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EFFECT OF BANKRUPTCY REFORM ON FEES |
FEE SURVEY
CONDUCTED BY THE BANKRUPTCY LETTER IN
JULY/AUGUST 2006 FEE
SURVEY RESULTS: PART 1 This
week we sent out a Bulletin soliciting lawyer participation
in a survey of fees and fee issues in chapter 13 cases since
the effective date of BAPCPA. To
date, The Bankruptcy Letter has received 158 responses from
consumer bankruptcy attorneys across the country. Here is a
partial report on those answers. QUESTION
# 2 Question
# 2 asked, do your local guidelines impose a no-lookback fee
limit such that as long as the fees charged do not exceed
the limit the attorney is not required to file an
application for approval of fees? While
the vast majority of districts have such fee limits, the
responses identified 19 districts or jurisdictions which
apparently do not impose such a fee limit. These are:
M.D.Fla., Delaware, Maine, N.D.MD (Baltimore), E.D.K.Y.,
N.D.Cal. (San Jose); E.D.N.Y., CT., E.D.M.O., S.D.Miss, 10th
Judicial District Colo., S.D.N.Y., W.D.VA, N.D.Cal. (Santa
Rosa), Kansas, W.D.N.D., W.D.Wisc., N.D.Ohio. We have not
contacted those districts to verify the answers. QUESTION
# 5 Question
#5 asked, is elimination of your district's no-lookback fee
limit policy being considered? A total of 16 local districts
were identified as considering elimination of the
no-lookback fee limit for chapter 13 cases. QUESTIONS
14 - 16 Questions
14, 15 and 16 asked, in light of BAPCPA, how supportive of
increased fees were the Judge, Chapter 13 trustee, and U.S.
Trustee? The
weight of opinion revealed in the answers is that bankruptcy
judges and chapter 13 trustees tend to be "very supportive"
or "moderately supportive," but that U.S. Trustees are
viewed as "not supportive." Here
are the numbers: HOW
SUPPORTIVE OF INCREASED FEES IN CHAPTER 13 CASES: JUDGES: Very
supportive 47; Moderately supportive 77; Not supportive 22 CHAPTER
13 TRUSTEES: Very
supportive 53; Moderately supportive 79; Not supportive 17 U.S.
TRUSTEE: Very
supportive 19; Moderately supportive 68; Not supportive 55 FEE
SURVEY RESULTS - PART 2 As
discussed in last week's Bankruptcy Letter, we conducted a
quick "straw" survey of Letter readers on certain aspects of
fees and fee practices in chapter 13 cases. We received 158
responses - admittedly a modest sampling - but providing
some insight nonetheless. Mostly,
the responses contain few surprises. We've all known that
the implementation of BAPCPA means more work for the
lawyers, and hence more expense. And not surprisingly, the
survey shows that 87% of responding lawyers have increased
their total chapter 13 fees. QUESTION:
What is your level of satisfaction with compensation in
chapter 13 cases? Only
88 lawyers responded. Their responses were: Responses: Very
satisfied - 8 Fairly
satisfied - 35 Moderately
unsatisfied - 28 Very
unsatisfied - 17 Increased
fees 158
lawyers responded to these questions: QUESTION:
Have you increased your pre-petition fees in chapter 13? Yes
- 107 No
- 50 QUESTION:
Have you increased your total fees for handling chapter 13
cases? Yes
- 137 No
- 20 To
summarize: 87.3%
of lawyers have increased their total fees for chapter 13
cases. 69% of lawyers have increased their pre-petition fees
in chapter 13 cases. QUESTION:
Has your local judge or trustee called a meeting of the
local bankruptcy bar to discuss increasing fees due to
BAPCPA? Yes
- 71 (45.5%) FEE
SURVEY RESULTS - PART 3 34%
of attorneys raise pre-petition fee in chapter 13 by 100% or
higher. We
have been providing the results of the survey on fees and
fee practices in chapter 13. This is the 3rd installment. Question
no. 7 asked, if the attorney has increased his or her
pre-petition retainer fees in chapter 13 cases due to
BAPCPA, by what percentage did he or she raise the fees? 108
lawyers responded to that question, representing 32 states
and Puerto Rico. The
lowest estimate was by an attorney in Maine, who estimated
he increased his fees by 13%. The
highest was an attorney in Minnesota who estimated 1000%.
That is so high that it might be a typo. We'll contact that
attorney and report back. The
next two highest were: Three
attorneys listed increases of 300% (one of those actually
listed it as 300-500%). These were from the states of New
York, Missouri, and the third state was not listed. The
two most frequently listed percentages were 50% and 100%, at
28 attorneys for each of those. 27
lawyers reported 30% or lower. 71
said under 100%. 37
lawyers reported 100% or higher. The
actual listings were: PERCENTAGES
PRE-PETITION FEES WERE RAISED DUE TO BAPCPA 13%
1 15%
4 20%
7 25%
8 30%
7 40%
1 45%
2 50%
28 60%
2 65%
3 75%
5 80%
1 85%
2 100%
28 125%
1 150%
2 200%
2 300%
3 1000%
1 FEES
SURVEY RESULTS PART 4 TOTAL
CHAPTER 13 FEES after BANKRUPTCY REFORM Based
on our fee survey (the first three parts reported in past
editions of The Bankruptcy Letter) we previously reported
that total chapter 13 fees had increased considerably since
the effective date of BAPCPA. We now look at the answer to
survey question # 11 - what is your average total fee for a
typical chapter 13 case? The
lowest total fee of $1,200 was reported from Kentucky. Other
low fees reported were $1,500 (OH), $1,650 (TN), $1,800
(LA). The
highest total fee of $5,500 was reported from Michigan.
Other high fees reported were $5,000 (WA), $4,500 (MD),
$4,000 (MIch.), $4,274 (NV). The
median fee range reported was $2,600 - $2,700. The
four total fees most often reported were - 16
attorneys reported ave. total fee of $2,000 31
attorneys reported ave. total fee of $2,500 40
attorneys reported ave. total fee of $3,000 10
attorneys reported ave. total fee of $3,500 Because
of the balloon figure of $3,000 getting the most mention, we
looked at the states reporting that fee for patterns. Lawyers
from nineteen states reported ave. total fee of $3,000. The
state of Texas reported this figure 11 times. Because that
was a kind of balloon, much more frequently reported in TX
than in other states, we more or less arbitrarily reduced
the number of TX reports of $3k to 5. Based
on that, we counted a total of 16 reports for $3k from
Western states; 9 reports came from Southern states; 5
reports came from Midwestern states, and 3 reports came from
Eastern states. Is
that a pattern? To try to get a comparison, we looked at
states reporting total fee of under $2,500. 32 reports were
for a fee of below $2,500. Only
1 fee of under $2,500 was reported from a Western state
(TX). 20
reports were from Southern states, with a pocket of 6 from
TN. 10
reports were from Midwestern states. Only
3 reports of under $2,500 came from Eastern states (all
three were from NY). So,
there shouldn't be any surprises here. Fees in Western
states appear to be higher than all other areas, and fees in
Southern states are typically lower than all other areas.
The reports from the Eastern seaboard were too few to get an
impression of fee rates from those states. Next
week: Selected remarks from reporting attorneys. (For
example, this comment from a California attorney: "I haven't
done a chapter 13 since BAPCPA, but I anticipate charging
the maximum I can because I've never made money on Chapter
13 cases. The courthouses are all too far away, and the more
hearings I do, the more I lose." From Tennessee, "We never
get paid the total amount of the fee. We should be paid on
the front end. The Bankruptcy court leaves us hanging in the
wind to collect the balance of the fee if the case is
dismissed. The 6th circuit in In re Boddie eliminated the
presumptive amount, but the Bankruptcy Court will not honor
the 6th circuit opinion." FEES
SURVEY RESULTS PART 5: LAWYERS' REMARKS In
previous editions of the Bankruptcy Letter we reported
findings from our fee survey in chapter 13 cases on current
fees and fee practices since BAPCPA. In this part of the
report we show some typical remarks made by some of the
attorneys who responded to the survey. We think you will
find them interesting. To
protect the privacy of lawyers who submitted remarks we have
not included their names, but have indicated which
bankruptcy districts they are reporting from. LAWYERS'
REMARKS ON CHAPTER 13 FEES: E.
District LA.: The judge arbitrarily set an amount of $1,800.
Previous fees were $1,500. She asked for input from the bar
who collectively recommended $2,300. She then called a
meeting to discuss the fees. Since there was a poor turnout
she stated that we must not care about the fee increase and
met us in the middle. ..... N.
District N.Y.: The no look fee was increased after the
Chapter 13 trustee was asked to survey the attorneys through
our local Bankruptcy Bar Association. A number of attorneys
submitted lengthy supporting documents for the fee increase
from $2100 to $3500. ..... W.
District TN: We never get paid the total amount of the fee.
We should be paid on the front end. The Bankruptcy Court
leaves us hanging in the wind to collect the balance of the
fee if the case is dismissed. The 6th Circuit in In RE:
Boddie eliminated the presumptive amount, but the Bankruptcy
Court will not honor that 6th Circuit opinion. ..... E.
District TN: In my district, to remain competitive, you must
have a no money down chapter 13 practice. The few attorneys
who charge $$ down don't file many cases and also don't know
what they are doing. ..... N.
District of MD: Our no-look fee has never been in the form
of a local rule it was always an unwritten rule that you
could not exceed a certain limit. Prior to BAPCPA that limit
had reached $2000. For the past year plus our local state
bar's section on Consumer Bankruptcy has been working on a
proposed fee schedule and rights and responsibilities
document which has been submitted to the court and we have
just been given it back with comments from which we need to
address the courts concerns and make revisions. We have
proposed a $4500 no look and a number of us have already
started using that figure with no objection from the 3 of
the 4 chapter 13 trustees here in Maryland. I have been on
the sub-committee of the bar section working on this which
has taken countless hours of our spare time ( at least 40+
hours ) to get these figures approved. ..... N.
District N.Y. : We now have a flat no-look fee of $3500.00
We can still get paid beyond this for motion practice.
However motion practice fees range from $100.00 to $250.00;
with the creditor bar getting $400.00! ..... Central
D. Cal: Even the $3000 no-look fee limit is not enough, but
few challenge it and go over it, lest they spend more hours
trying to collect the difference than the work is worth. ..... District
of Kansas: My remarks relate only to KS; some of our Judges
are very pro-debtor counsel; some not. In Missouri, where I
also practice, there is a no look fee of $2,000 which is
abominably low and the procedure to request an increase is
so cumbersome that it is not worthwhile. The work we have to
do on chapter 13s up front seems to have greatly expanded
b/c of the means test, and we can't charge enough money up
front to cover our time. Plus, it seems like all the post
Oct 17 chapter 13 clients are flakey and have already
defaulted on plan and mortgage payments! ..... W.
District WA: Most of my cases are not ordinary and I always
do a fee application. Given the nature of the practice, I do
not see any changes in our practice other than requiring
more in advance. ..... E.
District of TX: I try to avoid filing 13's as much as
possible, even to the extent of referring them to other
attorneys. I have never received an adequate hourly fee on
any 13 I have filed in the 10 years I have been doing them.
I will do them only to prevent my clients from losing their
homes and only then if another attorney won't accept them as
clients. ..... W.
District TN: The Western District of Tennessee allows a no
look back fee of $2400 but, more importantly, a lump sum
payment of $300 to $600, depending on money on hand, right
after confirmation. Competition prevents, most of the time,
getting an upfront retainer. ..... So.
District AL: I've answered these questions on the basis that
'fees' include expenses such as the filing fee, creditor
counseling, credit report and other due diligence expenses,
which is eating up most of the 'fee increase'. ..... So.
District of Texas: in the S.D. Tx -
Corpus/Brownsville/McAllen division, we have a fee cap of
$2460 on ch 13's, unless we file detailed fee apps. Hearings
were held in May in Houston to consider increasing the
"bright line" but no orders have been issued yet approving
increased fees. We also have a system (since 2004) of
current monthly mortgage payments being made through the
plan (paid by ch 13 trustee) which slowed down distribution
of attorneys fees. Since BAPCPA we have increased our
retainer from $500 to $750. ..... E.
District of MO: The survey here is missing our
jurisdictional fee structure: there are two options in the
EDMO for ch 13. A) a no look back fee option set at $3000
and you can never ask for more, it is the total fee, no
questions asked, take it or leave it and B) a no look back
of $2300, then you can bill for more, no limit, but you have
to itemize the $2300 and your additional fees in a formal
application sent to all parties. ..... E.
District of OK: We have held a legal hearing to increase the
no-look-back fee in the Eastern District of Oklahoma on June
22, 2006. Testimony and evidence was presented. Honorable
Judge Tom R. Cornish took the matter under advisement. He
has not issued an Order in the matter as of this date.
[UPDATE: Following receipt of these remarks, the
attorney has since reported the judge's decision; the "no
look" attorney fee for Chapter 13 cases in the U.S.
Bankruptcy Court for the Eastern District of Oklahoma is now
$3,750.00.] FEE
SURVEY RESULTS PART 6 - MORE LAWYERS' REMARKS W.
District IN: The Western District of Tennessee allows a no look back
fee of $2400 but, more importantly, a lump sum payment of
$300 to $600, depending on money on hand, right after
confirmation. Competition
prevents, most of the time, getting an upfront retainer. E.
District TX: I try to avoid filing 13's as much as possible,
even to the extent of referring them to other attorneys.
I have never received an adequate hourly fee on any 13 I have
filed in the 10 years I have been doing them.
I will do them
only to prevent my clients from losing them homes and only
then if another attorney won't accept them as clients. W.
District WA: Most of my case are not ordinary and I always
do a fee application. Given
the nature of the practice, I do not see any changes in our
practice other than requiring more in advance. District
KA: My remarks relate only to KS; some of our Judges are
very pro-debtor counsel; some not. In Missouri, where I also
practice, there is a no look fee of $2,000 which is
abominably low and the procedure to request an increase is
so cumbersome that it is not worthwhile. The work we have to
do on chapter 13s up front seems to have greatly expanded
b/c of the means test, and we can't charge enough money up
front to cover our time. Plus, it seems like all the post
Oct 17 chapter 13 clients are flakey and have already
defaulted on plan and mortgage payments! C.
District Cal: Even the $3000 no-look fee limit is not
enough, but few challenge it and go over it, lest they spend
more hours trying to collect the difference than the work is
worth. E.
District TN: I am starting to keep track of time spend and
doing fee applications as opposed to the no look fees on
many cases. N.
District NY: We now have a flat no-look fee of $3500.00 We
can still get paid beyond this for motion practice. However
motion practice fees range from $100.00 to $250.00; with the
creditor bar getting $400.00! N.
District MD: Our no-look fee has never been in the form of a
local rule it was always a unwritten rule that you could not
exceed a certain limit. Prior to BAPCPA that limit
had reached $2000. For
the past year plus our local state bar's section on Consumer
Bankruptcy has been working on a proposed fee schedule and
rights and responsibilities document which has been
submitted to the court and we have just been given it back
with comments from which we need to address the courts
concerns and make revisions. We have proposed a $4500 no
look and a number of us have already started using that
figure with no objection from the 3 of the 4 chapter 13
trustees here in Maryland. I have been on the sub-committee of the bar
section working on this which has taken countless hours of
our spare time ( at least 40+ hours ) to get these figures
approved. W.
District TN: In my district, to remain competitive, you must
have a no money down chapter 13 practice.
The few attorneys who charge $$ down don't file many cases and
also don't know what they are doing. S.
District FL: I no longer seek out Chapter 13's. I only file them if a Chapter 7 candidate meets
with me and cannot file under Chapter 7 due to the means
test. W.
District TN: WE never get paid the total amount of the fee. We should be paid on the
front end. The
Bankruptcy Court leaves us hanging in the wind to collect
the balance of the fee if the case is dismissed.
The 6th Circuit in In RE: Boddie eliminated the presumptive
amount, but the Bankruptcy Court will not honor that 6th
Circuit opinion. N.
District IN: Our court has raised the no look back fee to
$2800. I think this fee is
reasonable especially weighing my clients ability to pay. N.
District NY: The no look fee was increased after the Chapter
13 trustee was asked to survey the attorneys through our
local Bankruptcy Bar Association.
A number of attorneys submitted lengthy supporting documents
for the fee increase from $2100 to $3500. E.
District LA: The judge arbitrarily set an amount of $1,800
previous fees were $1,500)
She asked for an input form the bar who collectively
recommended $2,300. She then called a meeting to discuss the fees. Since there was a poor
turnout she stated that we must not care about the fee
increase and met us in the middle. W.
District LA: Judge Callaway is a very unreasonable Judge. He believes professionals
should be paid for work; and in return he expects the work
to be done. I am thankful Judge Callaway
has increased fees. The
U.S. Trustee and the Chapter 13 Trustee oppose the increase
in attorney fee, because they do not value the work of the
attorneys. M.
District FL: Our district imposes a $2500 no look fee for
Chapter 13 or you must file a contemporaneous time record
fee app. A number of Chapter 13 attorneys including our firm
have been requesting $3500 with time records but the Court
has not been granting the higher fees in most of the cases
we have seen. We are trying to get the Judges to raise the
presumptive fee but it has not happened yet. thanks for
doing this survey. Please send us the results. Hopefully it
will strengthen our position with our Judges. W.
District TX: We are charging over the trustee's set fee and
have had to petition for the extra fees and have not yet
been told if they are granted. The trustee total allowed fee
is $2800 and we have charged $600 more and our documented
hours spent have in each case been more than the $3400
requested. S.
District MS: If the Court wants quality work from Debtor's
attorneys, which makes the system work for all, the fees
should be $3,600.00 to $6,000.00 based on the length of the
plan, at the expense of the unsecured creditors of course!
While I'm on the soapbox, what the hell is the "means test"
SCHEDULES I and J were, AND STILL ARE, the "means test". The
Court should allow us to be paid $3600.00 to $6,000.00 so
the Court isn’t overburdened by the
forthcoming sloppy, frivolous crap, and the creditors can
continue to reap the benefits of their "means test" (ha!) W.
District VA: The no-look fee is not formally a part of our
local Rules, but it is generally understood that fees that
will not be objected to by the Trustee have increased from
$1,600.00 to $2,000.00 to $2,500.00 depending on the
complexity of the case. E.
District NY: We do not have a
formal no look system but the unwritten rule is up to about
3500 to 4500 depending on complexity-but I have charged up
to $5000. on occasion w/out an issue if it a more complex
case. E.
District NY: In the Long Island NY area competition plays a
bigger roll in setting fees then the
court or trustee. M
District GA: We had a $1,500 no look pre Bapcpa. We are currently announcing time. The judges and trustees are now circulating a
proposed order for a $2,500 no look.
No input was sought from the Bar. W.
District WI: We charge by the hour ($200/hr) for Motions for
Relief etc. We charge more for repeat
filers (Motion to Extend Stay) and for the self employed or
business operators. W.
District MI: Our district has a sliding no look back fee
standard: $2,200 in general, $2,500 for attorneys who attend
the annual district bankruptcy seminar that year and $2,900
for board certified attorneys. W.
District LA: I have been surprised at how many debtors have
been able to pay the fee in full since the change.
May be a function of hurricane damage money still in the area. S.
District IN: Upon implementation of new law, fees went from
$2200 flat to $3000 E.
District VA: Our no-look fee went up from $1,500 to $3,000. I think this is fair,
particularly since the judges will routinely grant
reasonable applications for additional fees. N.
District TX: Our prior fee in Northern District was $2000
and now is $3000. In Eastern it was $2000 and is now only
$2500. Not consistent but livable. N.
District CA: as often as not, clients' cases are dismissed
due to nonpayment prior to the disbursement of attorney fee
payments by the trustee. it
is of course burdensome to file a motion for attorney fees
when, as is usually the case, additional work is required
during the course of the chapter 13 representation.
for
these reasons, some bankruptcy specialists avoid Chapter 13
cases. W.
District WA: Answer to #17 very satisfied only because have
started doing fee apps in EVERY SINGLE CASE. Answer
otherwise would be very unsatisfied. N.
District TX: Our district by local rule increased the flat
fee that may be charged for a chapter 13 case from $2500 to
$3000.00. This fee includes preparation of the petition,
schedules and plan; meeting with the client, document review
and preparation; attending the meeting of creditors;
telephone calls from client, creditors and chapter 13
personnel; responses to routine motions such as motions to
terminate automatic stay etc.
If modification of a plan is required post-confirmation, an
additional fee of $350.00 is permitted.
Additional fees for non-routine services such as motions to
incur secured debt (i.e. to purchase/refinance a house or
vehicle)also are allowed. Lastly, attorneys are
permitted to file formal fee applications for fees in excess
of $3000.00 (or in excess of $3500.00 for a business case).
Not many attorneys in our district take the time to file fee
applications, but those that are file routinely are granted. E.
District VA: Our "no look" fee was increased from $1500 to
$3000, but the Office of the US Trustee has become extremely
litigious regarding supplemental applications.
The atmosphere between debtors' counsel and the US Trustee has
become completely poisoned as a result. W.
District MI: I used to do no money down chapter 13 cases and
the majority of my caseload was chapter 13. Now I will only
rarely if ever do a no money down case because of all the up
front work that must go into it and the difficulty with the
trustee's office in getting any plan confirmed. Confirming a
plan is now an uphill climb with all the documents and
proofs needed to substantiated every detail of the debtor's
finances. Fees have doubled not only because of BAPCPA but
also because of the attitude of the trustee's office in
creating barriers to confirmation. W.
District MI: I have done Chapter 13 and Chapter 7s
exclusively since 1983. Filed over 8,000 cases. My Chapter
13 revenue is now 75%+ LESS than it was two years ago.
Almost impossible now to "make a living" as a Chapter 13
Debtor's attorney currently, must supplement it with other
work even though 13s are more difficult than ever before to
prepare, file, and follow through with to completion. All SW
Michigan consumer bankruptcy attorneys I know are really
struggling. District
of MN: Minnesota tends to be on the low range of allowed
attorney fees. District
UT: Everyone understands the additional work required and
thus support increased fees. The problem is can the Debtor's
afford the increased fees. W.
District MO: Our no-look went from $1500 to $2000 prior to
BARF. No inkling of additional changes has been noted since
Oct. 17. N.
District TX: Our district by local rule increased the flat
fee that may be charged for a chapter 13 case from $2500 to
$3000.00. This fee includes preparation of the petition,
schedules and plan; meeting with the client, document review
and preparation; attending the meeting of creditors;
telephone calls from client, creditors and chapter 13
personnel; responses to routine motions such as motions to
terminate automatic stay etc.
If modification of a plan is required post-confirmation, an
additional fee of $350.00 is permitted.
Additional fees for non-routine services such as motions to
incur secured debt (i.e. to purchase/refinance a house or
vehicle)also are allowed. Lastly, attorneys are
permitted to file formal fee applications for fees in excess
of $3000.00 (or in excess of $3500.00 for a business case).
Not many attorneys in our district take the time to file fee
applications, but those that are file routinely are granted. M.
District AL: With additional filing fees and costs and hoops
to jump through, there are clients who can not file chapter
13 because they can not afford it.
Currently considering reducing attorney fees for one client so
that we can make a 13 work. Have done so in the past. Fees
have scared off clients in the past. District
OR: There is a local rule cap in OR on the estimated fee
(below $3,000) to avoid addl accounting submissions to the
court at confirmation. This has been unchanged so far.
