Bankruptcy lawyers may soon have to make an array of new disclosures on how they bill clients, Reuters reported today. One of the biggest points of contention is a proposal for firms to disclose and justify rate increases charged as a case goes on, drawing complaints from big law firms wary of more government oversight of their client agreements. It is part of a proposed overhaul of bankruptcy fee practices to be announced at the end of this month by the U.S. Trustee Program, an arm of the Justice Department that oversees how companies spend money during a court-supervised liquidation or restructuring. The Trustee's office, whose guidelines would only cover lawyers, wants law firms to be more accountable by giving notice of rate increases, calculating how much clients' bills would rise as a result, and submitting statements from clients saying they agreed to the higher fees. The proposals, the first fee rule overhaul by the Trustee's office since 1996, would also require a showing that rates are in line with the rest of the legal market.
