The U.S. Trustee Program is expected to unveil the first overhaul in nearly 17 years of the guidelines intended to keep bankruptcy costs in check on July 1, the Wall Street Journal reported today. The effort aims to tamp down on fee and expense applications submitted by attorneys for corporate debtors and sometimes creditors. The challenges come from the U.S. Trustee Program, the wing of the Department of Justice that monitors bankruptcy cases, as well as some bankruptcy judges. Spurring the effort to alter the guidelines are concerns that unjustified costs can give the impression that professionals are billing for money that rightly belongs to the people and businesses they are serving. The U.S. Trustee Program has attempted to curb fees and expenses for decades, but with the guidelines, under review for at least the last 18 months, it is refocusing its sights. "Evidence of improper expense reimbursements, even small ones (e.g., a professional billing an estate for a pack of chewing gum), reinforces the perception of abusive billing," according to a 2011 paper on bankruptcy fees co-written by U.S. Trustee Program Director Clifford J. White III. "While such reimbursements are frequently dismissed as isolated mistakes, the picture that emerges can be one of professionals who see the bankruptcy estate as an easy source of revenue." The proposed guidelines, which are expected to apply to attorneys in bankruptcy cases with $50 million or more in assets or liabilities, have gone through two drafts so far. Among the proposals: Expenses should be prorated where appropriate, and applicants shouldn't request reimbursements for "overhead" such as word processing and phone calls. The updated guidelines will be posted on the program's website and published in the Federal Register, and are expected to go into effect a few months later, according to the U.S. Trustee Program.
