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Under Bankruptcy Code § 329(a) and Federal Rule of Bankruptcy Procedure 2016(b), debtor’s counsel must file a compensation disclosure (a Rule 2016(b) Statement) that details legal fees charged and unpaid balances due. The local rules of the Bankruptcy Court for the Northern District of California also prescribe a “Rights and Responsibilities Statement of Chapter 13 Debtors and Their Attorneys” (the Rights and Responsibilities Statement) that details the fee arrangements between debtor and counsel.
Two recent ethics opinions issued by the New York State Bar Association’s Committee on Professional Ethics,1Anchor as well as a recent decision from the Virginia Supreme Court,2Anchor are spotlighting some of the issues surrounding the ethical standards regarding the propriety of attorney blogs and the contents thereof.
In the context of five firms’ fee applications exceeding $5.7 million, the U.S. Bankruptcy Court for the Northern District of Texas in Amarillo thoughtfully reviewed the cases applying the Fifth Circuit’s Pro-Snax[1] decision that fees may be awarded under Bankruptcy Code § 330(a)[2] when the services “resulted in an identifiable, tangible, and material benefit” to the estate. The court rejected the idea that success must be proven as a condition of a fee award.
In re Kimberly Nifong Mitchell, Case No. 11-08880-8-ATS (Bankr. E.D.N.C. Sept. 20, 2013), is a chapter 11 case involving the law firm of Oliver, Friesen, Cheek PLLC (OFC) and Bankruptcy Code §§ 503(b)(1)(A) and 507(a)(2). OFC was disqualified due to an undisclosed potential conflict of interest between two of its clients.
In In re Rowe,[1] the court considered the propriety of deviating from the percentage compensation set forth in Bankruptcy Code § 326(a) based on the chapter 7 trustee’s failure to perform as required. This case illustrates the effort needed to reconcile the tension between recognizing the trustee’s fee as a “commission” calculated by the formula set forth in § 326(a) and the court’s directive to award “reasonable” compensation to trustees and other professionals.
The U.S. Bankruptcy Court for the Southern District of Illinois recently issued an opinion in two related chapter 11 cases, In re Herrin Clinic Ltd. [1] and In re Bozorgzadeh, et al., [2] regarding a law firm's fee application for work done in the two cases.
This edition of the Ethics and Professional Compensation Committee newsletter marks the first edition from the new leadership. Richard Carmody of Adams & Reese has done an amazing job as our newsletter editor, and we would be remiss not to thank him for his work. Thanks, Richard! John Weiss with Alston & Bird's New York office has stepped in as the newsletter editor and is off to a running start with his first edition.
A ruling that an entity lacks standing in a bankruptcy case is usually a frustrating development that means that the party will not have the opportunity to be heard on a matter that may have negative consequences for it. In Savage Associates PC v. K & L Gates LLP (In re Teligent, Inc.), [1] the absence of standing in the bankruptcy case actually produced a favorable outcome for a law firm that later had to defend a malpractice suit in another court.
Creditors and parties in interest frequently file objections to bankruptcy professionals’ fee requests incurred during the case. According to the U.S. Trustee’s Annual Report of Significant Accomplishments for FY 2009, [1] the U.S. Trustee alone filed 511 objections to the allowance of professional fees in 2009 (the last year reported as of the date of this article), and 91.9 percent of which were successful, lowering the total amount of fees awarded in those cases by $28,524,879.
