"No Look" Attorneys' Fees in Chapter 13 Cases Should Be Clarified in the Bankruptcy Code, According to New ABI Law Review Article

May 10, 2012

Alexandria, Va. — An empirical analysis in the Spring 2012 edition (Volume 20, No. 1) of the ABI Law Review finds “no look” fees in chapter 13 cases, in which the attorneys’ fees are administratively approved without a hearing, are dealt with inconsistently in the courts and should be clarified in the Bankruptcy Code. In his article, " 'No Look' Attorneys’ Fees and the Attorneys Who are Looking: An Empirical Analysis of Presumptively Approved Attorneys’ Fees in Chapter 13 Bankruptcies and a Proposal for Reform," Professor Bruce M. Price of the University of San Francisco School of Law writes that the vast majority of courts have some form of presumptive fee and that the fee amounts vary significantly from one another. Price notes that the difference in the fee levels are generally not explainable by the differences in regional billing rates and that information on the fee amounts are disseminated by the courts in a variety of different and inconsistent ways.

Price writes that 11 U.S.C. §330 of the Bankruptcy Code requires bankruptcy court approval of attorneys' fees for debtor representation in chapter 13 cases. Faced with the administrative burden of such a requirement in the face of mounting chapter 13 filings, courts often enact presumptively approved "no look" fees. “Every chapter 13 case requires the court’s approval of the attorneys’ fee, whether through a presumptively approved fee or a different procedure,” Price observes. “Many courts would be administratively unable to hold a hearing in every chapter 13 case.” Different circuits, and even different courts within circuits, differ as to whether the practice of “no look” fees can be rationalized with the language and legislative intent of the Bankruptcy Code, according to Price’s analysis.

Price proposes amending §330 of the Code to provide a transparent “presumptively approved fee amount” and give the U.S. Trustees the exclusive responsibility for setting the flat fee. Under Price’s proposal, the U.S. Trustees would determine the services required in order for an attorney to obtain the fee and the fee would be scaled to account for regional differences in attorney billing rates. Price’s proposed amendment would also make it clear that fee requests in excess of the “presumptively approved fee amount” would require a hearing. Finally, the fee amount would be reviewed periodically, at least at five-year intervals.

The ABI Law Review, published in conjunction with St. Johns University School of Law is among the most-cited and respected scholarly publications in the bankruptcy community. In addition to the article on “no look” attorneys’ fees the Spring 2012 edition of the ABI Law Review also includes the following feature articles:

• "The Consumer Bankruptcy Fee Study: Final Report," written by Prof. Lois R. Lupica, the Maine Law Foundation Professor of Law at the University of Maine School of Law (Portland, Maine).

• "Valuation Methodologies: A Judge's View," written by Bankruptcy Judge Christopher S. Sontchi (D. Del.; Wilmington).

• "Customer Claims in SIPA Liquidations: Claims Filing and the Impact of Ordinary Bankruptcy Standards on Post-Bar Date Claim Amendments in SIPA Proceedings," written by Kenneth J. Caputo, the Senior Associate General Counsel at the Securities Investor Protection Corp. (Washington, D.C.).

• "'But Series-ly, Folks': The Series Laws, and How They (May) Intersect with Bankruptcy Law," written by Adam Hiller of Hiller & Arban, LLC (Wilmington, Del.).

• "The Ever-Expanding Scope of Securities and Commodities Safe Harbors in Bankruptcy," written by Christopher J. Rubino.

• "Better than Traditional Marriage?: The Bankruptcy Benefits to a Divorcee Following a Same-Sex Marriage, Domestic Partnership or Civil Union," written by Prof. Peter C. Alexander of Indiana Tech Law School (Fort Wayne, Ind.).

• "Constitutional Gaps in Bankruptcy," written by Prof. S. Todd Brown of SUNY Buffalo Law School (Buffalo, N.Y.).

The Spring 2012 edition also includes the following student notes:

• “Intersection of Intellectual Property Rights and Bankruptcy: When a Debtor Infringes,” written by Marissa T. Kovary of St. John's University School of Law (New York), Candidate for Juris Doctor, 2012.

• "Disallowing Administrative Expenses under Section 502(d): When Claims Are Not 'Claims' under the Bankruptcy Code," written by Michael Ryan Diaz of Mendes & Mount LLP (New York). Diaz received his J.D. from St. John’s University School of Law in 2011.

To obtain a copy of the Spring 2012 edition of the ABI Law Review, please contact John Hartgen at 703-894-5935 or via email at jhartgen@abiworld.org.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.