Ethics and Professional Compensation

2018 Co-Chair Corner: Ethics and Professional Compensation Committee

The Ethics and Professional Compensation Committee had an active 2018. We strived to continue to provide our members with enlightening and useful substantive information, while also offering enjoyable and valuable social and networking opportunities.

“Time Is Money”: Chapter 7 Fee Application Denied and Trustee Attorneys’ Fees Drastically Reduced as Not Reasonable

The chapter 7 trustee, in a July 2018 ruling, was denied compensation for services that were held to be “customary and statutory duties” that provided no further benefit to the bankruptcy estate and were not outside of those normal duties. The chapter 7 trustee’s attorneys were allowed reasonable compensation; however, the court noted that many of the entries provided with the application for compensation were not related to legal services requiring an attorney license and were not allowed.

Procedural Background

Caution! Using Appearance Counsel in Consumer Cases Deemed Problematic

In In re D’Arata,[1] the bankruptcy court ordered debtor’s counsel to disgorge the fee he received to represent the debtor in a chapter 7 case. The court also discussed and cautioned against the use of appearance counsel.

Ethics and Professional Compensation August 2018

Ethics and Professional Compensation August 2018

Ethics and Professional Compensation May 2018

Ethics and Professional Compensation May 2018

Nettlesome Neighbors: When Can Non-Client Outsiders Challenge Retentions

Many lawyers may have dealt with a challenging neighbor in their personal lives, but it is fair to say that few have dealt with a difficult neighbor challenging their retentions in their professional lives. However, the U.S.

Ignorance of Ethical Guidelines Can Cost You Money

A cautionary tale in the failure to have written fee agreements and maintain good records of client interactions is evidenced in a recent court decision out of the U.S. Bankruptcy Court for the District of Massachusetts. All attorneys, not just the bankruptcy practitioner, should take a glance at the following case to be reminded of the seriousness of not abiding by practices upholding the highest degree of ethical standards.

Secured Creditor Does Not Have a Lien on Retainer Paid to Debtor’s Counsel

In In re Tuscany Energy,[1] the U.S. Bankruptcy Court for the Southern District of Florida recently addressed the issue of whether a pre-petition retainer paid to a debtor’s attorney from an account encumbered by a security interest remains subject to the creditor’s lien. Corporate debtors must be represented by counsel in bankruptcy, and attorneys typically require a retainer. Because many debtors have creditors with blanket liens encumbering all assets, this situation arises frequently.

Court Orders Disgorgement of Counsel Fees as Unreasonable

In a recent ruling by the U.S. Bankruptcy Court for the Eastern District of New York, the court ordered the disgorgement of fees paid to the debtors’ counsel, finding that while “no counsel can guarantee success of a case when it is undertaken … the fee allowed must be reasonable for the services actually rendered as they were rendered”.

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