The U.S. Trustee Program's effort to crack down on the fees corporate bankruptcy lawyers charge quietly took effect this month, though time will tell how attorneys and judges alike react to the new rules, the Wall Street Journal reported today. Attorneys representing large corporate debtors in chapter 11 are now subject to additional disclosures about their billing rates and practices. Department of Justice officials who monitor bankruptcy filings for fraud and abuse are encouraging the disclosures in their review of legal fees, which in many corporate restructurings add up to many millions of dollars. The new rules apply only to attorney fees in large chapter 11 cases filed on or after Nov. 1. The U.S. Trustee Program has engaged in outreach, such as discussing the guidelines at various conferences and workshops as well as encouraging bankruptcy judges to make the guidelines part of their court’s local rules, which would obligate bankruptcy lawyers to comply. “The U.S. Trustee Program is seeking compliance, not litigation,” said Clifford J. White III, the program’s director. “If we all approach this process with a desire to comply—and with recognition that the statutory standards require this information—then the process will be speedy and fair, and will gain public confidence.”
