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The Consumer Bankruptcy Letter SURVEY RESULTS 2003

FEE PRACTICES IN CHAPTER 7 CASES June 27, 2003

FEE SURVEY - RESULTS The June 16, 2003 issue of The Consumer Bankruptcy Letter invited readers to participate in a survey on consumer bankruptcy attorneys' fees. The results are being posted below, as they are analyzed. The information collected from the Consumer Bankruptcy Letter fee survey will be presented in two parts. The first part is found below. Additional information will be provided in time for the next Letter. Last week we asked viewers to participate in a survey of fees for consumer bankruptcy work. Although lawyers from 29 states responded, we received fewer than 100 responses. With such a small sample to work from, we should not place too much significance on the results. Still, some insight may be teased out of the arithmetic. The lowest hourly rate reported was $100, and the highest, $325. Not surprisingly, the hourly rates were generally higher in the more industrialized or urbanized states such as New York, Texas, and California. There appears to be less correlation between number of years in practice and hourly rate than might be expected. We were surprised to find that while almost all attorneys charged higher total fees for business chapter 7 cases than for consumer chapter 7 cases, relatively fewer charged more for a tax discharge case than for a consumer case.   NUMBER OF STATES REPRESENTED: 29 AVERAGE HOURLY RATES: Lowest hourly rate reported: $100 Virginia, Ohio, Indiana, Louisiana Highest hourly rate reported: $325 New York, California Number of years in practice: Shortest: 2 years Hourly rate $125 Longest: 43 years Hourly rate $125 AVERAGE HOURLY RATES IN FIVE STATES STATE AVE. HOURLY RATE LOWEST RATE HIGHEST RATE Texas $228.50 $150 $300 Indiana $155.00 $100 $250 New York $257.00 $200 $325 Georgia $160.00 $125 $200 Ohio $158.00 $100 $200 AVERAGE TOTAL FEE FOR CONSUMER CASES Chapter 7 highest reported $1,750 (New York) Chapter 7 lowest reported $400 (Ohio, Georgia, Arizona, Washington) Chapter 13 highest reported $3,000 (New York) Chapter 13 lowest reported $400 (Ohio) AVERAGE TOTAL FEES IN FIVE STATES: STATE CONSUMER 7 CONSUMER 13 Texas $1,293 $1,894 Indiana $ 713 $1,903 New York $1,036 $1,993 Georgia $ 740 $1,540 Ohio $ 589 $1,308 NUMBER OF YEARS IN PRACTICE We broke down the number of years in practice by decade. So, we lumped attorneys with 1 to 10 years practice, lawyers with 11 to 20 years practice, and lawyers with 21 to 30 years practice, and lawyers with over 30 years of practice. The numbers of lawyers in each 10-year bracket are shown here: NUMBER OF YEARS IN PRACTICE NUMBER OF LAWYERS REPORTING In practice from 1 to 10 years: 23 In practice from 11 to 20 years 14 In practice from 21 to 30 years 29 In practice more than 30 years 12 AVERAGE HOURLY RATE BY LENGTH OF YEARS IN PRACTICE NUMBER OF YEARS IN PRACTICE AVERAGE HOURLY RATE In practice 1 to 10 years $161 In practice 11 to 20 years $188 In practice 21 to 30 years $203 In practice 31 or more years $206    RESULTS OF POLL ON BANKRUPTCY REFORM  Week of June 30, 2003   QUESTIONS ASKED IN REFORM POLL SUMMARY OF KEY FEATURES OF "REFORM" ACT 2003   RESPONDING TO THE POLL: Consumer debtor attorneys 74% Creditor attorneys, trustees, etc. 26% _________________________________ Combined responses: DO YOU SUPPORT THE PROPOSED LEGISLATION? No - 100% Yes - 0% DO YOU THINK THERE SHOULD BE "SOME" REFORM? No - 55% Yes - 45% WILL REFORM INCREASE THE AMOUNT OF MONEY CREDITORS COLLECT IN BANKRUPTCY? No - 74% Yes - 26% IF PASSED, WILL THE REFORM ACT CAUSE YOU TO INCREASE THE FEE YOU CHARGE IN CONSUMER BANKRUPTCY CASES? Yes - 100% IF PASSED, WILL THE REFORM ACT IS ADOPTED AS IS, DO YOU BELIEVE IT WILL TAKE MORE TIME TO HANDLE CONSUMER BANKRUPTCY CASES? Yes 100% SHOULD THERE BE A MEANS TEST? STRONGLY YES - 0% MODERATELY YES - 0% WEAKLY YES - 10% WEAKLY NO - 3% MODERATELY NO - 26% STRONGLY NO - 61% SHOULD THERE BE MANDATORY CREDIT COUNSELING? Weakly yes 8% Weakly no 12% Moderately no 20% Strongly no 60% SHOULD CHAPTER 13 PLANS BE EXTENDED TO 60 MONTHS IN ALL CASES? Moderately yes 12% Weakly yes 8% Weakly no 4% Moderately no 25% Strongly no 50% SHOULD DEBTORS' ATTORNEYS BE PRSONALLY LIABLE FOR THE CREDITOR'S ATTORNEY'S FEES IF THE CHAPTER 7 CASE IS FOUND TO BE IN "BAD FAITH" BASED ON THE MEANS TEST? Strongly yes 0% Moderately yes 0% Weakly yes 0% Moderately no 3% Strongly no 97% SHOULD DEBTOR'S ATTORNEYS BE REQUIRED TO CERTIFY THE ACCURACY OF ALL FACTUAL ALLEGATIONS IN THE DEBTOR'S PETITION AND SCHEDULES? Strongly yes 0% Moderately yes 0% Weakly yes 0% Weakly no 0% Moderately no 12% Strongly no 88% DO YOU THINK CONSUMER DEBTOR'S ATTORNEYS GENERALLY DO AN ADEQUATE JOB OF SCREENING OUT DEBTORS WHO ARE ACTING IN BAD FAITH? Yes 88% No 12% DO YOU THINK GREATER EFFORTS SHOULD BE MADE, GENERALLY, IN SCREENING OUT DEBTOR'S WHO ARE NOT ACTING IN GOOD FAITH? Yes 32% No 68% DO YOU THINK CONSUMER DEBTOR ATTORNEYS GENERALLY RECEIVE ADEQUATE COMPENSATION TO PROPERLY HANDLE CONSUMER BANKRUPTCY CASES? Yes 36% No 64%    COMMENTS ON THE NEED FOR REFORM SUBMITTED BY RESPONDING ATTORNEYS   Cary A. Gluesenkamp, OR Any "reforms" should be to fix the many ambiguities in the existing law.   Brian Crozier Whitaker, CA Temporary reduction of income should not be a basis for Chapter 7 discharge in many cases.   Dennis K. Cowan, CA 1. Chapter 13 "superdischarge" needs to be reviewed, perhaps allow it if only if a specified minimum amount or per centage is to be paid on claims that would be dischargeable in Chapter 13 but not in Chapter 7. 2.  Chapter 7 debtor's attorney should be allowed to apply for compensation from bankrutpcy estate for postpetition work done to assist trustee and/or enhance the estate. 3.  Attorneys should be barred from sending blanket "scare tactic" solicitations to pro se debtors seeking to convnce the debtors to hire the soliciting attorney to "fix mistakes" in the petition, schedules, and SoFA.                     Oliver Max Gardner III, NC I have no problems with the requirement of a debtor filing all tax returns on a timely basis; filing an annual income and expense statement with the court; and with proof that the debtor is current on post-filing child support as a condition of confirmation.  I do not have any problem with extending the ability to cram-down a newly acquired secured debt for some rasonable period of time (12 to 18 months).   Jed Grossman, CT Creditor lenders should be prevented from filing objections to discharge unless they can prove they have take prudent steps prior to lending or extending credit to debtors (eg. requesting income & debt info from debtors or obtaining credit reports & income verifications)   A JACK KOPKO IN 1.  Creditor's should be allowed to prosecute 707 b violations. 2.   Multiple filings to stop mortgage foreclosures should be limited at the time of a 3rd filing within 2 years.   Terry Stephens, KA While I don't support a means test, I think it would be helpful to have guidelines on what expenses are OK and what are going to be considered extravagent.  I also think debtors should be encouraged to seek credit counseling, but a 30-minute phone session isn't going to change long-established behaviors. I think secured creditors, such as the credit unions who are pushing for adoption of the bill, will have a rude awakening if there is no more cram-down & people start surrendering their vehicles in droves.   Phillip Defelice, Montana There should be a minimum award of $2,000.00 to debtors who are contacted by creditors after they have been noticed of filing.  Additionally this amount should be increased to $5,000.00 for large institutional creditors and debt collection agencies.   My debtors are scared half to death by the trustee at 341 meetings about committing bankruptcy fraud and the fines and jail times that would accompany such a conviction , why shouldn‚Äöt creditors who knowingly harass debtors be hit with minimum awards rather than paltry actual damages?  I spend much more time than I should threatening creditors who annoy my clients.  For the time and effort it would take it‚Äös simply not worth my time to haul them into court every time there is a violation of the automatic stay, unless something really outrageous has happened.   Siri Lipscomb, Michigan     Years in practice: = 19The Bankruptcy Code already has provisions that willful and malicious injury to another constitutes a non-dischargeable act, so arguing over whether abortion clinic sabateurs should be barred from a bankruptcy discharge is like angels dancing on the head of a pin.  Empty rhetoric. U.S. Trustees in our area already screen for 707(b) violations for "bad faith".  No new code required.   Don Pavelka Jr. Nebraska Change Section 727 to allow creditors to file Motions to Dismiss bad faith filings. However, if the case is not dismissed by the Court, the Court would have the option of sanctioning the creditor, much in the same manner for frivolous 523 complaints.   Stephen J. Zayler, TX Fix the current system, don't gut it.   John O Adams, CA Attestation by the Debtor as to the accuracy of certain information provided with penalties against the Debtor if information is wrong [by a margin of, say, 10%] or more.   Robert Eder Sr., UT One possible good result of any bankruptcy reform bill would be to put these non-atty bankruptcy preparer firms out of business.   T Budzynski, MI 707(b) should be open to creditors with the same attorney fee provision as 523(d) The incompetent and just plain sloppy attorneys who think bankruptcy practice is simply an easy way to make money should be forced out of the practice. Judges need to step up to this problem and stop coddling the incompetents under the guise of protecting debtors. If attorneys did their job, ie actually interview debtors, review budgets and explain the proper method of budgeting and staying out of debt the system would need no other reform. Instead of advertising 200 dollar br maybe do the job and charge a fair fee. The abuse that I have seen is directly related to attorneys.