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A debtor’s attorney may be compensated or reimbursed from the estate if his fees or costs constitute an administrative expense under § 503(a). Fees and costs in a chapter 13 generally constitute an administrative expense if they are either necessary expenses to preserve the estate or are “reasonable compensation.”[1] Debtor’s attorneys can file a detailed application to show the services rendered and expenses advanced. The bankruptcy court reviews the fee application to grant priority to the compensation deemed reasonable.
In Law Solutions Chicago LLC v. United States Trustee (In re Banks),[1] the Fifth Circuit upheld multiple sanctions against a national consumer bankruptcy law firm for misleading and neglecting clients. The district and bankruptcy court opinions thoroughly illustrate the complexities and pitfalls operating a high-volume, multi-jurisdictional law firm, and serve as a cautionary tale for debtors who search the internet for bankruptcy advice.
