Service to the Estate and Ethics: Fees and
Costs
| ID | Name | Group | Other | Code
Sec |
Cross
Ref | Problem
Referenced | Proposed
Solutions |
NBRC-
0026 | "United States Law Week" |
|
| 726(a)(5) | 330(a) | Whether interest on fees of bankruptcy trustee and other
professionals accrues from award of fee or date of appointment or fee
application. | Interest on fees of bankruptcy
trustees and other professionals, distributable from estate property
under Section 726(a)(5) of the Bankruptcy Code, accrues from time court
awards fee, not from time of trustee's appointment or professional's
filing of fee application. |
NBRC-
0017 | Professor Cynthia A. Baker, "Other People's Money: The
Problem of Professional Fees in Bankruptcy," (Working
Draft) | Professor of Law; Emory
University |
| 330 |
| The recent amendments to the Code that were designed to
effectively control fees and reign in costs are an attempt "to cure
a broken leg with a Band-Aid." Efforts to control costs through
after-the-fact judicial review of fees don't work. The problem is that
the bankruptcy system of priorities enables the parties to treat
professional fees and costs as externalities, costs ignored by the
parties to a transaction because they are incurred by other members of
society. | The system for compensating
professionals should be changed. The fees and expenses incurred by an
official committee should be charged against distributions to the class
or classes that the committee represents; fees incurred by the
debtor-in-possession's professionals should be allocated among all
classes of unsecured claims and equity interests in proportion to the
value of hte property distributed to each class under the plan of
reorganization; judicial review of professional fees should be
eliminated except where a party in interest objects |
NBRC-
0023 | Michael J. Chmiel | Chair, Bankr. Law
Section IL State Bar Ass'n |
| 523(a) | 523 | Attorneys who represent ch. 7
debtors agree to take payments that go beyond the filing of a petition
in bankruptcy. Obligation to pay attorneys fees is discharged unless
debtor affirms it. | Amend section 523(a) by
adding subsection (17) that would provide: for reasonable compensation
for actual, necessary services rendered by an attorney to the debtor and
for actual, necessary expenses incurred by such attorney, in connection
with the case under this title in which the discharge is
sought. |
NBRC-
0043 | Cynthia A. Baker | Assistant Professor
of Law - Emory University School of Law |
| 327 | 330 | Serious look at system for
compensation of professionals in bankruptcy. Current system is
inadequate as it relies on an after-the-fact review. It is
counter-productive to efforts to reduce the cost of chapter 11. Clients
have no incentive to rein in their professionals. '94 amendments took
the wrong approach by focusing on fee standards rather than on perverse
incentives that lead to overspending. | Enclosed article that focuses on flaws in the current system and
reforms: each class of creditors should bear its own professionals
costs; and eliminate court review except to resolve a dispute between
two parties. |
NBRC-
0117 | E. Rothberg |
|
|
|
| The increased Chapter 13 debt
limits allows attorneys to file more complicated reorgs under Chapter
13, but courts do not permit increases in attorney fees and costs
(excpet upon the filing of a Chapter 11 type fee
app). | Allow attorneys to recover higher fees
in Chapter 13, without requiring extensive fee applications (as part of
the purpose of Chapter 13 is to lower costs). |
NBRC-
0138 | Philip B. Schwartz | The Business Law
Section of the Florida Bar |
| 327 | 328, 329, 330, 331 | There are no
uniform guidelines for fee applications, retention of professionals or
disclosure of conflicts. | The Commission
should consider whether to amend 11 U.S.C. 1§ 327-331 and
Bankruptcy Rule 2016 to include uniform guidelines for fee applications,
retention of professionals, and disclosure of conflicts. |
NBRC-
0197 | J. Stanley Payne | Attorney; Corporate
Vice President & General Counsel/Secretary of Bassett
Furniture |
|
|
| Author is responding to an article by Commissioner Butler that
was published in the Insight Newsletter. The author states that
administrative claims and expenses for bankruptcy cases are far too
high. He concludes that there is something "fundamentally
wrong" with the bankruptcy system because bankruptcy cases are
providing windfalls to law firms and accounting firms. All too often,
administrative costs virtually eat up the estate, leaving nothing for
unsecured creditors. He adds that he and his furniture company have
witnessed this problem "time and time again," but that they
see "little chance that the system will be
changed." | Bankruptcy Code should be
amended to ensure that estates are not unnecesarily dissipated by high
administrative claims and expenses. |
NBRC-
0220 | Denis J. Murphy | Chair, ABA Standing
Committee on Lawyer Referral and Information
Service | Recommendation Re: Lawyer Referral
Services | 503 | 504(a) | Section 504(a), a
fee-splitting prohibition, currently prohibits lawyers from shraing
compensation awarded under § 503(a) with legitimate lawyer referral
services. Lawyer referral programs provide an important avenue for
moderate income consumers, including bankruptcy clients, to gain
information and find a lawyer who is willing and able to resolve their
legal problems. In this era of reduced funding for all legal services
programs, lawyer referral programs must be allowed to seek innovative
methods of funding to ensure their survival. The fee-splitting
prohibition contained in § 504(a) was not intended to apply to
public service lawyer referral programs. In addition, the prohibition
is similar to the fee splitting prohibition contained in the Model Rules
of Professional Conduct, for which an exception has been made
specifically for public service lawyer referral
programs. | Amend § 504 to permit a
lawyer to whom a referral has been made to pay back to the lawyer
referral service a percentage of the compensation awarded under §
503(a). The Committee proposes the following amendment to § 504.
Section 504(b)(3):
"An attorney who serves as a panel member of a lawyer referral
service authorized to operate under the laws of that state, or from
which the attorney is permitted to accept referrals under the state's
rules or code of professional responsibility, may pay to that lawyer
referral service a fee calculated as a percentage of the compensation
awarded or received under Section 503(b)(2) or 503(b)(4) of this
title."
Ths Committee requests that the NBRC add this item to its
agenda. |
NBRC-
0223 | Frank R. Kennedy | Professor, Michigan
Law School; former Executive Director, Commission on the Bankruptcy Laws
of the United States (1973) | Cover letter
discussing various areas of concern |
|
| Author provides a list of 30 "Topics for Consideration by
Commission on Bankruptcy Laws." Recommended topics relating to
fees are:
1. Control of administrative expenses
2. Imposition of caps on fee allowances | None. |
NBRC-
0269 | Fred Dombo | Legislative Counsel, HALT
(Americans for Legal Reform) | Cover letter;
documents from a case where § 110 sanctions were
imposed | 110 |
| Some bankruptcy judges and
trustees are misusing § 110 to impose harsh penalties upon petition
preparers, harass petitioners who use their services, and deny petition
preparers the fees they earn for their services. The mandates on fees
celings vary widely in amounts and rationale, violating the requirement
that bankruptcy be uniform throughout the country. Petition preparers
serve an important and valuable function. They help pro se petitioners
who might otherwise file improperly prepared documents, which in turn
helps the court system run more smoothly. The author attaches copies of
documents from a case where § 110 santions were
imposed. | "Appropriate steps"
should be taken to ensure that § 110 is used only to penalize
incompetent and error-prone paralegals, and not to "harrass"
the general population of petition preparers. |
NBRC-
0283 | Michael J. Chmiel | Chair - Commerical,
Banking and Bankruptcy Law Section Council, Illinois State Bar
Association |
| 523 |
| On occasion, attorneys representing a debtor will agree to take
payments over a period of time which goes beyond the filing of a
voluntary petition in bankruptcy. Technically, the obligation which
accrued prior to the filing of the bankruptcy case is discharged in
bankruptcy unless the debtor agress to reaffirm the same. Negotiating
with the client is awkward at best. A recent district court case in
Arizona confirmed this analysis. | Section
523(a) should be amended to make these types of attorneys fees
non-dischargeable in bankruptcy. Suggested statutory language is
provided. |
NBRC-
0303 | Commercial Law League of America | Commercial Law League of America (CLLA) |
|
|
| The Commerical Law League of
America believes that the following fees & costs issues should be
considered by the NBRC: criteria for approval of compensation, routine
hold-backs, lodestars, and other compensation schemes (CLLA believes
that this issue should receive "high priority"); whether
requirements for local counsel drive up costs (high priority); and
creditors' obligations to reduce costs imposed on the bankruptcy estate
(non-priority). | No additional details are
provided. |
NBRC-
0306 | Michael T. Hertz | Attorney | Article entitled
"Cutting Administrative Expenses in Chapter 7
Bankruptcy" |
|
| Author attaches an
article that he will be submitting to the San Francisco Daily Journal
entitled "Cutting Administrative Expenses in Chapter 7
Bankruptcy." In the article, the author argues that the current
method for determining chapter 7 trustee fees, which calculates fees
case-by-case rather than globally as in chapters 12 and 13, has
"profound... impact," and "bear[s] re-examination."
This approach, he argues, results in lower returns to creditors and
administrative inefficiencies. | Author
suggests that in chapter 7, as in chapters 12 and 13, each estate should
be charged a maximum fee based on distributions through the estate. A
panel of chapter 7 trustee's global fees and expenses should be capped
in a manner analagous to that of the standing chapter 13 trustee.
Moreover, the fees and expenses of certain of the trustee's
professionals--particularly accountants and attorneys, who services may
be required in non-asset as well as asset cases--be paid from the global
pool of revenue generated by all of the chapter 7 trustee's
cases. |
NBRC-
0308 | James R. Covington III | Director,
Illinois State Bar Association | Proposal from
the Illinois State Bar Association's Commercial, Banking, and Bankruptcy
Law Section Council, contained in letter dated 3/19/96 from Michael J.
Chmiel | 523 |
| On occasion, an attorney
representing a chpater 7 debtor will agree to take payments over a
period of time which goes beyond the filing of a voluntary petition in
bankruptcy. Technically, the obligation which accrued prior to the
filing of the bankruptcy case is discharged in bankruptcy unless the
debtor agress to reaffirm the same. Negotiating with the client is
awkward at best. A recent district court case in Arizona confirmed this
analysis. | Section 523(a) should be amended
to make these types of attorneys fees non-dischargeable in bankruptcy.
Suggested statutory language is provided. |
NBRC-
0314 | Peter F. Geraci | Bankruptcy
attorney | Summaries, a letter, and a decision
from a case discussing payments of bankruptcy attorneys over
time |
|
| "No money down"
practitioners, who do not collect their fees before filing, are
violating at least one statute. Some pratitioners even lend their
clients the $175 filing fee. This practice presents obvious legal and
ethical problems, and should not be permitted. Some of these
practitioners may ask the NBRC to consider an amendment which would
provide an exception for debtors' attorneys fees. This request should
be denied because there is not "access to the courts" problem
that requires an exception for dischrage for debtors' attorneys fees.
Author attaches two summaries of a case that discusses payments of
attorneys over time, a letter to a co-editor of a newsletter discussing
this case, and a copy of the decision from the
case. | Opposes any amendment to the Code that
would provide an exception for discharge for debtors' attorneys fees, or
that would in any other way permit debtors' attorneys to make "no
money down" filings. |
NBRC-
0318 | Paul Mignini, Jr., Mary E. Wysocki and Charles M.
Tatelbaum | President-National Association of
Credit Management ("NACM"), Chair-NACM Government Affairs
Committee, and NACM Legislative and Bankruptcy Counsel,
respectively |
| 1103 |
| NACM sought the input of all NACM members with respect to
proposed changes to the bankruptcy laws. The NACM Government Affairs
Committee, without discussing the rationales for their suggestions,
prepared the proposals below. | NACM's
Government Affairs Committee concludes that § 1103 should be
amended to provide that: if one or more professionals are authorized to
be employed by a creditors' committee, 25% of any pre-petition retainer
given to the debtor's attorney shall be held by the attorney in a
separate interest-bearing account pending a bankruptcy court order
allowing the payment of fees and expenses to the
professionals. |
NBRC-
0318 | Paul Mignini, Jr., Mary E. Wysocki and Charles M.
Tatelbaum | President-National Association of
Credit Management ("NACM"), Chair-NACM Government Affairs
Committee, and NACM Legislative and Bankruptcy Counsel,
respectively |
| 1112 | Rule 9011 | NACM sought the input of all NACM members with respect to
proposed changes to the bankruptcy laws. The NACM Government Affairs
Committee, without discussing the rationales for their suggestions,
prepared the proposals below. | NACM's
Government Affairs Committee concludes that § 1112 should be
amended to provide that: in the event that the court dismisses a chapter
11 case based on bad faith, the court may award reasonable attorneys'
fees and costs in favor of the parties who moved for the dismissal in
accordance with Rule 9011. |
NBRC-
0328 | Joseph I. Wittman | President, National
Association of Bankruptcy Trustees (NABT) |
|
|
| The author attaches NABT's
response to the "U.S. General Accounting Office July 13, 1994
Report on Bankruptcy Administration-Case Receipts Paid to Creditors and
Professionals." NABT's states that the statistical information
compiled in the GAO report often erronoeusly implies that this fee
system is ineffective and costly. NABT concludes that the statistical
information presented in the GAO report is of limited value because it
represents averages of all chapter 7 cases reviewed. Since percentages
on either extreme can result from cases that were ineffectively
administered, it is inapporpirate to conlcude that these statistics
uncover any problem with the current system. NABT firmly supports the
ability of trustees to employ themselves or their firm as the attorney
or accountant in the asset cases they administer. This policy is
administratively sound, cost effective, and provides for efficient
adminstration with minimal delays. Conflicts may arise which call for
outside counsel, but these cases are the exception and not the
rule. | The GAO report provides little insight
into chapter 7 issues, and thus is merely an interesting compilation of
numbers, averages and statisics. A true analysis of the effectiveness
of chapter 7 proceedings must be obtained from direct input of parties
involved in the bankruuptcy process. |
NBRC-
0329 | Brenda K. Argoe | President, The
National Conference of Bankruptcy Clerks
("NCBC") |
|
|
| NCBC is concerned about adequate funding of the judiciary, who is
increasingly required to find fundung to cover Congessional mandates or
simply to recoup money for shortfalls in the budget. Often, additional
funding is raised by increasing fees to already overburdened debtors and
creditors. NCBC is also concerned about the impact of the Congressional
Accountability Act which would require the courts to pay overtime and
establish strict compensatory time guidelines. Imposing these pay
requirements could initiate budgetary crsis in the judiciary. The Act
would also eliminate the conept of excepted service appointments of
judicial employees, which would negatively impact the independence of
the judiciary. | Clear direction is needed
regarding filing and court fee increases because at present they are
created on an ad hoc basis to fix immediate crises. Also, the NBRC
should remember during its deliberations that the Congressional
Accountability Act contains provisions governing employment of judiciary
staff that would place undue financial and structural strain on the
judiciary. |
NBRC-
0334 | Vicent P. Zurzolo | Bankruptcy Judge
(C.D. Cal.) |
|
|
| The author attaches his proposal to modify the employment and
compensation procedures required by the Bankruptcy Code and the Federal
Rules of Bankruptcy Procedure. The author states that he believes that
the compensation and reimbursememnt scheme in the Bankruptcy Code
promotes inefficiencies and wastefullness. He attaches a copy of
"Bankruptcy Court Decisions," which contains an article
discussing this issue. | The author recommends
that the Code be modified to streamline the compensation procedures,
provide ongoing oversight of services and fees, and remove the burden of
judicial review of compensation and reimbursement unless and until a
party in interest objects. |
NBRC-
0373 | National Consumer Law Center Inc. | National Consumer Law Center Inc.
("NCLC") |
|
|
| The NCLC notes that bankruptcy is the only significant American
legal system that bars access to those who are too poor to afford its
filing fees. The cost of filing has greatly increased over the years,
and more and more debtors find themselves too poor to afford the
fees. | The in forma pauperis program has
worked well in the jurisdictions where it has been tested and should be
expanded to all jurisdictions. |
NBRC-
0374 | Richard Carrera | Attorney |
|
|
| Some confusion has arisen over how to treat unpaid attorneys fees
that were earned in connection with the filing of a chapter 7 bankruptcy
petition. Some attorneys only collect a portion of the fee before
filing their clients' petitions, and the Code is unclear as to how the
debt for the reamining fees should be addressed. | To clarify treatment of these attorneys fees, the Code should be
amended to provide that such fees, to the extent that they were earned
in connection with the filing of a chapter 7 bankruptcy petition, are
nondischargeable debts owed by the debtor in that
bankruptcy. |
NBRC-
0375 | Thomas J. King | Chapter 12 Standing
Trustee in Bankruptcy |
|
|
| The decisions made in the 6th
and 8th Circuits in recent cases in allowing debtor direct payments are
having a devestating effect on chapter 12 trustees. While the courts
seem to think that the trustee's work load has diminished, in reality
the compensation is zero but the trustee continues to have the duty of
monitoring the case, attending the hearings for confirmation and
post-confirmation matters and administering the case including providing
information to anyone who calls and desires such information. In short,
these cases have turned the chapter 12 standing trustee into a complete
pro bono operation, and is driving trustees to
resign. | Bankruptcy Code should be amended to
provide for proper compensation of chapter 12 standing
trustees. |
NBRC-
0406 |
"Bankruptcy Petition Preparer" |
Anonymous Letter |
|
|
|
Some bankruptcy judges and trustees are misusing §
110 to impose harsh penalties upon petition preparers and deny petition
preparers the fees they earn for their services. The author has
sucessfully defended himself against the § 110 motions, but is
concerned about the effort and cost of defending these
"unnecessary" motions. Fraud is illegal regardless of the
directives in § 110..This section seems to be aimed at driving
petitions preparers out of the business instead of protecting against
fraud. |
Section 110 should be eliminated, and the Code should
be amended to protect legitimate petition preparers from unwarranted
harrassment. |
NBRC-
0444 | Mrs. Robert Hartman | Private
citizen |
|
|
| "What little regard for 'the people' to have non-lawyers
eliminated from the bankruptcy business. Anyone considering bankruptcy
is in a condition that would preclude the charges a lawyer is able and
encouraged to bill." | "Did you ever
consider having bankruptcy judges impose low limits on what attorneys
charge" |
NBRC-
0475 | Vincent P. Zurzolo | United States
Bankruptcy Judge, Central District of California | Article from Bankruptcy Court Decisions, Vol. 30, Issue 2 dated
1/28/97, and Proposal for Modificaation of the Scheme for the
compensation, Reimbursement and Employment fo Trustees and Professionals
in Bankruptcy Cases by the author. | 326 |
| The current scheme of judicial review of compensation and
reimbusement does not satisfy the twin legislative intents of: 1)
"strictest economy in the expenses of administration"
(preserving the estate); and, 2) providing fair and adequate
compensation to professionals providing services. Trustees often seek
employment of the law or accounting firm to which he or she belongs,
which is problematic because it blurrs the line between services that
ought to be provided by a trustee and those that may appropriately be
provided by a professional employed by a trustee. This also occurs in
trustee's use of paraprofessionals. | Author
proposes a change to the ceiling found in §326 to a presumptive
awared of compensation and reimbursement to the trustee. From this
award, the trustee must compensate him or herself and all profesionals
and paraprofessionals he or she decides are necessary to administer the
estate. Author outlines other specifics with regard to his proposal,
and also makes a proposal for debtors in possession and their
professionals. |
NBRC-
0526 | Wolfred Freeman | Private
citizen |
|
|
| Author feels lawyers have a hold on the bankruptcy process and
charge to much, and that accountants and paralegals could easily handle
many cases. Cases take to long and money which should go to creditors
goes to attorney's fees. | Allow persons other
then attorneys to help with cases, include an office of
"ombudsman" "to help eliminate some of the abuses and
address problems with the present system. The way it is set up now you
just can't afford to get justice." "What is so hard about
setting up the same system that is used in Traffic Court to speed up the
System so that case [sic] are settled quickly.[sic]" |
NBRC-
0528 | David Fagan, BPP | None given, except
"BPP" after name |
|
|
| Author is concerned that people
can't get help with bankruptcy cases because of the high cost of
attorneys. | No specific solutions proposed,
but following quote contains a hint: "Any rules that specifically
target a pro se debtor's case and can be used to disrupt and complicate
it will ultimately limit their access tot he relief that is supposed to
be available to them by law." |
NBRC-
0581 | Donna C. Willard-Jones | Secretary,
American Bar Association | Resolution adopted
by the American Bar Association House of Delegates on February 3,
1997. |
|
| Author is forwarding a
resolution adopted at the February 3, 1997 meeting of the ABA House of
Delegates. | "...[T]he American Bar
Association urges amendment of the United States Bankruptcy Code to
allow an attorney to remit a percentage of a fee awarded or received
under the Bankruptcy Code to a bona fide public service lawyer referral
program, operating in accordance with state or territorial laws
regulating lawyer referral services or the rules of professional
responsibility governing the acceptance of referrals." |
NBRC-
0640 | Joel H. Klein | Attorney |
| 504 |
| Author is involved in a local bar associations's lawyer referral
program. Attorneys pay an annual fee to participate, and then pay 10%
of all fees received as a result of direct referrals from the program.
All the bankruptcy listees are disclosing this arrangement when they
make their affidavit at the time a petition is filed. They have only
had two cases in which an objection was raised, both were business cases
in which large fees were generated. Author was told that an amendment
of Section 504 was going to be proposed to exempt lawyer referral
programs of either local or state bar associations. | "I would appreciate your considering this
matter..." |
NBRC-
0705 | Joel H. Klein | Attorney, Douglas &
Elms, Inc. |
| 504(b)(3) |
| Author suggests an amendment to the U. S. Bankruptcy Code that
would allow an attorney to remit a percentage of a fee awarded or
received under the Bankruptcy Code to a public service lawyer referral
program. | Amend Section 504(b)(3) as
suggested in the letter. |
NBRC-
0707 | Paul Hollender | Attorney, Corash &
Hollender, P.C. |
|
|
| Author, on behalf of the Business Bankruptcy Committee of the New
York County Lawyers' Association, submits a commentary on the treatment
of Small Business Chapter 11 Cases. They are concerned that aggressive
judicial and US Trustee criticism of professional fees in small chapter
11 cases is creating a sub-class of small business owners who will not
be able to receive legal assistance to save their
companies. | One solution is to remove the
Court and U.S. Trustee from the fee application process for a class of
small business Chapter 11. A second solution would be to consciously
reduce the frequency of court appearances in "slow-track"
bankruptcy cases. |
NBRC-
0841 | Wendell J. Sherk | Attorney |
|
|
| "...the Draft points out that the structure of attorney fees
in these cases is still to be worked out and invites imput."
"The statute is already fairly reliable and functional. The only
area it disappoints fromt he debtor's view is the limited circumstances
where a creditor's misconduct can lead to payment of fees."
"In general terms, attorneys should be paid enough to encourage
them to continue zealous representation." Author has an aversion
to flat fee Chapter 13 work. He feels it leads to minimalist
representation. | "The Draft proposal
should leave fee options to a more local level, as a
rule." |
NBRC-
0844 | David C. Andersen | Attorney |
|
|
| "Caps on attorney fess charged in Chapter 13 as is the
practice in many courts discourage attorneys from counseling and filing
Chapter 13 cases. Chapter 13 cases are far more labor intensive than
Chapter 7....Limits on attorney fees not only discourage the filing of
Chapter 13 in the first place, but also hurt attorneys' abilities to
provide the quality of service debtors need." | "Fee caps should be discouraged if attorneys are to (a.)
advise and accept a case for Chapter 13 and (b.) adequately render
services to the Chapter 13 debtor." |
NBRC-
0855 | Michael A. Richardson | Attorney |
|
|
| Author is a bankruptcy petitioner and has run into problems over
the years in getting his fees paid. He sets a standard fee and spreads
the payments out over six months. Occasionally he will get a client who
will not pay once he has received the Order of
Discharge. | Author suggests that the Order of
Discharge be withheld by the Court pending receipt of an affidavit from
the attorney to the Court stating that the attorney's fee has been paid
in full. |
NBRC-
0858 | Ed Goldwasser, et al. | Small World
Toys |
|
|
| Attorneys' fees absorb the bulk of the assets to the detriment of
the creditors. | There should be a cap on the
aggregate amount allocable to professional fees of no more than 10% of
the debtor's assets. |
NBRC-
0892 | Robert W. Alberts | U.S. Bankruptcy
Judge, Central District of California |
|
|
| No
discussion. | "...I believe it would be
most helpful and appropriate to amend the Code to permit attorneys to
accept payment of their bankruptcy attorney fees in installments,
without running the risk of having the installments which come due after
the filing of the bankruptcy petition discharged. In that regard, I
suggest a provision specifically rendering debtors' attorneys fees, to
the extent allowed by the bankruptcy court, nondischargeable int he
bankruptcy for which they were incurred." |
NBRC-
0934 | Jean Braucher | Professor of Law,
University of Cincinnati College of Law | Jean
Braucher, "Counseling Consumer Debtors to Make Their Own Informed
Choices--A Question of Professional Responsibility", 5 Am. Bankr.
Inst. L. Rev. 165 (1997). |
|
| There is unjustified diversity around the country in the methods
of payment of attorneys' fees in chapter 13, and lawyers oversell
chapter 13 because they can get higher fees, thus leading to the high
failure rate for chapter 13 plans. | "A
possible way to address this problem would be to have the law provide
for U.S. trustee surveys at regular intervals to determine the median
consumer chapter 7 fee in each bankruptcy district. The law could
provide that chapter 13 fees are presumptively unreasonable ...when they
exceed 135 percent of the median consumer chapter 7 fee." "In
addition, paying the full first plan payment to the lawyer, a practice
used in some areas, should be prohibited because this gives lawyers an
incentive to make plan payments as large as possible, leading to too
many 100 percent plans that are not feasible over the long term.
Chapter 13 attorneys' fees should have to be paid out by the chapter 13
trustee in equal amounts over some specified period such as a year or
two." |
NBRC-
0969 | Peter C. Longenecker | Attorney |
|
|
| "There is growing opinion that unpaid attorney fees are
discharged in the bankruptcy. We have many clients that need to file
immediately..., but cannot afford much more than the filing fee at the
time, but who are able to pay so much a month toward the attorney fees
after the filing." | "Make any
unpaid Chapter 7 attorneys fees to be allowed to be paid
post-petition." |
NBRC-
1139 | Wolfred Freeman | Creditor in a
bankruptcy | Copy of response by Congressman
Randy "Duke" Cunningham to letter sent to him by
author. |
|
| Author is upset that the
bankruptcy process takes so long, but more importantly, that attorneys
drag the process out until all of the estate is used up in attorneys'
fees and court costs and nothing is left for the
creditors. | Allow paralegals and accountants
"to do the boiler plate and to come before the Court or a Master
and settle everything quickly." |
NBRC-
1147 | Carolyn O'Connor | Credit Manager,
Beeswax Designs |
|
|
| In this form letter, author complains of the fact that there is
no cap on professional fees, and that these fees are paid in full as
billed, leaving no assets for distribution to the unsecured
creditor. | "We would suggest that there
be a cap on the professional fees, and that it be based on the net
results. They should receive a percentage of their amount billed
equivalent to the percentage of distribution to unsecured
creditors." |
NBRC-
1175 | Robert A. Colton | Chair, Business Law
Section of the Florida Bar |
|
|
| "In the Section's view, the
use of special "fee examiners" is an improper delegation of
the court's duty to review and award compensation and that the
appointment of examiners for such purposes may lead to abuses and
unfairness in connection with compensation of professionals working in
the bankruptcy system." | "In this
regard the Section supports the Commission's proposal that the use of
fee examiners be precluded by Congress." |
NBRC-
1185 | G. Russell Cogar | Debtor in
Bankruptcy |
|
|
| Author filed for bankruptcy in Chapter 11 and feels that there
was abuse of the system by the trustee and the professionals that he
hired. | Author would like to see the system
changed so that what happened to him will not happen to anyone
else. |