 U.S.C. § 330(a) and fall squarely within the category of administrative expenses described in § 503(b)(2). 11 U.S.C. § 503(b)(2) identifies “compensation and reimbursement awarded under section 330(a)” as administrative expenses. Prior to the Bankruptcy Reform Act of 1994, 11 U.S.C. § 330(a) stated that the court “may award . . . to the debtor’s attorney . . . (1) reasonable compensation.” As amended in 1994, the reference to “the debtor’s attorney” was removed from § 330(a), but 11 U.S.C. § 330(a)(4)(B) now specifically authorizes a court in a Chapter 13 case to “allow reasonable compensation to the debtor’s attorney.”1 The same is not true in a Chapter 7 case—after the Supreme Court’s decision in Lamie v. United States Trustee,2 a Chapter 7 debtor’s attorney is not entitled to compensation from the estate under § 330(a).

[2]

Bankruptcy Rule 2016(b) requires every Chapter 13 debtor’s attorney—without regard to whether the attorney actually applies for compensation during the Chapter 13 case—to “file and transmit to the United States trustee” a disclosure of compensation paid or promised consistent with § 329 of the Code.3 If the attorney seeks compensation from the Chapter 13 estate, Bankruptcy Rule 2016(a) requires an application for compensation. When the attorney’s fee in a Chapter 13 case is a “flat fee” that includes all services to be rendered during the case and the amount is fully disclosed in a Bankruptcy Rule 2016(b) statement, it has been held that no purpose is served by requiring a separate fee application under Bankruptcy Rule 2016(a).4 Although § 330 of the Code and Bankruptcy Rule 2016(a) require an application when debtor’s counsel seeks compensation from a Chapter 13 estate, nothing in the Code or rules requires a Chapter 13 debtor to obtain court approval prior to hiring an attorney.5

[3]

As long as the Chapter 13 case remains open, it has been held that the bankruptcy court has exclusive jurisdiction to determine compensation and to resolve disputes over debtors’ attorneys’ fees.6 Even when court approval of compensation is not required by § 330—for example, when payment is from a source other than the Chapter 13 estate7—Bankruptcy Rule 2016(b) and § 329 of the Code require disclosure of the source and amount of compensation.8

[4]

Debtors’ attorneys’ fees are entitled to priority under § 507(a)(1). Although there is no reference to administrative expenses in § 1322(a)(2), most Chapter 13 plans and courts treat debtors’ attorneys’ fees as priority claims entitled to full payment through the Chapter 13 plan.9 If debtors’ attorneys’ fees are priority claims entitled to full payment under § 1322(a)(2), then fees are payable without interest even if paid in installments after confirmation.10

[5]

The standards for awarding attorneys’ fees in § 330 of the Code were rewritten by the Bankruptcy Reform Act of 1994. The former version of § 330 controls attorneys’ fees in Chapter 13 cases filed before October 22, 1994,11 the new version of § 330 applies in cases filed after that date.12 In addition, the 1994 Act directed the Executive Office of the United States Trustee to promulgate “procedural guidelines” to be “applied uniformly” by U.S. trustees in reviewing applications for compensation and reimbursement of expenses under § 330.13 With somewhat more imperative than prior law, the 1994 Act instructs the U.S. trustee to file “comments” and “objections” to applications for compensation and reimbursement of expenses, when “appropriate.”14

[6]

The tone and content of the 1994 amendments to § 330 reflect congressional intent that attorneys’ fees should be vigorously regulated in bankruptcy cases. There is no empirical evidence of abuse of debtors’ attorneys’ fees in Chapter 13 cases. If anything, as discussed below, circumstances have conspired to artificially depress the allowance of fees in Chapter 13 cases in many districts.

[7]

As amended in 1994, § 330(a)(4)(B) contains for the first time a specific provision for compensation of debtors’ attorneys in Chapter 13 cases:

In a . . . chapter 13 case in which the debtor is an individual, the court may allow reasonable compensation to the debtor’s attorney for representing the interests of the debtor in connection with the bankruptcy case based on a consideration of the benefit and necessity of such services to the debtor and the other factors set forth in this section.15
[8]

There is no similar language that applies to Chapter 13 cases filed before October 22, 1994. In cases decided under prior law, priority status for debtor’s counsel’s fees was sometimes limited to services that benefited the estate.16 For example, a debtor’s counsel was entitled to priority payment of compensation for defending a motion to vacate an order of confirmation but was not entitled to priority for defending an adversary proceeding to determine the dischargeability of a Health Education Assistance Loan when the outcome of the adversary proceeding affected the debtor individually but not the rights of other creditors or the estate.17

[9]

In Chapter 13 cases filed after October 22, 1994, debtor’s counsel is entitled to an administrative expense for compensation for work that is beneficial and necessary to the debtor without proof of benefit or necessity to the Chapter 13 estate or to creditors.18 One of the first reported decisions interpreting new § 330 in a Chapter 13 case held that debtors’ attorneys are entitled to regular hourly rates for travel time to attend court hearings.19

[10]

The 1994 amendment of § 330(a)(4)(B) will impact Chapter 13 cases, for example, when debtors litigate exemptions or the dischargeability of claims. Success in exemption or dischargeability litigation typically only benefits the debtor. The proliferation of nondischargeable claims in Chapter 13 cases after the 1990 and 1994 amendments to the Code20 will produce more circumstances in which debtors’ counsel seek fees under § 330(a)(4)(B) for the expenses of litigating the dischargeability of debts.

[11]

In a throwback to practice prior to 1994, one bankruptcy court reported a decision denying compensation to debtor’s counsel notwithstanding a finding of benefit to the debtor. In Quisenberry v. American State Bank (In re Quisenberry),21 the Chapter 13 trustee declined to challenge a prepetition setoff by a bank of money deposited to the debtor’s checking account. The debtor’s attorney brought the action and successfully avoided the setoff, and the debtor claimed an exemption in the money recovered from the bank. The bankruptcy court then denied the debtor’s attorney’s request for compensation, applying this odd logic:

[S]ince Debtor’s standing to prosecute this adversary proceeding is limited to the extent of her exemption of the recovery, all of such recovery will inure exclusively to the benefit of the Debtor. . . . The estate does not benefit from a successful prosecution of this adversary. . . . [T]his adversary constituted nothing more than a preservation of Debtor’s exemption. As such, the court denies allowance of Debtor’s attorney’s requested compensation.22
[12]

Quisenberry turns § 330(a)(4)(B) on its head. The debtor unquestionably benefited from recovery of the money from the bank. The opinion reveals no option for the debtor to realize the exemption except by avoidance and recovery of the setoff. That creditors did not benefit from the adversary proceeding is not determinative for § 330(a)(4)(B) purposes after the 1994 amendments.

[13]

Even as amended in 1994, § 330(a)(4)(B) requires that the services of counsel at least benefit the estate or the debtor. Services that benefit neither are not compensable. For example, in In re Pirani,23 the debtor’s attorney’s fee request was reduced because “unusual” participation in litigation in a Canadian court “appear[ed] to have been of no benefit to the estate and of questionable benefit to the debtor.”24 Fees for preparation of the plan, for claims litigation and for efforts to keep the debtor’s car during a Chapter 13 case were not allowed in In re Polishuk,25 based on lack of benefit to the debtor or to the estate—the bankruptcy court found that counsel could not have “reasonably believed that Mr. Polishuk had a realistic hope of reorganization under any chapter of the Bankruptcy Code.”26 Defending a motion for relief from the stay and successfully cramming down a car loan “provides no continuing benefit to the debtor” when the Chapter 13 case was dismissed before a plan was confirmed.27 In In re Rothman,28 a fee request of $20,484.50 was measured against § 330(a)(4) and reduced to $7,500 based in part on findings that claims litigation was not compensable when it produced no greater dividend to unsecured claim holders nor benefit to the debtor by changing payments into the plan. Services in pursuit of fees were not allowed because of no benefit to the estate or to the debtor, and the litigation of unsuccessful objections to confirmation did not benefit the estate or the debtor. As explained by the court, “The Debtor, by his counsel, has displayed lapses of judgments, stubbornness, and combativeness . . . . The Debtor cannot be permitted to act out his litigious impulses at the expense of the creditors of the Debtor’s estate.”29

[14]

Section 330(a) reserves to the bankruptcy court substantial discretion to determine reasonable and necessary fees for debtors’ counsel. Almost every jurisdiction has local rules, general orders or local culture that defines the range of fees that can be routinely charged to represent a debtor in a Chapter 13 case without challenge from the Chapter 13 trustee, the U.S. trustee or the court.30 The method of payment of attorneys’ fees varies dramatically from jurisdiction to jurisdiction.31

[15]

A few of the reported decisions dealing with attorneys’ fees for Chapter 13 debtors’ counsel involve evidence of awkward practice or unreasonable charges. For example, in In re Barbee,32 it was the practice of some attorneys in the Chicago area to instruct Chapter 13 debtors to make payments to counsel prior to confirmation. The money would be accumulated pending confirmation and approval of fees. At confirmation, the debtor’s attorney would deduct the amount awarded as fees and remit only the balance to the Chapter 13 trustee. The court found this practice to be burdened with ethical and administrative problems. In In re Hepburn,33 the debtor’s attorney was ordered to refund $750 to the debtor when there was only one scheduled creditor, the debtor had no visible source of income and neither the debtor nor counsel appeared at the § 341 meeting or at the hearing on confirmation.34 In another case, the debtor’s law firm was required to refund its fee when the firm failed to reveal it held a prepetition security interest in assets that became property of the Chapter 13 estate.35 A debtor’s counsel was required to refund all but $200 of an $850 fee when on the face of the Chapter 13 statement, the debtors were not eligible for Chapter 13 relief.36

[16]

Charging paralegal and nonlegal time at attorney rates is a recurring problem for debtors’ attorneys who must rely heavily on paralegals and nonlawyer staff to run a successful Chapter 13 practice.37 That the debtor’s lawyer charged paralegal time for babysitting the debtor’s children during office visits figured prominently in one reported decision reducing the attorney’s fee.38 An attorney and the bankruptcy service for which the attorney worked were ordered to disgorge $3,500 and to pay for substitute counsel when the incompetent handling of the Chapter 13 case required substitute counsel to invest much time cleaning up the mess.39

[17]

The fee disclosures required by Bankruptcy Rule 2016(b)40 are often cited in reported decisions that reduce, refuse or require disgorgement of attorneys’ fees in Chapter 13 cases. Typically, the problem is an omitted retainer or fee payment that renders the Rule 2016(b) disclosure inaccurate or the disclosure is missing altogether.41 Rule 2016(b) imposes a continuing duty of disclosure: debtors’ attorneys have stumbled by failing to amend the 2016(b) disclosure when additional payments are made or promised during the Chapter 13 case or after conversion to Chapter 7.42 In a particularly complicated and vexatious Chapter 13 case, debtor’s counsel was required to pay a fine of $1,000 to the clerk of the bankruptcy court as a sanction for failing to file the Bankruptcy Rule 2016(b) statement.43 Another court ordered a refund of $2,000 for excessive fees under § 329 and a sanction of an additional $2,000 under Bankruptcy Rule 9011 when debtors’ counsel failed to disclose fees, failed to appear at court hearings and otherwise “inadequately” represented the debtors.44

[18]

Frequent filers are a magnet for fee problems for debtors’ attorneys in Chapter 13 cases. One bankruptcy court observed it was “very unlikely” that debtor’s counsel would be awarded more than the $1,575 already paid for the debtor’s fifth bankruptcy case in four years.45 A $4,080 fee request was reduced to $2,410 primarily because the same attorney represented the debtor in a recent Chapter 7 case and the time recorded for preparation of the new Chapter 13 statement and schedules was excessive.46

[19]

The extent of services to be performed begins as a matter of contract between the debtor and counsel but is quickly impacted by local Chapter 13 practice. Some jurisdictions take the view that once the debtor’s lawyer signs on at the beginning of the Chapter 13 case, the fee agreed upon requires the lawyer to represent the debtor through discharge—typically three to five years after filing the case. In other jurisdictions, the initial fee covers representation of the debtor through confirmation; postconfirmation representation is pay-as-you-go.47 And there is a middle position: pursuant to local “guidelines” or practice, the initial fee in a Chapter 13 case covers some postconfirmation services such as objecting to proofs of claim.48 In several reported decisions, debtors’ attorneys find trouble when bankruptcy courts conclude it was inappropriate for counsel to bill separately for matters that should have been included in the flat fee paid by the debtor.49 One court gave this detailed account of what is and what is not included in a flat fee for a “standard” Chapter 13 case:

[T]he court finds that . . . normal and customary services includ[e] furnishing general legal advice to the Debtors regarding chapter 13; preparation of the Debtors’ bankruptcy petition, schedules and their chapter 13 plan; reviewing proofs of claim filed in the Debtor’s case; and attending the Debtor’s § 341(a) meeting of creditors and their confirmation hearing. . . . Applicant is award a fee of $1,500.00 for the normal and customary work. . . . [W]ork . . . that exceeds the normal and customary [includes] . . . such matters as the defense of a motion to lift the automatic stay, objections to claims, cramdown of undersecured mortgages, and settlement of objections to confirmation.50
[20]

There are reported decisions discussing whether and how a debtor’s attorney gets additional fees for postconfirmation work in a Chapter 13 case. Postconfirmation attorneys’ fees are priority administrative expenses. The possibility that postpetition attorneys’ fees are postpetition claims under § 1305 was rejected by one court in favor of the usual procedure for approval of compensation of professionals under § 330.51 In another case, because postpetition attorneys’ fees were treated as priority administrative expenses entitled to full payment under § 1322(a)(2), the allowance of additional fees was refused when payment of the additional fees would extend the confirmed plan beyond the five-year limitation in §§ 1322(d) and 1329(c).52 Taking the extreme position, one reported decision held that the fee stated in the order of confirmation was binding on debtor’s counsel notwithstanding that counsel performed services in excess of that amount.53 Although the confirmation order would be binding on debtor’s counsel,54 the debtor’s contract with counsel becomes important: if the fee stated in the confirmation order did not include services after confirmation, then surely counsel is not precluded from applying for additional fees after confirmation.

[21]

Often the procedure for approval of fees after confirmation is different than for the initial preconfirmation fee. Pursuant to “guidelines” or local practice, in many jurisdictions the flat fee for preconfirmation services is revealed in a Rule 2016(b) disclosure,55 but a separate fee application under Rule 2016(a) is not required. The preconfirmation fee amount is included in the confirmed plan.56 When attorney services not covered by the flat fee are rendered, a formal application under Bankruptcy Rule 2016(a) may be required, with the usual supporting documentation.57

[22]

Allowance of attorneys’ fees as administrative expenses is important to unsecured claim holders in the calculation of disposable income for confirmation purposes.58 Attorneys’ fees that are administrative expenses will be paid from projected income, typically in advance of payments to unsecured claim holders and reducing the money available for prepetition creditors.

[23]

The allowance of attorneys’ fees as administrative expenses can imperil confirmation. For example, in Jensen v. Dunivent (In re Dewey),59 the bankruptcy court disallowed debtor’s attorney’s request for nearly $4,000 in postpetition fees because the plan would have failed the best-interests-of-creditors test in § 1325(a)(4) had the court known of the fee claim. The confirmed plan in Dewey stated that the attorney’s fees would be paid in full as administrative expenses. Including the $4,000 fee, administrative expenses would have eaten up most of what was to be paid to unsecured claim holders to satisfy § 1325(a)(4).60 The Bankruptcy Appellate Panel for the Tenth Circuit held that it was appropriate to disallow the attorney’s fees to preserve confirmation, at least in part because counsel could have avoided the problem by disclosing the fees at confirmation.

[24]

Attorneys’ fees are hard to fix on a case-by-case basis in Chapter 13 cases. The traditional bankruptcy methodology—reasonable hourly rate multiplied by hours necessarily expended61—breaks down in Chapter 13 cases, especially in a high-volume Chapter 13 practice. Some of the best Chapter 13 debtors’ attorneys operate computerized offices with specialized paralegals who manage a large volume of Chapter 13 cases very efficiently. Three or four hours of attorney time and a like number of hours of paralegal time in an experienced debtors’ attorney’s office can produce excellent results in a “typical” Chapter 13 case. Another lawyer who less regularly handles Chapter 13 cases might double or triple the time investment to produce the same or less desirable results. Applying normal lodestar methodology can penalize the efficient volume counsel by reducing the fee in each case while rewarding the inefficient practitioner with higher fees.

[25]

Added to the calculus is the unspoken truth that debtors’ attorneys rarely collect 100 percent of their fees in Chapter 13 cases. High-volume counsel verify that on the average they collect between one-half and two-thirds of the total fees they are awarded. This low percentage reflects not the quality of representation but the reality that many Chapter 13 cases convert or are dismissed before attorneys’ fees have been paid in full, especially in districts where it is the custom to pay all or most of the fee through the plan.62 Districts that require debtors’ attorneys to take their fees in dribs and drabs through confirmed plans tie the payment of fees to the risk of success of Chapter 13 cases.63 Where are the reported Chapter 13 cases recognizing that contingent fees are appropriately allowed at higher than normal hourly rates?

[26]

The U.S. Courts of Appeals for the Fourth and Sixth Circuits have addressed the standards for awarding debtors’ attorneys’ fees in Chapter 13 cases, reaching inconsistent conclusions. In Harman v. Levin,64 the Fourth Circuit affirmed the reduction of a debtor’s attorney’s fee to approximately 60 percent of the requested amount, holding that it was appropriate for the bankruptcy court to refuse to apply a normal time/hourly rate calculation because “Chapter 13 bankruptcy cases often involve a number of relatively routine questions.”65 In contrast, in Boddy v. United States Bankruptcy Court,66 the Sixth Circuit held that it was an abuse of discretion for the bankruptcy court to award a debtor’s attorney’s fees in a Chapter 13 case on any basis other than the “lodestar” method. As the Sixth Circuit explained, the bankruptcy court in a Chapter 13 case should determine a reasonable hourly rate for the debtor’s attorney and then multiply that rate by the reasonable hours worked on the case. The court held that it was not appropriate to fix a maximum fee or a normal and customary fee applicable to all cases. The Sixth Circuit elaborated:

The bankruptcy court also may exercise its discretion to consider other factors such as the novelty and difficulty of the issues, the special skills of counsel, the results obtained and whether the fee award is commensurate with fees for similar professional services in nonbankruptcy cases in the local area. . . . In many cases, these factors will be duplicative if the court first determines the lodestar amount because the lodestar presumably subsumes all of these factors in its analysis of the reasonable hourly rate and the reasonable hours worked.67
[27]

The truth probably lies somewhere between the Fourth and Sixth Circuit views.68 It is almost inconceivable that bankruptcy courts would engage in full-scale lodestar calculation of debtors’ attorneys’ fees in every Chapter 13 case, especially in districts with high-volume Chapter 13 programs. Lodestar analysis in Chapter 13 cases will tend to undervalue the services of experienced and efficient Chapter 13 debtors’ counsel unless bankruptcy courts are willing to recognize that the hourly rate for a highly skilled Chapter 13 debtors’ counsel should be equivalent to the hourly rates permitted highly skilled bankruptcy lawyers in other chapters. On the other hand, the Fourth Circuit’s abandonment of the lodestar approach in favor of an unarticulated other standard leaves debtors’ counsel at the mercy of bankruptcy judges who, with the passage of time on the bench, can become detached from the realities of the practice of bankruptcy law. It takes much skill, experience, attention to detail and willingness to stay current on many areas of law to be effective as a debtor’s counsel in Chapter 13 cases. Debtor’s counsel should be compensated accordingly.

[28]

The disagreement between the Fourth and Sixth Circuits illuminates this dilemma: how to respect the lodestar approach without routinely requiring thousands of (worthless) fee application hearings in routine Chapter 13 cases. Though many judges and standing trustees used to deny it, the practice is almost universal that fee requests by debtors’ counsel below a certain amount will not be questioned in a district notwithstanding that a precise hourly rate and time expended calculation is not performed in each case. The magic amount is sometimes set by local rule, sometimes by “general order,” sometimes by a bankruptcy court decision (reported or not) and sometimes just exists in the ether of the local bankruptcy culture. As this practice has come out of the closet, there are now many reported decisions talking about a “no look” fee or a “presumptive” fee or a “guideline” fee, which is shorthand for a fee request that need not be accompanied by a detailed traditional fee application.69

[29]

In re Eliapo70 illustrates how a “guideline” system for attorney’s fees works in Chapter 13 cases. As explained by the Bankruptcy Appellate Panel for the Ninth Circuit, “the Bankruptcy Judges for the Northern District of California have adopted guidelines . . . for compensating . . . chapter 13 debtors’ attorneys.”71 Under the guidelines, Chapter 13 debtors and their attorneys have an option to sign a form entitled “Rights and Responsibilities of Chapter 13 Debtors and Their Attorneys.” The Form incorporates “Chapter 13 payment guidelines,” which set the maximum fees that can be charged for specific services in a Chapter 13 case.

[30]

Pursuant to the fee guidelines, debtor’s counsel in Eliapo was allowed an initial fee of $2,750 composed of “$1,400 for the basic case; and an additional $750 [because] the case involves real property claims; $200 [because] the case involves vehicle loans or leases.”72 This guideline fee was available without filing a formal fee application under Bankruptcy Rule 2016(a). If counsel performed services and sought fees in excess of the guideline amounts, additional fees could be obtained “[if] the attorney [complies] with Bankruptcy Rules 2002 . . . and 2016.”73 The BAP fit this guideline system into the Code and Rules:

Although the lodestar method presents the “primary” and “customary” approach, it is not the exclusive method for calculating reasonable fees under § 330, and § 330 does not mandate its use. . . . In chapter 13 cases, the lodestar approach may not adequately measure the reasonableness of many routine tasks performed by attorneys. Instead, a “normal and customary” standard reflects that “a real market rate for certain routinized services exists and can be used directly.” . . . [B]ankruptcy courts throughout the nation have both experimented with and implemented a fee award approach aimed at standardizing and streamlining the compensation for routine chapter 13 legal services, while, at the same time, ensuring that any such compensation is fair and reasonable. The effort began with fee guidelines issued by the Executive Office of the United States Trustee effective May 1, 1995. The courts . . . next sought to develop uniform fees for standard procedures, through local rules, general orders, or informal recommendations by the chapter 13 trustee. . . . The procedure utilized in the Northern District of California is not contrary to § 330’s mandate to award reasonable fees as long as the assigned values are the result of a direct review of the marketplace. . . . [T]he Sixth Circuit appears to stand alone in holding that presumptive fee awards are arbitrary and capricious. See Boddy v. United States Bankruptcy Court (In re Boddy), 950 F.2d 334, 337-38 (6th Cir. 1991).74
[31]

In Eliapo, additional fees were refused by the bankruptcy court based on a finding that there were “no extraordinary circumstances” to justify a fee in excess of the guideline amount of $1,400 for the basic case. To review the application for additional fees, the Ninth Circuit BAP approved a hybrid standard that included lodestar analysis:

[A] bankruptcy court that operates under its guidelines for compensation in chapter 13 cases does not err by reviewing a fee application for additional compensation, first, to determine whether the routine services were normal and customary, and therefore compensable at the presumptive fee rate, and second, if any services were extraordinary or unusual, by applying the lodestar analysis to determine the reasonableness of those fees.75
[32]

There are many variations on this guideline or presumptive fee approach, but some general characteristics are emerging. Although not every court is quite as specific as the Northern District of California, there is some flat-fee amount that debtors’ counsel can claim by filing a disclosure under Rule 2016(b), that is allowed without filing a formal fee application under Rule 2016(a) and without a separate hearing under § 330. Above that amount, counsel has to file a separate fee application with more or less detail in support and the matter is set for a traditional fee application hearing.

[33]

Some of the guideline courts go further and prescribe hourly rates for debtors’ attorneys in Chapter 13 cases that are “generally” allowed when compensation in excess of a guideline amount is sought or when services are rendered that are not covered by a published schedule. In the Northern District of California, the bankruptcy court maintains a fee schedule based on a court “survey” of attorneys’ hourly rates. The methodology for assembling and applying this hourly rate data are described in In re Coats:76

The Court maintains a fee schedule at the request of the bar for Chapter 13 cases. This schedule does not control fees but rather provides that if an attorney charges in accordance with the schedule, and no objections are raised, the requested fees will be approved at the time of confirmation of the plan without the filing of a fee application. . . . Applicant now seeks additional fees . . . based on an hourly rate of $350 per hour. . . . To evaluate this requirement the Court maintains a survey of attorneys’ hourly rates. This survey contains the rates of bankruptcy attorneys practicing before this Court both in business cases and consumer cases. . . . The information is organized geographically so that any differences in rates throughout the Bay Area and State can be identified. . . . [T]he Court has found no support for consumer rates in excess of $250 an hour. . . . [T]he Court believes $250 per hour is presently the most that can be charged in a normal Chapter 13 case. It is essentially a cap that will rise when the Court has information showing that the rates for the peer group are rising.77
[34]

But what to one player is a presumptive or routine fee is to another a “punitive review level.” Increasingly, the management of attorneys’ fees in Chapter 13 cases is being resolved in the bankruptcy courts by the development of systems that reward debtors’ attorneys for not seeking fees above a certain amount and punish debtors’ attorneys for seeking fees above that amount even when justified.

[35]

Who sets the ceiling below which a Chapter 13 attorney’s fee application sails through the bankruptcy court without challenge, without hearing and without the time- consuming preparation of a full-scale fee application? In some districts, the bankruptcy judges fix this review level by local rule, by general order or by reported decision. In other districts, the review level is fixed indirectly by the Chapter 13 trustee: the trustee either objects or doesn’t object to the request for fees; in the absence of an objection from the trustee, the requested fee migrates to the confirmation order without court attention or additional work by the debtor’s attorney. In a few districts, the U.S. trustee is active with respect to Chapter 13 debtors’ attorneys’ fees.

[36]

How does a process like this change? How does the review level rise (or fall?) over time? Does a committee of the bankruptcy bar approach the bankruptcy judge and ask that the local rule or general order or reported decision be changed from $1,000 to $1,200 when the consumer price index goes up 20 percent?78 How does the system accommodate the unusual case when the review level should be exceeded because the debtor has three ex-spouses, the debtor has a business that is delinquent on its withholding taxes and the debtor is being prosecuted for tax evasion? What about the Chapter 13 case in which a fee of $1,750 is justifiable but the presumptive review level is $1,200? Is the system easy enough to negotiate that debtor’s counsel can ask for the extra $550 without spending more than $550 to get it? How does the guideline system identify the Chapter 13 case in which a fee of $1,200 is justifiable but the presumptive review level is $1,750?

[37]

These questions are percolating to the appellate courts in an interesting posture. For many years, the few reported Chapter 13 cases involving attorneys’ fees typically addressed a trustee’s objection to a fee request.79 Recent decisions present a different pattern: debtors’ attorneys appealing to the district, BAP and circuit courts for relief from local practices that suppress the amount of fees awarded without litigation. Typical of this new phenomenon are In re Kindhart80and George T. Carlson & Associates v. United States Bankruptcy Court (In re Ingersoll).81

[38]

In Kindhart, the Bankruptcy Court for the Central District of Illinois established an $800 base as “presumptively reasonable for Chapter 13 attorneys fees.” The debtor’s attorney appealed several Chapter 13 cases in which the bankruptcy court had refused fees in excess of that $800 base. No one objected to the debtor’s attorney’s fee request, but the additional fees were denied by the court. The U.S. Court of Appeals for the Seventh Circuit blessed the use of a review level but explained that review levels must be flexible over time.

[T]he $800 base likely could be outmoded, and though not arbitrary ten years ago when it was first adopted, it may be now. . . . Being frugal with fees in bankruptcy cases is admirable . . . . [F]ees, however, should be fair and reasonable . . . . [T]he consequences of continued unreasonably low fees might affect the rendering of prompt and good legal services which could be detrimental to debtors, creditors, and the courts, as well as the bankruptcy bar. . . . [W]e are compelled to hold that there has been an abuse of discretion even though well intentioned. . . . [T]his fee situation needs to be reviewed and updated . . . . Bankruptcy courts must not be so unreasonably frugal as to risk driving the bankruptcy bar into bankruptcy. No additional bankruptcy cases are needed, but bankruptcy practitioners are. . . . [T]his consolidated case is remanded . . . for the bankruptcy and district judges to reexamine the bankruptcy fee process, and then to make such adjustments in the fees at issue as is deemed reasonable and fair.82
[39]

The Seventh Circuit retained jurisdiction to review the new fee process and base, and the court of appeals noted, “It could be helpful in future cases of possible general bankruptcy interest where there is no opposing counsel if the Trustee would consider intervening, at least as a friend of the court.”83 After remand, Kindhart returned to the Seventh Circuit with this result:

[T]he United States district judges and the bankruptcy judges met to discuss the requirement of this court. . . . [T]he bankruptcy judges recommended that the review level be immediately adjusted from $800.00 to $1,000.00, and that they consider revising that review level every 24 months thereafter. . . . [T]he district judges adopted the bankruptcy judge’s [sic] recommendations . . . . The district judges and bankruptcy judges in the Central District on remand have been “fair and reasonable.”84
[40]

Two years later, the same attorney who litigated Kindhart I and Kindhart II returned to the Seventh Circuit, appealing the denial of fees in excess of the $1,000 presumptive fee limit. In Kindhart III,85 the Seventh Circuit held that it lacked jurisdiction to review the bankruptcy court’s denial of fees; but the panel published extended dicta describing continuing fee dysfunction in Chapter 13 cases in the Central District of Illinois:

[T]he merits of Dempsey’s appeal are not before us. Nonetheless, the happenings below raise several important concerns. . . . [Dempsey] has set forth several reasonable arguments regarding the manner in which her fee requests were handled. For example, the bankruptcy court never provided her with an opportunity to address its concerns with her billing methods prior to ruling on her request, choosing instead to surprise her with these concerns in its final opinion . . . . [T]he Central District seems not to be adhering to its own bankruptcy fee order, which we approved in Kindhart II. . . . [T]hat order required the Central District to establish a presumptive fee limit that would be uniform throughout the district and reviewed every two years. . . . [T]he courts in Danville and Peoria had already raised their presumptive fee limits to $1,500. With the Springfield court’s limit apparently still at $1,000 . . . . [T]he judges of the Central District had not met in December or thereabouts to review the $1,000 presumptive fee limit, as mandated by the order’s promise to review the fee limit every two years. . . . Dempsey’s frustration is understandable given the Central District’s apparent inability to follow its agreed-upon method of determining fees.86
[41]

At least in the Seventh Circuit, it is okay for bankruptcy courts to fix presumptive review levels for attorneys’ fees in Chapter 13 cases, so long as a process is in place to review and adjust the level over time. Kindhart I and II implicitly reject any mandate that the lodestar approach apply in every Chapter 13 case, contrary to Boddy from the Sixth Circuit. Kindhart III demonstrates that the presumptive fee approach remains a labyrinth for debtors’ attorneys even with periodic appellate supervision.

[42]

Almost the same fee issues were addressed by the U.S. District Court for the District of Colorado in Ingersoll, but the heat of the district court decision is palpable by comparison to Kindhart. In Ingersoll, the district court reprimanded the bankruptcy judges for the District of Colorado for what Judge Matsch found to be “fundamentally flawed” practices with respect to attorneys’ fees in Chapter 13 cases:

Each of the bankruptcy judges has set a presumptively reasonable fee for all Chapter 13 cases which that judge will accept if no objections are filed by creditors. These amounts have varied from $1,000 to $1,200. Debtors’ counsel limiting their fees to these amounts are excused from filing a formal fee application describing the services they have performed. Lawyers asking for any greater amount must file a “long form” fee application detailing time spent and services performed. After review, the bankruptcy judge may issue a form order questioning the reasonableness of the compensation requested. . . . The form orders are aptly described as “check the box” orders using standardized general language to challenge the application. . . . [T]he fee applicant has the alternative of accepting [the specified] reduction or engaging the bankruptcy judge as an adversary. . . . The boilerplate objections are not sufficiently specific to give the applicant notice of what showing may be thought to be adequate. . . . There is no opportunity to discuss and resolve the issues informally with the applicant’s adversary because the court has arrogated that role to itself. . . . There is some plausibility to the suspicion that the procedure may be designed to be so burdensome and time consuming that counsel will simply accept the reductions made by the bankruptcy judge rather than take the trouble to defend the fee applications. Such a perception, even if unwarranted, impugns the integrity of the court. . . . The factual premises underlying the objections raised sua sponte by the judicial officers of the Bankruptcy Court appear to be based upon problematic presumptions about the practice of law in this area. It seems to be assumed that there is a single model of organizational efficiency in a bankruptcy lawyer’s office; that the tasks involved are mundane and routine; that lawyers who file Chapter 13 petitions have a sufficient volume of debtor-clients to support employment of paralegals and clerical assistants trained to perform these tasks in minimum times; that the debtor’s attorney has a high level of experience in all aspects of bankruptcy practice with such expertise that no legal research is required; that the practitioner’s offices are proximate to the courthouse; that the circumstances of debtors’ lives have such commonalities that they are more like customers than clients; that the debtors are very knowledgeable about their affairs and are good record keepers; that the relevant role of the attorney is that of a general supervisor of an assembly-line process and, that people filing bankruptcy petitions do not need the customized, personalized professional counseling that is at the core of any attorney-client relationship. . . . The Bankruptcy Court is not the bargain basement of the Federal court system. A philosophy of paternalism is evident in the procedures under consideration. The apparent premise is that financially distressed debtors need court protection from predatory lawyers motivated by greed. That view seeps through the language in some of the opinions written in this district. . . . [T]he orders involved are fundamentally flawed and are inconsistent with procedural due process as well as the Bankruptcy Code . . . . The bankruptcy judges should have the opportunity, working with the practicing attorneys through whatever means the bankruptcy judges find appropriate, to review these procedures and adopt a uniform practice for this district. . . . [T]he court strongly suggests that the bankruptcy judges consult with the United States Trustee . . . . [T]he reviewing of fee applications by debtor’s counsel in Chapter 13 proceedings and the making of objections are within the province of the standing trustee and the development of a procedure involving that official would avoid the development of the adversary relationship between the bankruptcy judge and the applying attorney and maintain the role of neutral arbiter.87
[43]

Kindhart and Ingersoll are important. As demonstrated in the notes above, procedures similar to those dissected in Kindhart and Ingersoll are in place in Chapter 13 practice across the country.

[44]

The presumptive-review-level approach to attorneys’ fees accommodates the impossibility of applying lodestar analysis to every Chapter 13 case and the need for certainty with respect to fees; but Kindhart and Ingersoll demonstrate that this approach is easily corrupted in practice. Seeking fees in excess of the review level has to be uncomplicated and not punitive else the process itself becomes a self-fulfilling prophecy that all fees equal the review level. Frozen guidelines and static presumptive fees will drive the good consumer bankruptcy lawyers out of Chapter 13 practice and will reward the less competent with a fee guarantee unrelated to the quality of services. Debtors and, indirectly, creditors are the victims of either outcome.

[45]

The review level must float to reflect the cost of practicing law, changes in the marketplace for attorney services, and, perhaps most importantly, changes in Chapter 13 practice and procedure in the district. A new judge comes on the bench in a district and the cost of doing business in Chapter 13 cases can change dramatically. Does the presumptive review level change accordingly? Some would say that any system with a presumptive review level depends too much on the personality of the Chapter 13 trustee and the trustee’s opinion of the competence of practitioners in the district. As the district court pointed out in Ingersoll, Chapter 13 cases are not necessarily the cookie-cutter process that some courts want to believe. And Chapter 13 debtors’ attorneys are not all staffed, organized or operating at the same efficiencies. It is difficult to design a system that fairly balances all of these factors without creating either despotism or anarchy with respect to fees in Chapter 13 cases.

[46]

There is isolated evidence that the rush to guidelines and presumptive fees in Chapter 13 cases has produced some disillusionment. In an unreported decision, In re Wilson,88 one judge of the Bankruptcy Court for the Southern District of Texas abandoned the special fee practices in the district in Chapter 13 cases. Prior to Wilson, debtors’ attorneys could file a “truncated” fee application and realize expedited approval of fees in Chapter 13 cases.89 Experience under this system convinced one bankruptcy judge to retreat:

[T]his court’s experience with the truncated format for fee applications . . . has proved unworkable. The truncated form of fee application has resulted in counsels’ using estimates . . . . [F]orms of fee application are often filed later than five days prior to confirmation. . . . [D]elivery of courtesy copies to chambers has been an inefficient use of the resources of chambers staff. . . . The truncated form of fee application does not provide information sufficient to evaluate whether the services were performed within a reasonable amount of time . . . . [I]t has become impossible for this judge to evaluate whether the hourly rates of counsel reflect the efficiencies of experience gained, or merely the sense of self-worth of each particular attorney.90
[47]

At this writing, the best data available indicate a median fee for Chapter 13 cases of approximately $1,500.91 When the average fees district-by-district are compared to Chapter 13 filing rates, no pattern emerges: there is no statistically significant relationship between the average fee in Chapter 13 cases and the percentage of all consumer bankruptcies that are Chapter 13 cases in a district.92

[48]

If no plan is confirmed, § 1326(a)(2) provides some protection for the payment of counsel’s fees in Chapter 13 cases. If the trustee is holding funds paid by the debtor and if no plan is confirmed, the trustee is required to return the money to the debtor “after deducting any unpaid claim allowed under § 503(b) of this title.”93 It is reasonable in this context to interpret claim in § 1326(a)(2) to include expenses of administration; otherwise, the cross-reference to § 503(b) is drained of content. A debtor’s attorney who has filed a request for compensation would have an expense described in § 503(b) that is payable by the trustee before refunding to the debtor.94

[49]

At dismissal before confirmation, debtor’s attorney will have to satisfy the tests for compensation under § 330(a)(4)(B) to be entitled to an administrative expense under § 503(b). Proof that counsel’s efforts provided benefit to the debtor or to the estate is more difficult when the Chapter 13 case is dismissed before confirmation. For example, the bankruptcy court in In re Phillips95 found that defending a motion for relief from the stay and litigating cramdown of a car loan provided no benefit to the debtor when the Chapter 13 case was dismissed before confirmation. The bankruptcy court gave the following description of what a Chapter 13 debtor’s attorney must prove to be entitled to fees when the case is dismissed before confirmation:

To justify more than a nominal fee, counsel must provide evidence of valuable professional efforts to investigate and to evaluate the facts, valuable professional efforts to assess the prospects for confirming a chapter 13 plan, valuable professional efforts to confirm a chapter 13 plan, valuable professional client counseling concerning the debtor’s postpetition duties and responsibilities, and a reasonable belief that a plan could be confirmed and consummated.96
[50]

At conversion from Chapter 13 to Chapter 7, Bankruptcy Rule 1019(6) creates new hurdles for a debtor’s attorney who has not been paid in full. Implementing the 1994 amendments to § 503(a),97 Bankruptcy Rule 1019(6) provides: “a request for payment of an administrative expense incurred before conversion of the case is timely filed under § 503(a) of the Code if it is filed before conversion or a time fixed by the court.”98 Conversion from Chapter 13 to Chapter 7 is not always an orderly process that allows time for the filing of a preconversion request for payment of the balance due on an attorney’s fee. “Cause” for a tardy request after conversion is not defined by Rule 1019(6). In one reported Chapter 13 decision, cause was found for a tardy postconversion request for payment of preconversion attorney’s fees when the court found that debtor’s counsel was confused by a change in local procedure.99

[51]

Not all courts or trustees have procedures for protecting debtors’ counsel’s fees at the conversion or dismissal of a Chapter 13 case before confirmation.100 When confirmation is denied, debtor’s counsel may have to act quickly to file a request for an administrative expense under § 503(b) to cut off a refund to the debtor. The reported decisions demonstrate that counsel can get in trouble by grabbing the funds on hand at dismissal before confirmation—§ 1326(a)(2) does not dispense with the requirement to file a fee application or a request for payment of an administrative expense even when the debtor consents or has authorized the payment of fees.101

[52]

Conversion to or from a Chapter 13 case can complicate the collection of attorney fees.102 For example, in Gordon v. Hines (In re Hines),103 after conversion from Chapter 13 to Chapter 7, the U.S. Court of Appeals for the Ninth Circuit concluded that debtor’s counsel did not violate the automatic stay by cashing postdated checks to collect fees for postpetition services. Acknowledging that the Bankruptcy Code poorly manages the collection and discharge of fees for postpetition services, the Ninth Circuit held that claims for lawyers’ compensation for postpetition services “really do not fall within the automatic stay provisions of § 362(a)(6) or the discharge provisions of § 727.”104 In Schroeder v. Rouse (In re Redding),105 the Bankruptcy Appellate Panel for the Eighth Circuit held that after conversion from Chapter 13 to Chapter 11 and finally to Chapter 7, fees paid to debtor’s counsel were reviewable for reasonableness under § 329, but not for allowance under § 330 because the fees were paid directly by the debtor and not from the bankruptcy estate.

[53]

In the other direction—after conversion from Chapter 7 to Chapter 13—debtor’s attorneys’ fees incurred during the Chapter 7 case were held in In re Bottone106 to be priority administrative expenses in the Chapter 13 case, entitled to full payment under § 1322(a)(2). The court recognized that the 1994 amendment to § 330 did not specifically include a reference to Chapter 7 debtors’ counsels’ fees; nonetheless, “in light of the absence of any legislative history or comment . . . the omission of the debtor’s attorney from § 330(a) listing was inadvertent.”107 The predicate for this outcome—that § 330(a) permits compensation of debtor’s counsel from the estate in a Chapter 7 case—was rejected by the Supreme Court in Lamie v. United States Trustee.108 After Lamie and absent congressional action to “fix” § 330, there is no statutory basis for Chapter 7 counsel to claim an administrative expense for services prior to conversion to Chapter 13.109

[54]

What happens to debtors’ attorneys’ fees that are not allowed during the Chapter 13 case or not paid for some other reason? In Jensen v. Gantz (In re Gantz),110 the Bankruptcy Appellate Panel for the Tenth Circuit concluded that attorneys’ fees disallowed under § 330 are not payable through the Chapter 13 plan and are not collectible from the debtor because neither the debtor nor the estate is liable for disallowed fees. In Gantz, counsel applied for $7,844.90 for fees in a Chapter 13 case and its predecessor Chapter 11 case. The bankruptcy court allowed $6,440. The confirmed Chapter 13 plan paid the allowed portion in full. After completion of payments, counsel attempted to collect the disallowed fees directly from the debtor. The BAP refused to allow collection, not because the disallowed fees were discharged but because the fees were not owed by the debtor:

[A] debtor is discharged in Chapter 13 of any prepetition debt provided for in the plan or disallowed under 11 U.S.C. § 502. . . . Attorney’s fees are allowed (or denied) under 11 U.S.C. § 330, and to the extent that they are rendered and allowed in connection with the bankruptcy case, are administrative expenses. . . . Simply put, the Code does not discharge fees awarded under 11 U.S.C. § 330. Rather, fees are disallowed, allowed as an administrative expense, or allowed but must be paid by the debtor directly and not from the estate. Here, the fees [counsel] now seeks to collect from the debtor were disallowed—thus there was nothing to discharge. . . . [Counsel] was never entitled to any additional fees because, under § 330, no additional fee was allowed. . . . [N]either the debtor nor the estate was ever liable for the difference.111
[55]

In In re Hanson,112 the bankruptcy court concluded that attorneys’ fees that were not billed or approved during the Chapter 13 case were discharged. The confirmed plan provided for payment in full of administrative expenses. The court found that attorneys’ fees allowed under § 503(b) were priority claims that the plan proposed to pay in full. The provision for payment of administrative expenses “provided for” all attorneys’ fees notwithstanding that counsel did not apply for postconfirmation fees during the Chapter 13 case because “an administrative expense is defined by statute, not by whether the claimant chooses to file a claim, and the confirmed plan in these cases provided the sole mechanism for payment of administrative expenses.”113 Accordingly, the attorneys’ fees that were not requested during the case were discharged by the completion of payments under § 1328(a).114 The logic of Hanson fails if expenses and claims are different creatures for § 1322(a)(2) purposes.115

[56]

In contrast to Gantz and Hanson, one reported decision suggests that disallowed or unpaid fees survive discharge in a Chapter 13 case. In Cornelison v. Wallace (In re Cornelison),116 the district court recited without analysis that postconfirmation attorneys’ fees were priority administrative expenses entitled to full payment under § 1322(a)(2) in a Chapter 13 case. However, because payment of the fees would extend the confirmed plan beyond the five-year limitation in § 1322(d), the plan could not be modified under § 1329(c) to pay the additional fees.117 The district court allowed judgment against the debtor for the postconfirmation attorneys’ fees but refused modification of the plan to pay the fees.

[57]

It has been held that the plan cannot provide that attorneys’ fees will be paid directly by the debtor if they are not approved by the bankruptcy court.118 This makes good sense. Nothing in the Bankruptcy Code suggests that a debtor’s attorney can contract around the requirement for court review of attorneys’ fees in Chapter 13 cases. Any other rule invites conflicts of interest and opens the door to arrangements for paying attorneys’ fees off the books of the Chapter 13 case and after discharge of other debts.

[58]

A relatively new phenomenon likely to generate spirited debate is the use and payment of “contract attorneys” or “appearance attorneys” in Chapter 13 cases. Roughly defined, a contract or appearance attorney is a lawyer who appears on behalf of a debtor at a court hearing or meeting of creditors when the attorney is not a member of the firm hired by the debtor to file the bankruptcy case but is actually hired by that original attorney or firm for a specific appearance or event. The difficult ethical and professional issues in this practice are just beginning to percolate. In one reported Chapter 13 decision, a bankruptcy court held that debtor’s counsel can recover fees and expenses for a contract attorney if the relationship is included in the Bankruptcy Rule 2016(b) disclosure119 and the debtor consents before the contract services are performed.120


 

1  See, e.g., Jensen v. Gantz (In re Gantz), 209 B.R. 999, 1003 (B.A.P. 10th Cir. 1997) (“Attorney’s fees are allowed (or denied) under 11 U.S.C. § 330, and to the extent that they are rendered and allowed in connection with the bankruptcy case, are administrative expenses.”); In re Hall, 296 B.R. 707 (Bankr. E.D. Va. 2002) (Attorney fees in a Chapter 13 case are payable from the estate under § 330(a)(4)(B) and are expenses of administration under § 503(b).); In re Hallmark, 225 B.R. 192 (Bankr. C.D. Cal. 1998) (Fees awarded to debtor’s counsel in a Chapter 13 case are administrative expenses under § 503(b)(2) and § 330(a)(4)(B) which ordinarily would be entitled by § 1326(b) to be paid before or at the same time as payments to other creditors.); In re Hanson, 223 B.R. 775 (Bankr. D. Or. 1998) (Administrative expenses such as attorney fees allowed under § 503(b) are priority claims in a Chapter 13 case, and administrative expenses include compensation of a debtor’s attorney under § 330.); In re Oliver, 222 B.R. 272, 274 (Bankr. E.D. Va. 1998) (“Reading sections 1326(a)(2), 503(b)(2) and 330(a)(4)(B) together, we conclude that the debtor’s attorney’s fees and expenses are administrative expenses which are properly payable . . . pursuant to section 1326(a)(2).”). For BAPCPA's impact on attorney fees see § 136.7  Debtors’ Attorneys’ Fees after BAPCPA; see also § 73.9  Attorney Fees after BAPCPA, § 136.7  Debtors’ Attorneys’ Fees after BAPCPA and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA

 

2  ___ U.S. ___, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (2004).

 

3  See below in this section, and see § 36.26  Attorney’s Disclosure of Compensation See also § 4.1  WARNING! You Are a Debt Relief Agency.

 

4  See In re Young, 285 B.R. 168, 170–76 (Bankr. D. Md. 2002) (“Rule 2016(a) requires that any entity seeking compensation for services or reimbursement of expenses from the estate in bankruptcy shall file an application . . . . On its face this Rule would appear to apply across the board, including to the unpaid balance of flat fees disclosed at the outset of a multitude of cases. This has not been the practice in this district. . . . [T]his court finds that the purposes of Rule 2016(a) are satisfied without the filing of a separate document entitled application for compensation, where the fee is a flat fee, and is fully disclosed by the original Rule 2016(b) disclosure. . . . However, if the fee is not entirely a flat fee, but rather has an hourly rate or unliquidated feature, a formal application under Rule 2016(a) is required as a prerequisite to allowance as an administrative expense . . . . Also, in a flat fee case, if counsel does work outside the scope of the flat fee and seeks additional compensation from the estate, an application must be filed seeking court approval of the additional fee. . . . [I]n this case, where the fee was approved by confirmation of a plan containing specific language as to the fee and its amount . . . the absence of an application does not constitute grounds for an alteration, amendment or rehearing.”).

 

5  In re Harris, 298 B.R. 319, 320–21 (Bankr. E.D. Tenn. 2003) (“[A] Chapter 13 debtor is not required to obtain court approval prior to hiring an attorney. . . . Even though court approval is not necessary for the employment of a Chapter 13 debtor’s attorney, compensation thereof still requires court approval.”).

 

6  See In re Williams, No. 03-10344, 2003 WL 22722841 (Bankr. D. Vt. Nov. 18, 2003) (unpublished) (If Chapter 13 case is still pending, bankruptcy court has exclusive jurisdiction over fee disputes between debtor and counsel; if case is no longer pending, bankruptcy court has discretion to abstain in favor of state court.).

 

7  See, e.g., In re Martinez, 293 B.R. 387, 391 (Bankr. N.D. Tex. 2003) (Citing Palmer & Palmer P.C. v. United States Trustee (In re Hargis), 887 F.2d 77 (5th Cir. 1989), because proceeds of prepetition personal injury claim settled during the Chapter 13 case are exempt, a portion can be paid to debtor’s personal injury counsel without court approval or review. “[T]he debtor could use wholly non-estate funds to pay prepetition and postpetition attorney’s fees even though such attorneys failed to comply with the Code’s requirements, because such attorneys were not being paid from estate proceeds.”).

 

8  But see In re Newton, 292 B.R. 563 (Bankr. E.D. Tex. 2003) ($1,000 paid to counsel five days before Chapter 13 petition was settlement of debt for prior bankruptcy case, not a fee payment “in contemplation” of the Chapter 13 case for purposes of disclosure under 11 U.S.C. § 329(a) and Bankruptcy Rule 2016(b).).

 

9  See below in this section, and see § 73.8  Special Provisions for Attorneys’ Fees and § 73.9  Attorney Fees after BAPCPASee, e.g., In re Swan, 98 B.R. 502 (Bankr. D. Neb. 1989) (Fees for debtor’s counsel are administrative expenses allowed under § 503, entitled to priority under § 507 and entitled to full payment under § 1322.).

 

10  Deferred payment of priority claims without interest is permitted by § 1322(a)(2). See § 73.4  Deferred Payments Are Permitted, § 73.5  Interest Not Required, with Exceptions§ 73.6  Treatment of Priority Claims Changed by BAPCPA, § 73.9  Attorney Fees after BAPCPA, § 136.7  Debtors’ Attorneys’ Fees after BAPCPA and § 136.16  Postpetition Interest on Priority Claims before BAPCPA.

 

11  11 U.S.C. § 330(a) (prior to amendment in 1994) provided in part:

(a) After notice to any parties in interest and to the United States trustee and a hearing, and subject to sections 327, 328, and 329 of this title, the court may award to . . . the debtor’s attorney—
(1) reasonable compensation for actual, necessary services rendered by such  . . . attorney, . . . and by any paraprofessional persons employed by such . . . attorney, . . . based on the nature, the extent, and the value of such services, the time spent on such services, and the cost of comparative services other than in a case under this title; and
(2) reimbursement for actual, necessary expenses.

 

12  11 U.S.C. § 330(a), as amended by the Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 224, 108 Stat. 4106 (1994), provides in part:

(a)(1) After notice to the parties in interest and the United States Trustee and a hearing, and subject to sections 326, 328, and 329, the court may award . . .
(A) reasonable compensation for actual, necessary services . . . ; and
(B) reimbursement for actual, necessary expenses.
(2) The court may, on its own motion or on the motion of the United States Trustee, the United States Trustee for the District or Region, the trustee for the estate, or any other party in interest, award compensation that is less than the amount of compensation that is requested.
(3) In determining the amount of reasonable compensation to be awarded, the court shall consider the nature, the extent, and the value of such services, taking into account all relevant factors, including—
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or beneficial at the time at which the service was rendered toward the completion of, a case under this title;
(D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed; and
(E) whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.
(4)(A) Except as provided in subparagraph (B), the court shall not allow compensation for—
(i) unnecessary duplication of services; or
(ii) services that were not—
(I) reasonably likely to benefit the debtor’s estate; or
(II) necessary to the administration of the case.
(B) In a chapter 12 or chapter 13 case in which the debtor is an individual, the court may allow reasonable compensation to the debtor’s attorney for representing the interests of the debtor in connection with the bankruptcy case based on a consideration of the benefit and necessity of such services to the debtor and the other factors set forth in this section. . . .
(6) Any compensation awarded for the preparation of a fee application shall be based on the level and skill reasonably required to prepare the application.

 

13  See 28 U.S.C. § 586(a)(3)(A), as amended by Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 224, 108 Stat. 4106 (1994). Fee guidelines were issued by the Executive Office of the United States Trustee, effective May 1, 1995, with respect to cases filed after October 22, 1994. See also In re Eliapo, 298 B.R. 392, 399 (B.A.P. 9th Cir. 2003) (“[B]ankruptcy courts throughout the nation have both experimented with and implemented a fee award approach aimed at standardizing and streamlining the compensation for routine chapter 13 legal services, while, at the same time, ensuring that any such compensation is fair and reasonable. The effort began with fee guidelines issued by the Executive Office of the United States Trustee effective May 1, 1995.”).

 

14  28 U.S.C. § 586(a)(3)(A)(ii).

 

15  11 U.S.C. § 330(a)(4)(B).

 

16  This “benefit to the estate” predicate for allowance of counsel fees as an administrative expense in Chapter 13 cases was not explicit in § 330 of the Code. See 11 U.S.C. § 330(a) (prior to amendment in 1994), reproduced above.

 

17  In re Cleveland, 80 B.R. 204 (Bankr. S.D. Cal. 1987). Accord In re Zwern, 181 B.R. 80, 84, 88 (Bankr. D. Colo. 1995) (Applying prior law, allowance of attorneys’ fees in Chapter 13 cases is controlled by § 330, and the debtors’ attorney must prove both that the services rendered were “beneficial to the estate” and that all services were “necessary.” Whether services are necessary “depends upon whether the services benefited the bankruptcy estate as opposed to the debtor.” A total of 3.6 hours representing the debtor in opposition to probation revocation in state court were disallowed as not benefiting the estate. “Avoidance of probation revocation theoretically could be necessary and beneficial in a Chapter 13 case, if revocation of the Debtor’s probation would preclude the Debtor’s performance under the plan. Here, however, there was no evidence of the consequence of the revocation of probation. I cannot speculate whether the Debtor would have been incarcerated, for how long or upon what terms (work release or full-time incarceration). Thus, the evidence presented is insufficient to correlate Applicant’s services with a demonstrable benefit to the estate.”).

 

18  See, e.g., In re Argento, 282 B.R. 108, 116 (Bankr. D. Mass. 2002) (“[A] Chapter 13 ‘debtor’s counsel is entitled to an administrative expense for compensation for work that is beneficial and necessary to the debtor without proof of benefit or necessity to the Chapter 13 estate or the creditors.’”); In re Polishuk, 258 B.R. 238 (Bankr. N.D. Okla. 2001) (In a Chapter 7 case that was filed under Chapter 11, converted to Chapter 13 and then converted to Chapter 7, debtor’s attorneys can recover fees for services during the Chapter 13 case that either benefited the debtor or benefited the estate. Section 330(a)(4)(B) permits debtor’s counsel to recover fees for services during a Chapter 13 case that did not benefit the bankruptcy estate, so long as they did benefit the debtor.); In re Famisaran, 224 B.R. 886, 898 (Bankr. N.D. Ill. 1998) (Court allows debtors’ attorney fees of $3,354 based on an hourly rate of $195 notwithstanding denial of confirmation and dismissal of case based on false and misleading statements and schedules. Court denied confirmation of Chapter 13 plan that would compromise a $25,151.18 prepetition judgment that was declared nondischargeable in a prior Chapter 7 case. Court found that the debtors had materially understated their income, failed to list transfers to insiders, omitted expenditures for gambling and materially falsified monthly expenditures. Debtors were sanctioned under Bankruptcy Rule 9011 with payment of $8,977.50 of attorney fees for the objecting creditor’s counsel. The creditor then objected to debtors’ counsel’s fee request. Applying § 330 and the Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) factors, court first found that the debtors’ counsel’s $195-per-hour rate was “reasonable and well within the range of hourly rates charged by other Chapter 13 debtors’ attorneys.” The court rejected the creditor’s argument that the debtors’ counsel’s work had been “generally poor,” observing “As bridge aficionados must play the hands they are dealt, so also must attorneys advocate as best they can their clients’ cases on the pertinent facts in light of the applicable law.”).

 

19  In re Braddy, 195 B.R. 365, 367–68 (Bankr. E.D. Mich. 1996) (“[U]nder 11 U.S.C. § 330, the compensation to which an attorney in this district is entitled includes compensation at the attorney’s full hourly rate for travel time that is: (1) actually spent for travel; (2) a reasonable time considering the distance traveled; (3) necessary in the sense that the travel was required in connection with the bankruptcy court process; and (4) beneficial in the sense that the legal services for which the travel was undertaken advanced the administration of the estate.” Arguably contrary unreported opinions from the Sixth Circuit are neither fully reasoned nor persuasive.). See In re Hayes & Son Body Shop, Inc., 958 F.2d 371 (6th Cir. 1992) (Affirms bankruptcy court decision to allow 50% of usual hourly rate for travel time.); Schroeder v. Woodhaven Sch. Dist., 870 F.2d 657 (6th Cir. 1989) (unpublished) (Affirms district court’s denial of fees for travel time. “[I]t is customary in the legal services market in this area for attorneys in non-bankruptcy cases to charge the full hourly rate for travel time. . . . [G]ranting full compensation for travel time will allow the greatest number of attorneys to offer their services to the public in chapter 13 cases.”). But see Bachman v. Laughlin (In re McKeeman), 236 B.R. 667, 673 (B.A.P. 8th Cir. 1999) (Applying lodestar and Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) factors, “the bankruptcy court determined that it was unreasonable in its district to charge the full hourly rate for travel time. This decision was within the court’s discretion.”).

 

20  See § 157.2  BAPCPA Shrank the Discharge and discussion beginning at § 158.1  Alimony, Maintenance or Support and § 159.1  Taxes.

 

21  295 B.R. 855 (Bankr. N.D. Tex. 2003).

 

22  295 B.R. at 865.

 

23  232 B.R. 891 (Bankr. E.D. Tex. 1999).

 

24  232 B.R. at 893. Accord Bachman v. Pelofsky (In re Peterson), 251 B.R. 359 (B.A.P. 8th Cir. 2000) (On objection by U.S. trustee, bankruptcy court did not abuse its discretion by reducing debtor’s attorney’s hourly rate from $125 to $110 and reducing loadstar based on findings that some efforts produced no benefit to the debtor.).

 

25  258 B.R. 238 (Bankr. N.D. Okla. 2001).

 

26  258 B.R. at 249–50 (“[I]t is difficult for the Court to see how the time spent by J & S [debtor’s counsel] in general administrative matters or in preparation of a plan was of any true benefit either to Mr. Polishuk or his bankruptcy estate. . . . [T]he same is true with respect to the 19.65 hours spent by J & S litigating and/or negotiating with TMCC so that Mr. Polishuk could retain his vehicle. The effort made by J & S to enable Mr. Polishuk to keep this vehicle was almost herculean in nature. . . . While he may have needed a vehicle to get to and from work and to perform other personal and business activities, there is no showing that he needed this particular vehicle. The amount of the monthly lease payments ($379.86) were [sic] sufficient to provide for acquisition of a different vehicle. . . . [T]hese efforts were not reasonable or beneficial, and should not be compensated with proceeds of the bankruptcy estate. . . . Absent the likelihood of a confirmable plan, any efforts regarding claims classification were of no consequence. Thus, the fees incurred in this area should not be compensated from the estate.”). Accord In re Phillips, 291 B.R. 72, 83 (Bankr. S.D. Tex. 2003) (At dismissal before confirmation, benefit to the debtor for purposes of § 330(a)(4)(B) includes proof of “a reasonable belief that a plan could be confirmed and consummated.”); In re Burton, 278 B.R. 645, 651–53 (Bankr. M.D. Ga. 2001) (Fee request of $1,150 is reduced to $600 when debtor was an elderly woman with no nonexempt assets and less than $6,000 of debt. “This Debtor might have been more ably and economically assisted by legal counsel that would have discouraged the filing of a Chapter 13 case. . . . [T]he option of filing a Chapter 7 case should have been considered. . . . Can a debtor’s attorney knowingly direct a debtor to a remedy which serves to protect the best financial interest of the attorney rather than the debtor? . . . [T]he Court will award attorney’s fees to Debtor’s counsel of $600.00.”); In re Migiano, 242 B.R. 759, 761–62 (Bankr. S.D. Fla. 2000) (Fees reduced from $5,129.83 to $3,125 based in large part on finding that the case should have been filed as a Chapter 7 case. “The only unusual aspect of this case is that the debtor operated a business . . . manufacturing cabinets. The debtor listed an extensive inventory of tools and supplies, and the debtor listed 26 unsecured creditors, virtually all of which appear to have been incurred in the operation of the debtor’s business. The debtor’s schedules, statements, and chapter 13 plan are otherwise unremarkable, notwithstanding the fact that Applicant prepared and filed five chapter 13 plans, the last of which ultimately was confirmed. . . . [T]his case should have proceeded as a chapter 7 Liquidation and . . . the filing of the successive chapter 13 plans was thus unnecessary . . . . [T]he debtor proposed to sell, and did sell, his business tools and his 1992 GMC truck used in his business, during the administration of this estate . . . the debtor moved to Connecticut. . . . [O]nly marginal benefit was obtained by the debtor in having his case administered under chapter 13 . . . . A chapter 7 trustee could have liquidated the debtor’s business tools and truck, and Applicant could have negotiated for the reaffirmation . . . or revaluation of the obligation due to American Honda Finance Corp. The priority claims owing to the Internal Revenue Service, Florida Department of Revenue and the Newtown, Connecticut Tax Collector could just as easily have been paid following a chapter 7 liquidation as through a chapter 13 plan, thereby relieving the debtor of liabilities which otherwise might have been non-dischargeable. Aside from payment of these potentially non-dischargeable obligations, the only cognizable benefit achieved by administering this case as a chapter 13 proceeding was the debtor’s ability to value his motorcycle via his chapter 13 plan. . . . [The debtor’s attorney] should have known that a chapter 7 filing would have been significantly more economical than a chapter 13 filing.”).

 

27  In re Phillips, 291 B.R. 72, 77 (Bankr. S.D. Tex. 2003) (At dismissal before confirmation, debtor’s attorney is denied fees because professional efforts did not benefit the debtor. Applying § 330(a)(4)(B): “the resolution of the motion for relief from the stay confers no continuing benefit to the Debtor since the case has been dismissed. . . . [C]ramdown of the vehicle loan . . . provides no continuing benefit to the Debtor since the plan was not confirmed .”).

 

28  206 B.R. 99 (Bankr. E.D. Pa. 1997).

 

29  206 B.R. at 110–11.

 

30  See below in this section, and see § 73.8  Special Provisions for Attorneys’ Fees and § 73.9  Attorney Fees after BAPCPA.

 

31  See § 73.8  Special Provisions for Attorneys’ Fees§ 73.9  Attorney Fees after BAPCPA§ 113.7  Order of Payments to Creditors before BAPCPA and § 113.8  Order of Payments to Creditors after BAPCPASee, e.g., In re Pappas & Rose, P.C., 229 B.R. 815, 817–20 (W.D. Okla. 1998) (District court approves guidelines for payment of attorneys’ fees in Chapter 13 cases. “The challenged guideline provides that attorneys’ fees will be paid in equal installments over not less than 24 months, unless the plan proposes to pay unsecured creditors 20% or more. Then attorneys’ fees may be paid over a ten-month period. . . . [P]riority payments, including attorneys’ fees under 11 U.S.C. § 507(a)(1) are limited by 11 U.S.C. § 1326. . . . [T]hese payments may be made concurrently with payments to creditors. . . . [A] bankruptcy court has some discretion in awarding attorneys’ fees. . . . This Guideline is not contrary to law, and does not rearrange priority claims.”); In re Moore, No. 02-03960, 2003 WL 22946433 (Bankr. D. Haw. May 28, 2003) (unpublished) (Guidelines for the district permit an attorney to recover a guideline fee without formal fee application; attorney that agrees to accept the guideline fee receives the lesser of 50% of the monthly plan payment or $250 from each plan payment.); In re Meadows, 297 B.R. 671 (Bankr. E.D. Mich. 2003) (Consistent with local model, plan can create a $2,000 reserve for the payment of attorney’s fees.); In re Rogers, 239 B.R. 883, 886–90 (Bankr. E.D. Tex. 1999) (On car lender’s motion for relief from the stay and adequate protection in a district that delays confirmation, court conditions continuation of stay that one-half of the payments held by the Chapter 13 trustee will be distributed to lienholders in advance of payment of attorney fees at confirmation. Court notes the “almost universal plan provision in this district; that first available funds distributed by the Chapter 13 Trustee will go to the payment of the fees for the debtor’s attorney.” Although § 1326(b) neither prohibits nor authorizes the payment of administrative expenses in advance of adequate protection, “under circumstances in which a creditor’s interest is deserving of additional protection, . . . to add to that delay by preventing the receipt of any payment by a secured creditor in deference to the full and complete payment of professional fees is inconsistent with provisions of the Bankruptcy Code and can no longer be endorsed by this Court.”).

 

32  82 B.R. 470 (Bankr. N.D. Ill. 1988).

 

33  84 B.R. 855 (Bankr. S.D. Fla. 1988).

 

34  Accord In re Burton, 278 B.R. 645, 651 (Bankr. M.D. Ga. 2001) (Elderly woman with no nonexempt assets and less than $6,000 of debt was not “ably” or “economically” assisted by legal counsel; fee request of $1,150 is reduced to $600. Court observed that debtor’s counsel should have “discouraged the filing of a Chapter 13 case.”).

 

35  In re Whitman, 51 B.R. 502 (Bankr. D. Mass. 1985). Accord In re Cohagan- Deubel, No. 01-21596 SBB, 2002 WL 1046715 (Bankr. D. Colo. May 17, 2002) (unpublished) (Failure to disclose practice of taking a “lien statement” from each Chapter 13 client to secure attorney fees and then using the lien statements to redeem clients’ properties from foreclosure sales justified disgorgement of all fees received in many cases, a sanction of $20,000, disgorgement of all profit from the sale of property that belonged to clients and other sanctions.).

 

36  In re Vivado, 94 B.R. 785 (Bankr. D.D.C. 1989).

 

37  See, e.g., Dempsey v. Bond (In re Bond), 254 F.3d 669, 676 (7th Cir. 2001) (In dicta, “[W]e would likely have upheld the lower courts’ decision to deny [debtor’s counsel’s] request for excess fees. . . . [A]ttorneys may not bill non-legal tasks (such as typing) at the rate commanded by an attorney.”); Clark v. LaBarge (In re Clark), 223 F.3d 859 (8th Cir. 2000) (Bankruptcy court did not abuse its discretion in denying fees, ordering disgorgement of fees and sanctioning attorney for claiming flat fees of $1,250 per Chapter 13 case when petition and other documents were prepared and filed by a paralegal and counsel met with the debtors for the first time at the meeting of creditors.); McCullough v. Chambers, Nos. 98-6344 JB, 96-16524, 97-918, 2000 WL 502827 (E.D. Pa. Apr. 25, 2000) (Debtor’s attorney is not allowed fees beyond the $750 retainer in part because a paralegal met with the debtor and performed other legal services without supervision from an attorney. That the paralegal’s services were billed at the same hourly rate as an attorney supported the finding that the paralegal engaged in the unlawful practice of law.); In re Newman, 270 B.R. 845, 850 (Bankr. S.D. Ohio 2001) (Fees are reduced or disallowed because some of the services billed by a law firm were not billable at attorney rates.); In re Szymczak, 246 B.R. 774 (Bankr. D.N.J. 2000) (Fees are reduced in part because attorney billed at attorney rates for ministerial and clerical services.).

 

38  In re Stromberg, 161 B.R. 510 (Bankr. D. Colo. 1993) (Debtor’s attorney’s fee reduced from $2,407.50 to $1,130 for routine Chapter 13 case. One and one-half hours charged for paralegal time at $25 per hour for babysitting the debtor’s children during office visits triggered special attention from the court.). See In re Pinkins, 213 B.R. 818 (Bankr. E.D. Mich. 1997) (Fees in 21 Chapter 13 cases filed by Castle Law Office, a high-volume Chapter 13 filer, are reduced by 20% because of a failure to keep contemporaneous time records, reduced by the expenses for clerical services that are not permitted or allowed and reduced to deny all fees for the work of legal assistants who engaged in the unauthorized practice of law under Michigan rules. Court found that law firm failed to adequately supervise legal assistants, permitted legal assistants to engage in the unauthorized practice of law, failed to have sufficient direct contact with clients, billed office overhead to clients and could not provide sufficient detail in reconstructed fee records.).

 

39  Determan v. Sandoval (In re Sandoval), 186 B.R. 490, 495–96 (B.A.P. 9th Cir. 1995) (Bankruptcy court appropriately ordered debtors’ counsel and counsel’s employer, Southern California Law and Accounting Services, to disgorge $3,500 in fees and to pay fees and costs for substitute counsel where handling of bankruptcy case by former counsel was incompetent, schedules showed that the debtor was ineligible for Chapter 13 relief, former counsel did not file necessary documents within required time periods and substitute counsel invested much time cleaning up the case. Debtors’ former counsel “should consider himself lucky that he has not been sanctioned or disbarred over his conduct.” Request for sanctions under 28 U.S.C. § 1927 and under Bankruptcy Rule 9011 refused because the bankruptcy court is not a “court of the United States,” and the Bankruptcy Appellate Panel is not a “court” within the contemplation of Bankruptcy Rule 9011.). Accord O’Connell v. Mann (In re Davila), 210 B.R. 727, 732 (Bankr. S.D. Tex. 1996) (On complaint of Chapter 13 trustee for disallowance of attorney’s fees and disgorgement in 155 cases, counsel must disgorge all fees and is suspended from practice. Counsel illegally accepted payments for fees without court approval, falsified statements, failed to supervise attorneys and paralegals and failed to adequately represent clients. Counsel’s services “amount to little more than a large scale petition preparer service for which Mann receives an unreasonably high fee.”).

 

40  See § 36.3 [ Attorney’s Disclosure of Compensation ] § 36.26  Attorney’s Disclosure of Compensation.

 

41  See, e.g., Steinberg v. Alvarado (In re Alvarado), No. Civ. SA-03-CA-0295-RF, 2003 WL 22097092 (W.D. Tex. July 29, 2003) (unpublished) (Bankruptcy court order for disgorgement based on inaccurate Bankruptcy Rule 2016 statement is affirmed.); McCullough v. Chambers, Nos. 98-6344 JB, 96-16524, 97-918, 2000 WL 502827 (E.D. Pa. Apr. 25, 2000) (Debtor’s attorney is not allowed fees beyond the $750 retainer received because attorney failed to reveal the retainer in the disclosure under Bankruptcy Rule 2016.); In re Wallace, No. 02-93676, 2003 WL 21715335 (Bankr. C.D. Ill. July 24, 2003) (unpublished) (Debtors’ counsel ordered to refund $3,300 attorney fee and pay an additional sanction of $200 for filing a false Bankruptcy Rule 2016(b) disclosure and failing to comply with a court order to refund fees to the debtors.); In re Patti, 293 B.R. 297, 299 (Bankr. D.R.I. 2003) (Inaccurate Bankruptcy Rule 2016 statement coupled with failure to keep time records in 1/10th of an hour increments would justify denial of all compensation; based on quantum meruit, court allows $1,000, and orders counsel to disgorge $2,300 to the debtor and to undertake “ten hours of private study on the subject of Chapter 13 practice and procedure.”); In re Mayeaux, 269 B.R. 614, 625–26 (Bankr. E.D. Tex. 2001) (Debtor’s attorney violated § 329(a) and Bankruptcy Rule 2016(b) by failing to reveal pre- and postpetition payments for advice with respect to civil and criminal liability for improprieties by the debtor as a financial advisor. “[I]n light of the broad interpretation which has historically been applied under § 329(a), . . . payments made by the Debtor in the pre-petition period were made ‘in contemplation of or in connection with’ this bankruptcy case . . . . The duty of the Debtor’s counsel to disclose the $3,000.00 in post-petition payments he received from the Debtor is even more apparent.”); In re Campbell, 259 B.R. 615 (Bankr. N.D. Ohio 2001) (Substitute counsel for the debtor who neglected to file the disclosure required by § 329 and Bankruptcy Rule 2016(b) and then “compounded the problem” by accepting a $700 fee and suing the debtor in state court to recover more fees was disallowed all fees and ordered to disgorge the money received from the debtor.); In re Anderson, 253 B.R. 14, 21 (Bankr. E.D. Mich. 2000) (On bankruptcy court’s orders to show cause, debtor’s counsel was ordered to disgorge fees based on incomplete Bankruptcy Rule 2016(b) disclosures and illegal practice of receiving a postpetition retainer without court approval. Counsel’s practice was to collect $200 to file the petition and then to collect an additional $300 fee after the petition to file the plan and schedules. The Rule 2016(b) statement disclosed a $500 retainer but did not disclose that $300 of the retainer was paid postpetition. This practice “deprived the Court and the parties of the opportunity to act to correct the illegal practice of collecting postpetition fees from the debtor.” Counsel’s failure to deposit the postpetition retainer into client trust account violated Michigan rules for professional conduct. Use of the postpetition retainer without court approval required that the $300 postpetition retainers be disgorged.); In re Bell, 212 B.R. 654 (Bankr. E.D. Cal. 1997) (Debtors’ counsel ordered to disgorge $8,185.25 received as fees during a Chapter 13 case because counsel failed to file the disclosure required by Bankruptcy Rule 2016(b), counsel failed to reveal fees received during the Chapter 13 case and counsel owned real property in which the debtors had an interest which created a conflict of interest for counsel.).

 

42  See, e.g., In re Argento, 282 B.R. 108 (Bankr. D. Mass. 2002) (Fee application for $12,837 is reduced to $8,500 because attorney failed to amend Bankruptcy Rule 2016 statement to reveal postpetition payments and some time entries were excessive.); In re Whaley, 282 B.R. 38, 41–42 (Bankr. M.D. Fla. 2002) (Debtor’s attorney must disgorge $500 received as a condition for conversion from Chapter 13 to Chapter 7 but not disclosed until after the omission was caught in the Chapter 7 case. “The system only works if debtors’ attorneys disclose all payments received from the debtors automatically and without reminding. Disclosure is mandatory, not permissive. . . . Mr. Baron violated his duty under Section 329 and Bankruptcy Rule 2016(b) to disclose the additional $500 he received from the debtor after this case was filed.”). But see In re Burke, 281 B.R. 367 (Bankr. S.D. Ala. 2001) (Debtor’s attorney did not violate Bankruptcy Rule 9011 when original Bankruptcy Rule 2016(b) disclosure was not accurate but disclosure was amended before anyone raised the issue.).

 

43  In re Fricker, 131 B.R. 932, 944 (Bankr. E.D. Pa. 1991) (Bankruptcy court retains jurisdiction to supervise the payment of attorneys’ fees after dismissal of case. Debtor’s counsel’s failure to file Bankruptcy Rule 2016(b) statement would ordinarily justify denial of all compensation and disgorgement of all compensation already paid. However, in a particularly complicated and vexatious Chapter 13 case, in which counsel may have provided services supporting an award as great as $63,351.50 plus costs of $5,547.95, the payment of $14,741.11 need not be returned in full. Court imposed a “relatively modest ‘penalty’ upon counsel by directing that counsel pay a fine of $1,000 to the clerk of this court as a sanction for ignoring the requirement to timely file a complete and accurate 2016(b) statement.”).

 

44  In re Ostas, 158 B.R. 312 (N.D.N.Y. 1993). Accord Clark v. LaBarge (In re Clark), 223 F.3d 859, 863–64 (8th Cir. 2000) (Bankruptcy court did not abuse its discretion in denying fees, ordering disgorgement of fees and sanctioning attorney for claiming flat fees of $1,250 per Chapter 13 case when petition and other documents were prepared and filed by a paralegal and counsel met with the debtors for the first time at the meeting of creditors. “The bankruptcy court found that by seeking the flat fee for services Walton knew had been performed by his non-attorney employee, Walton was attempting to collect excessive payments . . . . Walton admits that he did not meet with debtors until their meetings with creditors and that, although he officially represented the debtors, a non-attorney prepared, signed, and filed documents and advised the debtors when they sought bankruptcy assistance. These actions, at a minimum, violate Rules 9011 and 2016.” Bankruptcy court had “ample” authority under § 105 to sanction attorney in the amount of $4,759—the U.S. trustee’s attorneys’ fees and expenses for investigating and objecting to the payment of fees.); In re Wulfekuhl, 267 B.R. 856 (Bankr. W.D. Mo. 2001) (Castle Law Firm’s practice of filing general denial in response to trustee’s motions to dismiss without first contacting debtors violated Bankruptcy Rule 9011; sanctions imposed of $2,500.); In re Smith, 257 B.R. 344, 351–53 (Bankr. N.D. Ala. 2001) (Debtor’s attorney ordered to refund $2,800 fee and to pay $10,000 to the Chapter 13 estate as a sanction under Bankruptcy Rule 9011 when petition was filed 23 hours before a state court hearing on summary judgment in litigation against the debtor, the petition was dismissed four days later and within a few days of the dismissal, the debtor conveyed a valuable interest in property inherited from his mother’s estate and the debtor transferred to his brother cash proceeds from the sale of that property. “Rule 9011(b) as amended in 1997 clearly subjects debtor’s counsel to the standards set forth in Rule 9011. . . . The safe harbor provision contained in Rule 9011(c)(1)(A) does not apply to the filing of a bankruptcy petition. . . . [T]he debtor filed his petition in order to stop the state court from entering judgment in favor of the bank on a complaint to which the debtor admittedly had no viable defenses while the debtor effectuated the transfer of his only assets. The invocation of the automatic stay was used as a litigation tactic to stay the state court action . . . . Debtor’s counsel had a duty to investigate the factual contentions claimed by debtor in his bankruptcy petition and schedules. By signing the petition and presenting the bankruptcy to the Court, counsel was certifying that the factual contentions claimed therein were supported by the evidence and were submitted for a legitimate purpose. They were not.”); In re Gooch, 250 B.R. 887 (Bankr. S.D. Ohio 2000) (Debtor’s attorney sanctioned for failing to respond to debtor’s phone calls and letters, for failing to adequately respond to a postpetition foreclosure notice and for permitting a business owned by counsel’s brother to send the debtor offers to resolve the postpetition foreclosure notice. Counsel was ordered to refund attorney’s fees, to attend continuing legal education programs and to pay the debtor $2,500 as damages. Brother of the debtor’s counsel operated a loan company and a foreclosure-notice-chasing business from the same location as the debtor’s counsel’s office. During the Chapter 13 case, when mortgage company noticed a foreclosure in violation of the automatic stay, counsel’s brother sent the debtor a solicitation to help the debtor with the foreclosure notice.); In re Redding, 242 B.R. 468 (Bankr. W.D. Mo. 1999) (After conversion from Chapter 13 to Chapter 11 to Chapter 7, debtors’ attorney is sanctioned with disgorgement of all attorney’s fees in excess of $1,000 for failure to comply with local rules, failure to adequately disclose fees received from the debtors and failure to get court approval for fees. Disgorgement included part of the retainer received from the debtors before filing the original Chapter 13 case.); In re Moix-McNutt, 220 B.R. 631 (Bankr. E.D. Ark. 1998) (Debtor’s attorneys who advised debtor not to schedule a large unsecured claim that would make the debtor ineligible for Chapter 13 and who advised the debtor to sell real property after the petition and distribute proceeds without notice or application under § 363 were sanctioned under Bankruptcy Rule 9011 with a fine of $5,000 and disgorgement of fees in the case and suspended from representing debtors in bankruptcy cases for a period of four years.).

 

45  In re Collida, 270 B.R. 209 (Bankr. S.D. Tex. 2001).

 

46  In re Copack, No. 01 B 09341, 2001 WL 1346063 (Bankr. N.D. Ill. Oct. 29, 2001) (unpublished). Accord In re Harbin, No. 01 B 26324, 2002 WL 1180887, at *4 (Bankr. N.D. Ill. June 4, 2002) (unpublished) (Requested fee of $3,420 is reduced to $2,205 when the same attorney received $5,899.50 for representing the debtor in two prior cases, the third case was “typical of many Chapter 13 cases filed in this district in which debtors attempt to save their homes and, as such, was neither undesirable nor unusually difficult,” and the results obtained were unfavorable because confirmation was denied and the case converted to Chapter 7.).

 

47  See In re Orris, 166 B.R. 935, 937 (Bankr. W.D. Wash. 1994) (In the Western District of Washington, standard Chapter 13 attorneys’ fees in the $700 to $1,000 range are allowed in the confirmation order. After confirmation, “the practice has evolved in the Western District of Washington, [that] Chapter 13 counsel customarily request fees on an incremental basis, in conjunction with whatever substantive motion or application is necessary, and without a separate or detailed fee application. The notices given to creditors of the motions usually specify the amounts requested.” Court allows additional fees, finding that the services for which compensation was requested were outside the scope of the initial fee agreements with debtors’ counsel. “The economic circumstances of Chapter 13 debtors, and judicial economy, argue for exercising the discretion allowed by § 331 to permit applications for compensation more frequently than every 120 days, in conjunction with substantive applications or motions.” The court also relaxed the detailed requirements of disclosure under Bankruptcy Rule 2016 and local bankruptcy rules for postconfirmation fee requests.).

 

48  See, e.g., In re Henry, 293 B.R. 72, 75–76 (Bankr. W.D. Okla. 2003) (“In this district, [§ 330(a)(4)(B)] is supplemented by the attorney fee provisions of this Court’s recently amended Chapter 13 Guidelines. The Guidelines provide for an attorney fee of up to $250 for post-confirmation services, but further provide that in cases filed April 1, 2003, or thereafter, the fee awarded upon confirmation of a chapter 13 case ‘shall constitute compensation for fees and expenses incurred for all pre-confirmation services and nominal post-confirmation services, including . . . objecting to proofs of claim.’”).

 

49  See, e.g., In re Newman, 270 B.R. 845, 850 (Bankr. S.D. Ohio 2001) (Fees are reduced or disallowed in part because law firm charged some supplemental fees that “should have been covered by the initial fee.”); In re Palladino, 267 B.R. 825 (Bankr. N.D. Ill. 2001) (Debtors’ attorney’s fees are reduced from $6,854 to $2,925.50 because written fee agreement included in the $1,695 flat fee some separately billed items; good result of confirmed plan does not justify fee “too high” for an unremarkable case.); In re Szymczak, 246 B.R. 774 (Bankr. D.N.J. 2000) (Fee request for $9,691.25 is allowed for $3,350 because part of requested amount should be included in the $1,500 flat fee for a standard Chapter 13 case.). See also In re Davis, 258 B.R. 510 (Bankr. M.D. Fla. 2001) (Leave to withdraw as debtors’ counsel is denied when only reason given is that a plan has been confirmed and counsel has done all of the things promised for the $1,395 paid by the debtors before the filing of the case.).

 

50  In re Szymczak, 246 B.R. 774, 782 (Bankr. D.N.J. 2000).

 

51  In re Phillips, 219 B.R. 1001, 1009–10 (Bankr. W.D. Tenn. 1998) (Disapproves debtor’s attorney’s practice of filing postpetition claims under § 1305 for routine postconfirmation attorney fees and reimbursement of expenses. Debtor’s attorney routinely charges Chapter 13 clients an initial fee “to obtain confirmation.” Thereafter, the attorney billed his clients at an hourly rate for all additional work, typically at $200 per hour, even for “routine legal work involving the generation and filing of one paragraph motions and brief orders.” Counsel would then file a postpetition claim for the legal services pursuant to § 1305(a)(2), and orders were routinely entered allowing these fees. On consolidated review of dozens of postconfirmation claims, court rejects attorney’s argument that § 1305(a)(2) is an “alternative” to the usual procedure for approval of compensation of professionals under § 330. The attorney did not have the approval of the Chapter 13 trustee as required by § 1305(c) for allowance of a postpetition claim, and such approval was not impractical. The use of § 1305 was not procedurally appropriate because it gave no meaningful notice to the debtors or other parties in interest. “The more appropriate procedure for approval of postpetition attorney’s fees and reimbursement of expenses . . . is an application for the court’s approval of attorney’s fees and expenses pursuant to § 330 . . . . [N]otice and hearing opportunity is crucial . . . . It is significant that the Code requires the court to award only reasonable fees ‘for representing the interests of the [chapter 13] debtor.’ . . . When considering an attorney’s postpetition application for fees, the Court is bound by the Sixth Circuit’s decision in Boddy v. U.S. Bankruptcy Court, 950 F.2d 334 (6th Cir. 1991) . . . which mandates that the bankruptcy court ‘must expressly calculate the lodestar amount when determining reasonable attorney’s fees.’” The court reconsiders all administrative orders allowing attorney’s fees as postpetition claims under § 1305, vacates those orders and grants attorney time to file appropriate § 330 applications in each case.). Accord In re Hanson, 223 B.R. 775, 781 (Bankr. D. Or. 1998) (Postconfirmation attorney fees are not postpetition claims under § 1305 because “[t]he postconfirmation fees and costs of debtor’s counsel related to the Chapter 13 case are administrative expenses, a specific category of postpetition debts distinct from the more general types of consumer debts covered by section 1305(a)(2). Under the rule of statutory construction that specific provisions control over general ones, we conclude that section 1305 does not apply to postconfirmation fees of Chapter 13 debtors’ counsel.”).

 

52  Cornelison v. Wallace (In re Cornelison), 202 B.R. 991 (D. Kan. 1996).

 

53  In re Black, 116 B.R. 818 (Bankr. W.D. Okla. 1990) (Postconfirmation request for interim compensation and expenses of $4,337 is denied in an uncomplicated Chapter 13 case where the order of confirmation allowed a $750 attorney’s fee. Debtors’ counsel is bound by the order of confirmation under § 1327.). Accord In re Lasica, 294 B.R. 718 (Bankr. N.D. Ill. 2003) (Postconfirmation application for attorney fees is denied because confirmed plan provided zero payment for attorney’s fees and allowance of fees would eliminate the dividend promised to unsecured creditors.).

 

54  See § 229.1 [ 11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors ] § 120.2  11 U.S.C. § 1327(a): Binding Effect on Creditors and Debtors.

 

55  See above in this section, and see § 36.3 [ Attorney’s Disclosure of Compensation ] § 36.26  Attorney’s Disclosure of Compensation for discussion of Bankruptcy Rule 2016(b).

 

56  See below in this section for further discussion of “guideline” fees in Chapter 13 cases. See, e.g., In re Young, 285 B.R. 168 (Bankr. D. Md. 2002) (When debtor’s attorney files a 2016(b) disclosure that reveals a specific flat-fee dollar amount that is incorporated into confirmation order, no purpose is served by requiring a separate fee application.).

 

57  See, e.g., In re Young, 285 B.R. 168, 173–74 (Bankr. D. Md. 2002) (“[T]his court finds that the purposes of Rule 2016(a) are satisfied without the filing of a separate document entitled application for compensation, where the fee is a flat fee, and is fully disclosed by the original Rule 2016(b) disclosure. . . . However, if the fee is not entirely a flat fee, but rather has an hourly rate or unliquidated feature, a formal application under Rule 2016(a) is required as a prerequisite to allowance as an administrative expense . . . . Also, in a flat fee case, if counsel does work outside the scope of the flat fee and seeks additional compensation from the estate, an application must be filed seeking court approval of the additional fee.”).

 

58  See discussion beginning at § 91.1  In General.

 

59  237 B.R. 783 (B.A.P. 10th Cir. 1999).

 

60  In re Lasica, 294 B.R. 718 (Bankr. N.D. Ill. 2003) (Attorney fees were denied because allowance of fees would preclude payment of the dividend promised to unsecured creditors.).

 

61  The so-called “lodestar” approach.

 

62  See § 73.8  Special Provisions for Attorneys’ Fees§ 73.9  Attorney Fees after BAPCPA, § 113.7  Order of Payments to Creditors before BAPCPA and § 113.8  Order of Payments to Creditors after BAPCPA.

 

63  See, e.g., In re Pappas & Rose, P.C., 229 B.R. 815, 817 (W.D. Okla. 1998) (District court approves guidelines for payment of attorneys’ fees in Chapter 13 cases. “The challenged guideline provides that attorneys’ fees will be paid in equal installments over not less than 24 months, unless the plan proposes to pay unsecured creditors 20% or more. Then attorneys’ fees may be paid over a ten-month period.”); In re Pedersen, 229 B.R. 445 (Bankr. E.D. Cal. 1999) (Under general order, Chapter 13 fee guidelines include a limit of $1,750 in a nonbusiness case and a prepetition retainer of $750. Attorneys voluntarily accepting the guidelines receive payments through the plan at the lesser of $200 per month or 50% of the debtor’s monthly payment.).

 

64  772 F.2d 1150 (4th Cir. 1985).

 

65  772 F.2d at 1153. See also In re Stromberg, 161 B.R. 510 (Bankr. D. Colo. 1993) (Because of the “form” nature of Chapter 13 practice and the widespread use of standardized forms, it is especially important for Chapter 13 counsel to exercise “billing judgment.”).

 

66  950 F.2d 334 (6th Cir. 1991).

 

67  950 F.2d at 338. Accord Bachman v. Laughlin (In re McKeeman), 236 B.R. 667, 671–73 (B.A.P. 8th Cir. 1999) (Applying lodestar and Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) factors, bankruptcy court did not err in reducing debtor’s attorney fees from $3,595 to $1,300 in a routine Chapter 13 case with no novel issues. “[T]he court determined that the case presented no novel or difficult legal issues, nor required expertise higher than that required in the typical Chapter 13 case. Consequently, the court found no reason to deviate greatly from the reasonable rates or hours charged in a typical Chapter 13 case. . . . The Johnson factors specifically require consideration of customary fees charged, awards in similar cases, and the novelty of the issues involved. . . . [I]n light of the routine nature of the proceeding, the court applied a reasonable rate of $110.00 rather [sic] the requested rate of $125.00. In so holding, the bankruptcy court did not arbitrarily impose a flat fee. . . . When a bankruptcy court determines that a case presents routine Chapter 13 matters, the court may review the fees requested in light of fees typically charged, and may reduce the requested fees accordingly. . . . [T]he bankruptcy court determined that it was unreasonable in its district to charge the full hourly rate for travel time. This decision was within the court’s discretion.”); In re Anderson, 253 B.R. 14, 21 (Bankr. E.D. Mich. 2000) (Fee agreement stated a “minimum” fee of $1,200 and an hourly rate of $150 per hour. The court found this agreement ambiguous and that “the fee calculation method in the fee agreement is inconsistent with Boddy v. United States Bankr. Court (In re Boddy), 950 F.2d 334 (6th Cir. 1991), which held that under 11 U.S.C. § 330(a), the fee of a chapter 13 debtors’ attorney must be calculated by the number of hours and the hourly rate.”); In re Courtois, 222 B.R. 491 (Bankr. D. Md. 1998) (Debtor’s counsel’s requested compensation of $3,991.01 in a relatively routine Chapter 13 case is reduced to the $1,160 counsel received for filing the petition. Debtor had fewer than 20 creditors, no adversary proceedings were filed and no motions were brought. Debtor’s 36-month proposal to pay $123 per month into the plan where debts totaled $413,588.62 would result in nearly 70% of monies paid into the plan being paid to debtor’s counsel. Court applied 12-factor “lodestar” approach and found that compensation exceeded the reasonable value of the services rendered.).

 

68  See In re Szymczak, 246 B.R. 774, 779–81 (Bankr. D.N.J. 2000) (“The Third Circuit Court of Appeals in [In re Busy Beaver Building Centers, Inc., 19 F.3d 833 (3d Cir. 1994)], examined the [Boddy v. United States Bankruptcy Court W.D. of Ky. (In re Boddy), 950 F.2d 334 (6th Cir. 1991),] opinion and concluded that ‘contrary to the apparent view of the Sixth Circuit Court of Appeals, § 330 by no means ossifies the lodestar approach as the point of departure in fee determinations.’ . . . With the arrival of specialized computer software for bankruptcy and because of the increased use of skilled bankruptcy paralegals, debtors’ attorneys are now able to file and confirm chapter 13 cases with minimal investment of attorney time. . . . It is likely chapter 13 cases are being filed and confirmed with fewer than five hours of attorney time. Despite this small investment of time, however, these attorneys are able to achieve the very results their clients sought, i.e., relief from oppressive debt. Under these types of circumstances, use of the lodestar method would not adequately compensate an attorney who was only required to invest a few hours of time because of his familiarity or understanding of chapter 13, while overcompensating an inexperienced attorney who was required to invest considerable time or who performed inefficiently. . . . Because use of the lodestar method for calculating legal fees does not achieve fair and reasonable results for debtor’s counsel in chapter 13 cases, bankruptcy courts should divide services into two categories: work that is standard or normal and customary in a chapter 13 case and work that falls outside of this standard. Fees for services that are normal and customary should be limited to the fixed fee established by the marketplace. Those services that go beyond the normal and customary standard should be compensated using the regular lodestar formula.”); In re Watkins, 189 B.R. 823, 828–34 (Bankr. N.D. Ala. 1995) (Disagreeing with Boddy v. United States Bankruptcy Court W.D. of Ky. (In re Boddy), 950 F.2d 334 (6th Cir. 1991), “[t]his Court is of the opinion that a bankruptcy court may allow an attorney representing a chapter 13 debtor an initial fee based on a ‘normal and customary’ debt-based formula. This Court suggests that if a request for additional fees is made, that the ‘normal and customary’ standard should be applied first and if the court finds that the case, or work in it, falls outside of that standard, then the lodestar method should be applied to calculate whatever additional fees are appropriate. . . . This Court respectfully disagrees with the Court of Appeals for the Sixth Circuit . . . . The problem that a lodestar analysis would create in trying to apply it to a chapter 13 system is having to determine what is compensable where the vast majority of work in a chapter 13 case is normal and customary. . . . From an administrative and case management standpoint, this Court cannot require attorneys to file detailed fee applications in all chapter 13 cases as the Court of Appeals of the Sixth Circuit seems to suggest. If the attorneys were required to file fee applications in every case and the Court were required to apply a full lodestar analysis to every one, the time required could not be justified by either. . . . Attorney fees are awarded on a sliding scale. . . . A lodestar analysis in every case simply will not work in a district where about 90% of cases pending at any given time are chapter 13 cases. Certainly, the debt-based pay method is an administrative convenience, but it guarantees that attorneys are adequately compensated. . . . [A] consideration of factors laid out in [Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974),] produces almost identical answers in almost all chapter 13 cases. . . . This Court considers certain services to be compensated through the initial debt-based fee. These include counseling with the Debtor; preparing and filing the chapter 13 petition and other documents; attending the first meeting of creditors’ meeting and confirmation hearing; reviewing claims and objecting to claims if necessary; filing amendments, motions, adversary proceeding complaints, answers to complaints or any other required pleadings; and attendance at all hearings when required. . . . Initial fees are awarded on a debt-based, normal and customary, standard. . . . When an additional fee request is filed, the court’s initial review should determine through the same ‘normal and customary’ standard whether the work represented by the request is extraordinary . . . . If the court finds that there is extraordinary work, the court should employ a full lodestar analysis to the fee application to determine reasonable compensation.”). Accord In re Shamburger, 189 B.R. 965 (Bankr. N.D. Ala. 1995).

 

69  See, e.g., Dempsey v. Bond (In re Bond), 254 F.3d 669, 677–78 (7th Cir. 2001) (Appellate courts lacked jurisdiction to review bankruptcy court’s denial of fees in excess of $1,000 “presumptive fee limit”; however, in dicta, Seventh Circuit notes that “the Central District seems not to be adhering to its own bankruptcy fee order . . . . [T]hat order required the Central District to establish a presumptive fee limit that would be uniform throughout the district and reviewed every two years. . . . [T]he courts in Danville and Peoria had already raised their presumptive fee limits to $1,500. With the Springfield court’s limit apparently still at $1,000.”); In re Eliapo, No. 01-50227-FRG, 2002 WL 31185824, at *1 & n.1 (Bankr. N.D. Cal. Aug. 2, 2002) (unpublished) (Based on fee guidelines, additional compensation of $1,248 is reduced to $394. “Applicant was awarded $2,350 in compensation at the time the Chapter 13 plan was confirmed. This award was pursuant to the fee guidelines maintained by the Court. Pursuant to the guidelines, the $2,750 was composed of: $1,400 for the basic case; and an additional $750 if the case involves real property claims; $200 [if] the case involves vehicle loans or leases.” In a note, “[t]he Chapter 13 fee guidelines are the Court’s attempt to predict what the typical case should cost the debtor when the specified aspects are present. It is the court’s intent to accurately predict the legal [sic] in a case in an attempt to avoid the additional cost and delay of fee applications. As a general rule the fee guidelines accurately represent the legal fees in the great majority of cases.”), aff’d, 298 B.R. 392 (B.A.P. 9th Cir. 2003); In re Moore, No. 02-03960, 2003 WL 22946433, at *1 (Bankr. D. Haw. May 28, 2003) (unpublished) (“The fee guidelines permit counsel to ‘opt in’ or ‘opt out.’ . . . [A]ttorneys who opt in may have their fees allowed without a formal fee application, but the attorney fees must not exceed a fixed maximum amount. An attorney who opts out can seek reasonable compensation that is not constrained by a fixed limit, but must file and obtain court approval of a compensation application. . . . The fee guidelines also provide that Chapter 13 Trustee shall pay the attorney the lesser of 50 percent of the monthly plan payment or $250 of each plan payment. . . . [T]he limitation does not apply to attorneys who ‘opt out’.”); In re Dorsett, 297 B.R. 620, 623–26 (Bankr. E.D. Cal. 2003) (Under fee guidelines for Eastern District of California, debtors’ counsel in a business Chapter 13 case may be entitled to higher fees; however, even if debtors’ day care is characterized as a business, facts do not justify an increased fee. “Counsel filed an executed copy of this court’s ‘Rights and Responsibilities of Chapter 13 Debtors and Their Attorneys’ . . . . Counsel was entitled to request a Guideline Fee. . . . The Chapter 13 Fee Guidelines do not require the court to accept the Debtors’ (or Counsel’s) characterization of the case. The Chapter 13 Fee Guidelines are not a fee schedule. Rather, they set forth the maximum amount of fees that the court may approve on an expedited basis for a particular type of case. . . . The term ‘business case’ is not defined . . . . This court’s Chapter 13 Fee Guidelines introduced the concept of a ‘business case’ in an attempt to assure fair compensation for attorneys employed in those cases (business in nature), which tend to involve unique issues and generally require more legal work than the typical consumer case. . . . The court acknowledges that a daycare operation is technically a business . . . . However, every case in which the debtor operates a small business is not necessarily a ‘business case’ . . . . [T]he fact that debtors are self-employed in a for-profit enterprise does not necessarily mean that their case has the unique issues and the level of complexity sufficient to warrant a higher level of compensation for their attorney. . . . Based on the court’s review of the schedules, statement of financial affairs, claims filed and the docket, this case does not appear to have the potential level of complexity to warrant the increased Guideline Fee for legal services. The Debtor’s business has no employees (other than themselves) and it does not appear to maintain any significant inventory or equipment . . . . It is run out of the Debtors’ home. . . . Debtors’ obligations appear to consist primarily of consumer debt. . . . [T]his court concludes that the ‘business’ Guideline Fee is not necessary or reasonable in this case. Even if this is a ‘business case’ the facts do not appear to justify the higher fee.”); In re Henry, 293 B.R. 72, 75–76 (Bankr. W.D. Okla. 2003) (“In this district, [§ 330(a)(4)(B)] is supplemented by the attorney fee provisions of this Court’s recently amended Chapter 13 Guidelines. The Guidelines provide for an attorney fee of up to $250 for post-confirmation services, but further provide that in cases filed April 1, 2003, or thereafter, the fee awarded upon confirmation of a chapter 13 case ‘shall constitute compensation for fees and expenses incurred for all pre-confirmation services and nominal post-confirmation services, including . . . objecting to proofs of claim.’”); In re Coats, No. 99-56566-JRG, 2002 WL 1359691 (Bankr. N.D. Cal. Jan. 31, 2002) (unpublished) (Bankruptcy court maintains a fee schedule for Chapter 13 cases that includes an approved hourly rate of $250 an hour based on the bankruptcy court’s survey of attorneys’ fees in consumer bankruptcy cases.); In re Cortez, 281 B.R. 290, 290 (Bankr. N.D. Cal. 2002) (Fee request of nearly $22,000 is reduced to $9,750 based on “evidence of inefficiency” in the handling of stay relief and other routine matters. Counsel was awarded $2,750; “pursuant to the fee guidelines maintained by the Court . . . the $2,750 was composed of: $1,400 for the basic case; and an additional $750 if the case involves real property claims; $400 if the case involves state or federal tax claims; $200 [if] the case involves vehicle loans or leases.”); In re Burton, 278 B.R. 645, 650–53 (Bankr. M.D. Ga. 2001) (Fee request of $1,150 is reduced to $600 when debtor was an elderly woman with no nonexempt assets and less than $6,000 of debt. “[T]he policy of the Court in this district is to award $1,150.00 in routine cases based upon a report by the debtor’s attorney of the number of hours spent in the representation of the debtor. The purpose of this rule is not to set a standard fee in Chapter 13 cases. Instead, the purpose of the rule is to relieve the debtors of the expense of requiring their lawyers to make a presentation of itemized fee requests and to urge consideration by the Court of such fee requests on a case by case basis. . . . The Court’s policy does not discourage the request for larger fee awards in cases which pose greater difficulty . . . . Such requests must be accompanied by itemized fee applications and must be noticed to creditors and individually considered by the Court. Likewise, cases of less than average difficulty do not warrant an award of fees in the amount of $1,150.00. . . . If a Chapter 13 case of average complexity warrants a fee of $1,150.00, this case calls for a substantially lesser fee.”); In re Fry, 271 B.R. 596 (Bankr. C.D. Ill. 2001) (Applying In re Kindhart, 160 F.3d 1176 (7th Cir. 1998) (Kindhart I), In re Kindhart, 167 F.3d 1158 (7th Cir. 1999) (Kindhart II), and In re Bond, 254 F.3d 669 (7th Cir. 2001) (Kindhart III), bankruptcy court allows some additional attorneys’ fees above the $1,000 “review level” then in effect for the Central District of Illinois.); In re Newman, 270 B.R. 845, 850 (Bankr. S.D. Ohio 2001) (Beginning in January, 2002, the amount “usually allowed . . . without itemization and a hearing . . . will increase to $1,500.”); In re Szymczak, 246 B.R. 774, 777 n.1 (Bankr. D.N.J. 2000) (“‘Each year approximately 15,000 chapter 13 cases are filed in the United States Bankruptcy Court for the District of New Jersey. Because of the burden it would place on the court, debtor’s counsel in chapter 13 cases are only required to file detailed fee applications if their fee exceeds $1,500.00.’”); In re Migiano, 242 B.R. 759, 762 (Bankr. S.D. Fla. 2000) (“[T]he fee[s] customarily charged by attorneys to represent chapter 13 debtors in this District . . . generally range between $1,500 and $2,500, and pursuant to the ‘Chapter 13 Fee Guidelines,’ any attorney seeking to charge a fee in excess of $2,500 for representing a chapter 13 debtor must file a fee application.”); In re Pirani, 232 B.R. 891, 893–94 (Bankr. E.D. Tex. 1999) (Debtor’s attorney fee request for $11,085 is reduced to $6,262.50. “Under Local Rule . . . if a Chapter 13 Debtor’s attorney requests more than $2000 for pre-petition and post-petition services, the attorney must file an application . . . . Applicant’s unusual efforts in the prosecution of this bankruptcy case involved participation in litigation in a Canadian court of law as well as involvement on the Debtor’s behalf in a pending Chapter 11 proceeding . . . . [S]ervices provided in connection with the Canadian class action suit appear to have been of no benefit to the estate and of questionable benefit to the debtor. . . . Debtor’s counsel does not appear to have delegated any tasks to a paralegal or lower billing professional. . . . [T]he Court has reduced the fees sought for such tasks as faxing, filing documents with the court, obtaining copies, mailings and preparing letters to the clerk of the court and certificates of service.”); In re Pedersen, 229 B.R. 445 (Bankr. E.D. Cal. 1999) (Denies debtor’s attorney’s application for $1,500 because request neither complies with local Chapter 13 fee guidelines nor is a conventional fee application. Under general order, Chapter 13 fee guidelines include a limit of $1,750 in a nonbusiness case and a prepetition retainer of $750. Attorneys voluntarily accepting the guidelines receive payments through the plan at the lesser of $200 per month or 50% of the debtor’s monthly payment. Attorneys have option to depart from the guidelines and file a separate fee application.); In re Howell, 226 B.R. 279, 281–82 n.6 (Bankr. M.D. Fla. 1998) ($1,300 is standard fee for routine Chapter 13 case. “Routine Chapter 13 cases are not appropriate cases for the use of the lodestar method. Instead, they are much more susceptible to a standard rate or flat, fixed rate approach, based upon all the relevant legal factors. Chapter 13 cases are standardized and systematized, and much of the work is capable of performance by paralegals. These cases are typically handled in high volume practices. Although counsel may lose a few dollars on one case when a standard, fixed fee is approved in a routine case, counsel will make up those dollars in another case. . . . [T]he court routinely allows an attorneys fee of up to $1,300 . . . in standard Chapter 13 cases when a portion of the total fee is to be paid through the plan after confirmation.” In a note, “[m]y observation is that lawyers generally charge $800 to $1,200 to represent Chapter 13 debtors in this community.”); In re Famisaran, 224 B.R. 886, 898 (Bankr. N.D. Ill. 1998) (With respect to the $1,200 “standard fee” requested as part of debtors’ counsel’s application, the court disallowed the standard fee without prejudice because “[t]he Court has established $1,000.00 as the figure below which Chapter 13 debtors’ attorneys need not itemize their services rendered and time expended.” Disallowance of the $1,200 was without prejudice to debtors’ counsel submitting detailed time records.); In re Yates, 217 B.R. 296, 301–02 (Bankr. N.D. Okla. 1998) (“It appears in this district . . . the maximum amount that the Court will award without a detailed fee application has become the ‘going rate’ for Chapter 13 representation, regardless of the complexity of the case. . . . This Court will respect and honor the determination of its predecessors that the $1,300 figure is proper and correct . . . . The fact that a fee application is not required where counsel seeks less than $1,300 does not mean that a $1,300 fee is justified in all cases. . . . [T]he Court will continue to review the fees sought in each and every Chapter 13 case in order to determine their reasonableness . . . . [T]ime records, though not required, may be of great assistance in persuading the Court that the fees sought are reasonable.” Court lists seven “factors” to describe a “routine” Chapter 13 case.); In re Roffle, 216 B.R. 290, 296 (Bankr. D. Colo. 1998) (In “routine, ‘vanilla’ Chapter 13 cases, the Court finds that an appropriate maximum hourly rate for the attorneys is $125.00. . . . [T]he reasonable fees . . . should be $1,200.”); In re Lee, 209 B.R. 708, 711–12 (Bankr. N.D. Ill. 1997) (In a “routine, ordinary, typical nonbusiness Chapter 13 case,” local rules for Western Division of Northern District of Illinois permit a maximum fee of $800 without court approval; counsel from Eastern Division of Northern District was reluctantly allowed an additional $1,500. “Typically, the fee requests of Eastern Division counsel approach or exceed double the fee requests of Western Division counsel for comparable services. This is, to say the least, somewhat demoralizing to Western Division lawyers, but that is beside the point. . . . Eastern Division hourly rates are significantly higher than Western Division hourly rates. This is true even though a pound of Frango mints costs the same at Marshall Fields in the loop as it does at Marshall Fields in Cherry Vale. . . . [T]here exists the accursed, but understandable need for Eastern Division lawyers to charge for time spent driving to and from the federal building in Rockford. For one Eastern Division lawyer (and sometimes two are sent) four hours windshield time may cost in excess of $1,000.00. . . .  Did the Debtors here know that the charge for legal services by Eastern Division counsel would be more than four or five times that of competent Western Division Chapter 13 counsel? Does an attorney practicing in the Eastern Division have an ethical duty to advise a client of the enormous discrepancy in fees charged by Eastern Division versus Western Division counsel? . . . Here we have a routine, ordinary, typical nonbusiness Chapter 13 case. There were no unusual or unanticipated time-demanding legal challenges. By the fee standards of Western Division lawyers, this is an $800.00 case. . . . [F]or the additional services performed beyond those contemplated in standing Order # 5, a generous $1,500.00 is allowed, bringing the total fee allowance to $2,300.00. That is less than requested by counsel [$4,142.50], but enough to make Western Division Chapter 13 lawyers drool, so it must be just about right.”); In re Thorn, 192 B.R. 52, 54, 56 (Bankr. N.D.N.Y. 1995) (Fee requests of $1,450 to $1,500 are reduced to $750 in Chapter 13 cases involving a single secured creditor and no unusual creditor opposition to confirmation. “As is the custom in Chapter 13 cases, no time records were provided to the Court.” Applying § 330 as amended in 1994, “reasonable compensation should have amounted to $750 for approximately six hours of legal services.”); In re Watkins, 189 B.R. 823 (Bankr. N.D. Ala. 1995) (Court allows an attorney representing a Chapter 13 debtor to charge an initial “normal and customary debt-based” fee that compensates counsel for preparing and filing the petition, attending the first meeting of creditors and confirmation hearing, reviewing and objecting to claims, filing amendments, answering complaints and attending all hearings. Additional fee requests beyond the initial debt-based formula are by separate application and, if “extraordinary,” require a full loadstar analysis.); In re Zwern, 181 B.R. 80, 85–86 (Bankr. D. Colo. 1995) (“For applications seeking allowance of fees of $1,000.00 or less, General Order No. 1993-2 excuses the attachment of the time and task summary. . . . [T]he Judges in this District have not adopted a standard or fixed amount of fees to be allowed to debtors’ counsel in uncomplicated, routine Chapter 13 cases. Some Judges review each case individually; others informally use a ‘rule of thumb’ of $1,200.00. Judge Matheson has held that a fee of $1,000.00 is appropriate for the average Chapter 13 case without any unusual, troublesome or unique issues.”); In re Orris, 166 B.R. 935 (Bankr. W.D. Wash. 1994) (In the Western District of Washington, standard Chapter 13 attorneys’ fees in the $700 to $1,000 range are allowed in the confirmation order.); In re Stromberg, 161 B.R. 510 (Bankr. D. Colo. 1993) (Experienced Chapter 13 practitioners in the District of Colorado in a routine Chapter 13 case charge between $800 and $1,200.); In re Fricker, 131 B.R. 932 (Bankr. E.D. Pa. 1991) (The “high normal” charge for representing Chapter 13 debtors in the Eastern District of Pennsylvania is $1,200.); In re Black, 116 B.R. 818 (Bankr. W.D. Okla. 1990) ($750 attorney’s fee allowed in an uncomplicated Chapter 13 case.); In re Richardson, 89 B.R. 716, 719 (Bankr. N.D. Ill. 1988) (“Fees of up to $850 [are] customary in this legal community in uncomplicated Chapter 13 cases involving significant debt and the saving of a home”; $750 is allowed in uncomplicated case involving no novel issues, no home and relatively little secured and unsecured debt.); In re Rodriguez, 76 B.R. 252 (Bankr. D.P.R. 1987) (Given that the average Chapter 13 case entails approximately 10 hours of work, fees in the range of $450 to $600 are appropriate, but the fee must not exceed 25% of the payments to be made under the plan. The 25% figure is based on attorneys’ fees allowed under Social Security Act.); In re Morgan, 48 B.R. 148 (Bankr. D. Md. 1985) (Court awards $650 fee in “an ordinary Chapter 13 case.”); In re Busby, 46 B.R. 15 (Bankr. E.D.N.Y. 1984) (Court reserves judgment on $500 fee in one-asset case.).

 

70  No. 01-50227-FRG, 2002 WL 31185824 (Bankr. N.D. Cal. Aug. 2, 2002) (unpublished), aff’d, 298 B.R. 392 (B.A.P. 9th Cir. 2003).

 

71  298 B.R. at 395.

 

72  2002 WL 31185824, at *1.

 

73  298 B.R. at 403.

 

74  298 B.R. at 398–402.

 

75  298 B.R. at 404.

 

76  In re Coats, No. 99-56566-JRG, 2002 WL 1359691 (Bankr. N.D. Cal. Jan. 31, 2002) (unpublished).

 

77  2002 WL 1359691, at *1–*2.

 

78  See In re Coats, No. 99-56566-JRG, 2002 WL 135969, at *1–*2 (Bankr. N.D. Cal. Jan. 31, 2002) (unpublished) (“The Court maintains a fee schedule at the request of the bar for Chapter 13 cases . . . . It is essentially a cap that will rise when the court has information showing that the rates for the peer group are rising.”).

 

79  See above in this section.

 

80  160 F.3d 1176 (7th Cir. 1998).

 

81  238 B.R. 202 (D. Colo. 1999).

 

82  160 F.3d at 1178–79.

 

83  160 F.3d at 1179.

 

84  167 F.3d 1158, 1159–60 (7th Cir. 1999).

 

85  Dempsey v. Bond (In re Bond), 254 F.3d 669 (7th Cir. 2001).

 

86  254 F.3d at 676–78. See also In re Fry [Kindhart IV?], 271 B.R. 596, 607 (Bankr. C.D. Ill. 2001) (Applying In re Kindhart, 160 F.3d 1176 (7th Cir. 1998) (Kindhart I), In re Kindhart, 167 F.3d 1158 (7th Cir. 1999) (Kindhart II), and In re Bond, 254 F.3d 669 (7th Cir. 2001) (Kindhart III), bankruptcy court allows some additional attorneys’ fees above the $1,000 “review level” then in effect for the Central District of Illinois. Court disallows additional fees for overhead items such as inputting bankruptcy schedules and to account for noncompensable clerical time. “Today, the uniform review level for the Central District of Illinois is $1,500.”).

 

87  George T. Carlson & Assocs. v. United States Bankruptcy Court (In re Ingersoll), 238 B.R. 202, 203–09 (D. Colo. 1999).

 

88  No. 02-41399-H3-13, 2003 WL 21501786 (Bankr. S.D. Tex. Apr. 10, 2003) (unpublished).

 

89  See In re Robinson, Case No. 98-41812 (Bankr. S.D. Tex. Sept. 4, 2002) (unpublished).

 

90  2003 WL 21501786, at *4.

 

91  Chapter 13 Attorneys Fees & Function Survey, National Association of Consumer Bankruptcy Attorneys (Mar. 2003).

 

92  Attorney’s Fees in Chapter 13: Do They Influence Chapter Choice?, 9 Norton Bankr. l. adviser 1 (2003).

 

93  11 U.S.C. § 1326(a)(2). See § 136.4  Trustee’s Fees and Expenses before BAPCPA, § 136.5  Trustees’ Fees and Expenses after BAPCPA§ 143.1  In Cases Filed before October 22, 1994 § 143.2  In Cases Filed after October 22, 1994 and § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA.

 

94  See, e.g., In re Oliver, 222 B.R. 272, 274 (Bankr. E.D. Va. 1998) (Debtor’s attorney’s fees and expenses are administrative expenses entitled to be paid from the funds held by the Chapter 13 trustee at dismissal before confirmation and before the balance of the funds is returned to the debtor. At dismissal before confirmation, the Chapter 13 trustee was holding $10,876.04 that was paid by the debtor pending confirmation. The order of dismissal simultaneously granted the debtor’s counsel an award of attorney’s fees. After the order of dismissal but before closing the case, the trustee was served with a state court garnishment. Trustee moved the bankruptcy court for guidance. Under § 1326(a)(2), the trustee is required to return the money paid by a debtor if a plan is not confirmed but must first pay administrative expenses allowable under § 503(b). Section 503(b)(2) provides for the allowance of administrative expenses for compensation awarded under § 330(a). Section 330(a)(4)(B) provides that the bankruptcy court can allow reasonable compensation to the debtor’s attorney in a Chapter 13 case. “Reading sections 1326(a)(2), 503(b)(2) and 330(a)(4)(B) together, we conclude that the debtor’s attorney’s fees and expenses are administrative expenses which are properly payable by the Trustee prior to the return of the remaining funds to the debtor pursuant to section 1326(a)(2).”). 

 

95  291 B.R. 72 (Bankr. S.D. Tex. 2003).

 

96  291 B.R. at 83. See also In re Phillips, No. 02-35075-H2-13, 2002 WL 31943454, at *1–*2 & n.5 (Bankr. S.D. Tex. Dec. 31, 2002) (unpublished) (In routine Chapter 13 case dismissed before confirmation, debtor’s attorney was allowed a § 503(b) administrative expense at reduced hourly rate of $150 and with a 20% discount based on lack of evidence of material contribution to completion of the case. “It is especially difficult to apply the appropriate tests to determine an appropriate fee in routine chapter 13 cases. Counsel generally do not submit extensive applications. Requiring extensive fee applications would be wasteful, because the cost of the application would exceed the amount of the fee charged . . . . [T]he tremendous volume of such requests . . . make it impossible for the Court to devote substantial time to each application . . . . [T]he judges of the Southern District of Texas have developed a uniform procedure requiring the submission of fee applications immediately prior to plan confirmation, with summary consideration of the fee application at the plan confirmation hearing if there is an objection to the fee application or if the Court on its own motion believes that it should review the fee that has been requested. But the uniform procedure does not address situations in which a case is dismissed without confirmation of a plan. . . . ‘Benefit’ is a very difficult concept to define in this context.”); In re Agee, 273 B.R. 149, 151 (Bankr. S.D. Ohio 2001) (On debtor’s objection to attorney’s application for fees from funds held by trustee after dismissal, attorney is not limited to $850 stated in ambiguous fee agreement, but request for $4,025 “is greatly in excess of fees normally awarded to attorneys for services in relatively uncomplicated consumer chapter 13 cases, even where confirmation is obtained. Benefit to the debtor is also a factor that the Court must examine in this case under 11 U.S.C. § 330(a)(4)(B).”).

 

97  See §§ 275.1 [ 1994 Code Amendments Changed the Rules ] § 132.1  1994 Code Amendments Changed the Rules, 279.1 [ Priority Claims, Including Requests for Payment of Administrative Expenses ] § 132.6  Priority Claims, Including Requests for Payment of Administrative Expenses and 281.1 [ Postpetition Claims ] § 132.9  Postpetition Claims for further discussion of the 1994 amendments to § 503(a).

 

98  Fed. R. Bankr. P. 1019(6).

 

99  See In re Simmons, 286 B.R. 426 (Bankr. D. Kan. 2002) (Under Bankruptcy Rule 1019(6), a request for payment of a preconversion attorney’s fee is timely if it is filed before the order of conversion; when counsel was misled by a change in local procedure, bankruptcy court exercised its discretion to deem the request timely though filed after the order of conversion to Chapter 7.).

 

100  See § 54.9  Compensation When Case Is Dismissed or Converted before Confirmation, § 73.8  Special Provisions for Attorneys’ Fees, § 73.9  Attorney Fees after BAPCPA, § 143.1  In Cases Filed before October 22, 1994, § 143.2  In Cases Filed after October 22, 1994, § 143.3  Payments Held by Chapter 13 Trustee at Conversion: § 1326(a)(2) after BAPCPA, § 151.1  Procedure, Timing and Form, § 152.1  Procedure, Timing and Form§ 152.3  Cause for Dismissal Added or Changed by BAPCPA, § 153.1  In General and § 153.2  Consequences of Dismissal Added or Changed by BAPCPA.

 

101  See, e.g., In re Harris, 258 B.R. 8, 13–14 (Bankr. D. Idaho 2000) (At dismissal before confirmation when debtor’s counsel did not file a fee application or a request for payment of an administrative expense, § 1326(a)(2) requires the trustee to return the funds on hand to the debtor notwithstanding that the debtor consents to payment of attorney’s fees. Counsel’s assertion of an attorney’s lien under state law fails because “while it is true that plan payments would not have been made to Trustee without the efforts of Counsel in commencement and prosecution of the Chapter 13 case, the actual funds did not come into existence due to the efforts of Counsel. The funds were part of Debtor’s income. With no fund created by the efforts of Counsel, the Court doubts the validity of Counsel’s alleged lien.”); In re Marin, 256 B.R. 503 (Bankr. D. Colo. 2000) (Debtors’ attorney violated Bankruptcy Rule 2016 and Code §§ 329, 330 and 1326 when the Chapter 13 case was dismissed before confirmation and, based on a letter signed by the debtors, counsel retrieved the funds on hand from the trustee and applied the funds to fees without court approval. Fee agreement provided services up to confirmation for $1,400. Bankruptcy Rule 2016 disclosure indicated $2,000 for preconfirmation services. Case failed before confirmation. Based on a letter signed by the debtors before the filing of the case, counsel received $4,200 from the Chapter 13 trustee, the funds on hand at dismissal. On the trustee’s motion to examine the fees, bankruptcy court ruled that $240 was reasonable fee and ordered counsel to disgorge the balance of the $4,200.).

 

102  See § 142.5  On Postpetition Claims§ 148.3  Effects of Conversion from Chapter 7 to Chapter 13 and § 148.4  Conversion to Chapter 13 after BAPCPA for further discussion of the effects on attorney fees of conversion to and from Chapter 13.

 

103  147 F.3d 1185 (9th Cir. 1998).

 

104  147 F.3d at 1191. Contra Fickling v. Flowers, Medalie & Markowitz (In re Fickling), 361 F.3d 172 (2d Cir. 2004) (At conversion from Chapter 11 to Chapter 7, unpaid preconversion administrative expenses for debtors’ attorneys’ fees are a dischargeable debt in the Chapter 7 case.). See also Bethea v. Robert J. Adams & Assocs., 352 F.3d 1125 (7th Cir. 2003) (Prepetition retainer contract for attorney fees in Chapter 7 case is not excepted from discharge.).

 

105  247 B.R. 474 (B.A.P. 8th Cir. 2000), after remand, 263 B.R. 874 (B.A.P. 8th Cir.), on motion for reh’g, 265 B.R. 601 (B.A.P. 8th Cir. 2001).

 

106  226 B.R. 290 (Bankr. D. Mass. 1998).

 

107  226 B.R. at 297.

 

108  ___ U.S. ___, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (2004).

 

109  See also § 148.3  Effects of Conversion from Chapter 7 to Chapter 13 and § 148.4  Conversion to Chapter 13 after BAPCPA.

 

110  209 B.R. 999 (B.A.P. 10th Cir. 1997).

 

111  209 B.R. at 1003.

 

112  223 B.R. 775 (Bankr. D. Or. 1998).

 

113  223 B.R. at 776.

 

114  See § 157.1  Broadest Discharge Available§ 157.2  BAPCPA Shrank the Discharge, § 157.3  Completion of Payments after BAPCPA and § 162.5  On Administrative Expenses.

 

115  See § 73.2  What Claims Are Priority Claims?, § 73.3  Priority Claims Added or Changed by BAPCPA§ 73.6  Treatment of Priority Claims Changed by BAPCPA, § 73.8  Special Provisions for Attorneys’ Fees§ 73.9  Attorney Fees after BAPCPA, § 136.1  Treatment of Priority Claims and § 136.7  Debtors’ Attorneys’ Fees after BAPCPA.

 

116  202 B.R. 991 (D. Kan. 1996).

 

117  See § 256.1 [ Duration of Modified Plan ] § 126.4  Duration of Modified Plan.

 

118  In re Wyant, 217 B.R. 585, 588 (Bankr. D. Neb. 1998) (“The plan may not provide contingently that attorney fees will be paid directly by the debtor, if they are not approved by this court. Such a provision circumvents the statutory requirement that the fees of debtor’s counsel shall be approved by the court. It also circumvents the disposable income requirement. . . . [F]ees may be paid from monthly income only if the court determines that such expenditures for attorney fees are reasonable and necessary for the maintenance of the debtor or the debtor’s dependents.”).

 

119  See above in this section, and see § 36.3 [ Attorney’s Disclosure of Compensation ] § 36.26  Attorney’s Disclosure of Compensation for discussion of Bankruptcy Rule 2016(b).

 

120  In re Wright, 290 B.R. 145 (Bankr. C.D. Cal. 2003).