In re Amdura Corp., Bankruptcy No. 90 B 03811 E
| Decision Date | 05 May 1992 |
| Docket Number | 90 B 03813 D,Bankruptcy No. 90 B 03811 E,90 B 03812 E,90 B 03815 J and 90 B 03816 E.,90 B 03814 D |
| Citation | 139 BR 963 |
| Parties | In re AMDURA CORPORATION; Amdura National Distribution Company, fka Fok; Coastamerica Corporation; Coast to Coast Holdings, Inc.; Coast to Coast Stores, Inc.; and Intertrade Cargo, Inc., Debtors. |
| Court | U.S. Bankruptcy Court — District of Colorado |
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James L. Nachman, Curt Schultz, Cheryl Tama, Winston & Strawn, Chicago, Ill., for Winston & Strawn.
Leo Weiss, Denver, Colo., for the U.S. Trustee.
Thomas C. Seawell, Ducker, Dewey & Seawell, Denver, Colo., and Mark Schrupp, Sidley & Austin, Chicago, Ill., for The Bank Group.
Steven E. Abelman, Berryhill, Benjamin, Cage & North, Denver, Colo., for the ANDCO Creditors' Committee.
ORDER ON FINAL FEE APPLICATION OF WINSTON & STRAWN
These six related Chapter 11 proceedings were commenced by the filing of petitions in this Court on the 2nd of April, 1990. They were consolidated procedurally for administrative purposes in the case for Amdura Corporation, 90 B 3811 E.
Immediately after the filing of the petitions, an application was filed with the Court on behalf of the six debtors-in-possession ("Debtors") to employ the law firm of Winston & Strawn ("W & S") as counsel pursuant to the provisions of 11 U.S.C. § 327. An affidavit, as required by the provisions of F.R.B.P. 2014, was filed with the Court and an order was entered approving their employment. Pursuant to the Local Rules of this Court, out-of-state counsel must be associated with local counsel. Accordingly, a similar application was filed by the Debtors to employ the Denver firm of Fairfield and Woods ("F & W"), and a similar order authorizing employment was entered.
The two law firms served as counsel from the time of the commencement of the case until July 6, 1990. On that date, this Court entered its Opinion and Order withdrawing its previous orders authorizing these law firms to serve as counsel for all of the Debtors in these proceedings. In re Amdura Corp., 121 B.R. 862 (Bankr. D.Colo.1990). They were authorized to continue to act on an interim basis pending the entry of appearance of new counsel on behalf of the Debtors. Under that arrangement W & S continued to act as counsel for all of the Debtors through August 10, 1990.
W & S has now filed applications for the allowance and payment of fees pursuant to 11 U.S.C. § 328 and § 330. Hearings were conducted on those applications on December 11, 1991, and a supplemental application was filed thereafter on March 2, 1992, in response to this Court's Order entered following that hearing. This order enters in response to those applications and after consideration of the applications and the evidence submitted both in support and by way of objection to the fee applications.
W & S was hired pursuant to the provisions of 11 U.S.C. § 327 which preconditions employment on being "disinterested" and not holding or representing any interest adverse to the estate. Fees are allowed pursuant to the provisions of section 330 of the Code and that section mandates that the Court may award to a professional person employed under section 327 "reasonable compensation for actual, necessary services rendered by such . . . attorney . . . based on the nature, the extent, and the value of such services, the time spent on such services, and the cost of comparable services other than in a case under this title. . . ." However, as specified by section 328(c), the Court may deny compensation if, at any time during the professional's employment, he is not a "disinterested person."
In bankruptcy proceedings, issues periodically arise concerning the propriety of charging for certain types of activities such as travel time and other "soft costs," or for the preparation and presentation of fee applications. In part, these issues were resolved in these cases by the Court's general order on professional fees. In addition, this Court has previously expressed its views on these types of issues. In re Frontier Airlines, Inc., 74 B.R. 973 (Bankr.D.Colo.1987); In re Orthopaedics Technology, Inc., 97 B.R. 596 (Bankr. D.Colo.1989). These prior decisions will be applied in the allowance of fees in these cases.
The Tenth Circuit Court of Appeals has established a checklist of factors to be considered in awarding fees. In the case of In re Permian Anchor Services, Inc., 649 F.2d 763 (10th Cir.1981), the Court adopted the standards earlier set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974). In awarding fees in bankruptcy matters, the court should appropriately consider the following factors: (1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the skill requisite to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of the case; (5) the customary fee; (6) whether the fee is fixed or contingent (7) time limitations imposed by the client or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation and ability of the attorneys; (10) the undesirability of the case; (11) the nature and length of the professional relationship with the client; and, (12) awards in similar cases.
The United States Supreme Court has recently revisited the fee arena in the case of Blanchard v. Bergeron, 489 U.S. 87, 109 S.Ct. 939, 103 L.Ed.2d 67 (1989). There again, that Court affirmed the principle that in awarding fees a court should start with the "lodestar" reached by multiplying a reasonable hourly rate by the reasonable number of hours required for the task. The Court in the Blanchard case relied on its previous opinion in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983). The Court in Hensley relied on Johnson v. Georgia Highway Express, Inc., supra, and recognized that attorneys, in applying for fees, "should make a good-faith effort to exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice ethically is obligated to exclude such hours from his fee submission." Hensley v. Eckerhart, supra 103 S.Ct. at 1939-40. The Tenth Circuit Court of Appeals has similarly recognized that the actual time expended by the attorneys is not necessarily the reasonable time required. In the private sector "billing judgment" is an important component in fee setting which is no less important when the fees are to be set by the court. Ramos v. Lamm, 713 F.2d 546 (10th Cir.1983).
The admonitions of the Supreme Court and the Tenth Circuit are well taken. As this Court has also observed, the setting of fees, whether by the Court or counsel, is an art, not a science. In re Frontier Airlines, Inc., supra. This is simply an acknowledgement of the fact that every hour logged by an attorney as "billable" does not necessarily deserve to be billed. Billing judgment must enter into the final analysis.
Unfortunately, in the real world, attorneys do not always meet the Supreme Court's expectation that every lawyer will heed his ethical obligation to exclude excessive, redundant, or otherwise unnecessary time. The reasons for such failure are varied. Sometimes it is simply overt unethical greed on the part of the lawyer. More often, and more charitably, the failure may be laid to human frailty. Lawyers, especially young associates, who are faced with inflexible and excessive quotas of billable hours, are understandably reluctant to exclude time even when they recognize their own inefficiencies and, worse, may be tempted to "puff" when put to the task of writing down the day's efforts. Partners, who face similar performance standards from their peers, are subject to the same pressures to produce "billable" hours. Partners responsible for billing are reluctant to exclude or writeoff "billable" time because of firm pressures to produce billings. And the process is further frustrated by the necessity to make those purely subjective evaluations, called "billing judgments" by the Ramos court, supra, to determine what time is truly worthy of being billed, and what is not.
In applying for fees under 11 U.S.C. § 330, it is the obligation of the attorney to show the entitlement to fees. Continental Illinois Bank & Trust Company of Chicago v. Charles W. Wooten Ltd. (In re Evangeline Refining Co., Debtor), 890 F.2d 1312 (5th Cir.1989); see also, Hensley v. Eckerhart, supra. The threshold is, of course, the attorney's time records showing the services rendered and the time expended. Those records must describe the services with sufficient particularity to enable the Court to evaluate the time expended, the nature and need for the service and the reasonable fee to be allowed. Hensley v. Eckerhart, supra; In re Holub, 129 B.R. 293 (Bankr. M.D.Fl.1991); In re Navis Realty, Inc., 126 B.R. 137 (Bankr.E.D.N.Y.1991).
In bankruptcy cases it is common for the attorney for the debtor-in-possession to be involved in many different matters. In allowing fees, the Court must consider, among other things, the necessity for the particular services, the success achieved and the benefit to the estate. 11 U.S.C. § 330; In re Permian Anchor Services, Inc., supra. In order for the Court to make this evaluation it is both necessary and proper that the attorney's billing records be maintained and presented in such a manner that, within reason, the Court can identify the various categories of matters worked on and the time and services allocable to those categories. Hensley v. Eckerhart, supra; Bee v. Greaves, 910 F.2d 686 (10th Cir.1990); In re Vann, 136 B.R. 863 (D.Colo.1992). The lumping of thousands of dollars of time under one general billing category is inconsistent with this requirement. In re Vann, Ibid.
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