In re Debtor's Attorney Fees in Chapter 13 Cases, 07-MP-00002-MGW.

• Decision Date: 31 August 2007
• Docket Number: No. 07-MP-00002-MGW.,07-MP-00002-MGW.
• Citation: 374 B.R. 903
• Parties: In re DEBTOR'S ATTORNEY FEES IN CHAPTER 13 CASES.
• Court: U.S. Bankruptcy Court — Middle District of Florida

374 B.R. 903

In re DEBTOR'S ATTORNEY FEES IN CHAPTER 13 CASES.

No. 07-MP-00002-MGW.

United States Bankruptcy Court, M.D. Florida, Tampa Division.

August 31, 2007.

ORDER ESTABLISHING PRESUMPTIVELY REASONABLE DEBTOR'S ATTORNEY FEE IN CHAPTER 13 CASES

PAUL M. GLENN, Chief Judge, MICHAEL G. WILLIAMSON, K. RODNEY MAY and CATHERINE PEEK McEWEN, Bankruptcy Judges.

This order sets forth the procedures that will generally be followed by the judges of the United States Bankruptcy Court for the Middle District of Florida, Tampa Division ("Tampa Division Judges" or "Court"), with respect to the attorneys' fees to be routinely allowed without a fee application and supporting time records for attorneys representing chapter 13 debtors in cases before the Tampa Division Judges.

Procedural Background

Sections 329 and 330 of the Bankruptcy Code, Title 11, United States Code,¹ permit the Court to determine the reasonable value for services provided by the attorney for the debtor in a chapter 13 case. In this regard, the Tampa Division Judges have generally followed the procedures ("Newman Procedures") set forth in the case of In re Newman, 2003 WL 751327 (Bankr.M.D.Fla. February 18, 2003) ("Newman"), which establishes a presumptively reasonable fee to be allowed debtor's counsel and also the requirements for the allowance of such fee. Newman recognizes, however, and this order reaffirms, that any attorney may choose not to charge and seek an award of a presumptively reasonable fee and may instead file a traditional fee application, which will be reviewed by the Court using the lodestar approach and the factors set forth in section 330 and in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir.1974).

The utility of a presumptively reasonable fee, also called a precalculated lodestar amount² is well described in In re Cahill, 428 F.3d 536 (5th Cir.2005). A presumptively reasonable fee

... address[es] the need for both efficiency and flexibility in handling the large number of Chapter 13 cases that bankruptcy courts ... review each year.... This [presumptively reasonable fee] aids bankruptcy courts in disposing of run-of-the-mill Chapter 13 fee applications expeditiously and uniformly, obviating the need for bankruptcy courts to make the same findings of fact regarding reasonable attorney time expenditures and rates in typical cases for each fee application that they review.

. . .

[A presumptively reasonable fee] anticipate that bankruptcy courts evaluating traditional fee applications will continue to analyze and adjust fee applications on a case-by-case basis using the lodestar analysis and flexible Johnson factors, ensuring that the lodestar amount in an atypical case will be adjusted to reflect the specifics of that case. This approach strikes the proper balance between the need for efficient disposal of attorneys' fee applications and the need for a flexible approach that provides for adjustment of the lodestar when necessary.

In re Cahill, 428 F.3d at 540-41 (footnotes and citations omitted); see also In re Eliapo, 468 F.3d 592, 598 (9th Cir.2006) (describing "the "virtues" of a presumptively reasonable fee); In re Howell, 226 B.R. 279 (Bankr.M.D.Fla.1998) (standardized fee provides simplicity, efficiency, economy, and certainty); cf. Hensley v. Eckerhart, 461 U.S. 424, 437, 103 S.Ct. 1933, 76 L.E d.2d 40 (1983) (noting that "[a] request for attorneys' fees should not result in a second major litigation"). Indeed, many bankruptcy courts throughout the nation have established presumptively reasonable fees. See, e.g., cases cited above and in Newman and In re Williams, 357 B.R. 434, 439 n. 3 (6th Cir. BAP 2007); In re Chapter 13 Fee Applications, 2006 WL 2850115 (Bankr.S.D.Tex. October 3, 2006); In re Murray, 348 B.R. 917 (Bankr. M.D.Ga.2006); In re Walker, 319 B.R. 917 (Bankr.S.D.Ga.2004); In re Smith, 306 B.R. 5 (Bankr.M.D.Ala.2004)³

As a result of additional requirements contained in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), the passage of time, and efficiencies in the administration of chapter 13 cases created by the Court over the last several years, the Tampa Division Judges determined that' it was appropriate to review their current procedures with respect to the presumptively reasonable fee for the attorneys for debtors in chapter 13 cases. Accordingly, by administrative order of May 2, 2007, ("May 2nd Order") the Tampa Division Judges solicited written comments from members of the public and the bar with respect to the services required of the attorney for the debtor in a chapter 13 case in the Tampa Division of this Court, including the type, nature, and extent of the legal services necessary to adequately represent a chapter 13 debtor, the requisite skill level inherent in such services, whether some of such services can be performed by a paralegal or other non-attorney staff of the attorney for the debtor, the amount of time reasonably necessary to perform such services, an appropriate hourly rate for the professional performing such service, and the reasonableness of the overall fee to be charged by the attorney for the debtor in a chapter 13 case. In addition, the Court requested input with respect to the timing of the payment of such fees and the priority of payments to be made by the debtor towards the attorney's fee in the Chapter 13 Plan.

The May 2^nd Order was served on approximately 800 attorneys who are registered users of the Court's electronic filing system, representing most, if not all, of the attorneys who regularly appear before the Tampa Division Judges in the representation of chapter 13 debtors and secured and unsecured creditors. In response, numerous attorneys filed papers with the Court indicating an interest in being heard with respect to the issues raised by the May 2^nd Order. In addition, the Court appointed an attorney to serve as attorney ad litem to represent the interests of unknown future chapter 13 debtors ("Attorney Ad Litem").

A full-day evidentiary hearing ("Hearing") was conducted on July 13, 2007, with respect to the issues raised by the May 2^nd Order and, the responses thereto. During the Hearing, the Court sitting en banc heard from many attorneys who regularly represent chapter 13 debtors and secured and unsecured creditors, the two standing chapter 13 trustees assigned to the Tampa Division, a representative of the office of the United States Trustee, an experienced bankruptcy paralegal, and the attorney for the Attorney Ad Litem. In addition, the Court considered 17 exhibits comprising hourly rate surveys, orders approving fee applications in typical and complex chapter 13 cases, time records, comparisons of legal services required pre- and post-BAPCPA, surveys of similar fees in other states and of how fees are paid in other states, and other statistical information.

Having considered the proffers, testimonial and documentary evidence, and the arguments made by all parties at the Hearing, it is the conclusion of the Tampa Division Judges that it is appropriate at this time to modify Newman Procedures as set forth below.

Modified Newman Procedures

The Newman Procedures and the rationale as well as the terms and conditions under which attorneys representing chapter 13 debtors are allowed a presumptively reasonable fee ("Presumptively Reasonable Fee") shall continue to apply to chapter 13 cases filed before the Court with the following modifications:

1. The Presumptively Reasonable Fee for cases filed after the entry of this order is increased as follows:

a. For plans of a duration of 36 months or less: $3,300;

b. For plans of a duration of 60 months: $3,600.

e. For plans of a duration between 36 and 60 months: the prorata portion of $300 ($3,600-$3, 300) based on the months in excess of 36 divided by 24, plus $3,300. For example, for a 48-month plan, the additional fees will be: $300X (48-36)/24 or $300X12/24=$150, for a total of $3,450.

2. The "soup to nuts" approach to services to be provided as mandated by Newman is modified to allow a limited list of "a la carte" matters for which an attorney may be compensated as an administrative expense to be paid under the terms of the confirmed plan. These items are limited to the following matters ("a la carte items") for which a fee of $250 if no hearing is required or $350 if a hearing is held will, be allowed as an addition to the Presumptively Reasonable Fee:

a. Motions for, reconsideration of an order dismissing the case;

b. Motions to amend or modify plan;

c. Motions for approval of sale or refinancing;

d. Motions to approve settlements of any causes of action, such as, for example, personal, injury or a workers' compensation claim;

e. Motions to approve early termination of chapter 13 plan; and

f. Motions to impose the stay pursuant to section 362(c)(4).

The additional fee may be requested in a motion meeting the description of any of the a la carte items. The Court may then include in the order on the motion an award of the presumptively reasonable fee fore the services in connection with the motion.

3. A fee of $250 will be allowed in addition to the Presumptively Reasonable Fee if non-Florida exemptions apply to the debtor.

4. Other than the a la carte items and the application of non-Florida exemptions, all services rendered by the debtor's attorney and expenses incurred in connection therewith, except the expenses noted below in this paragraph, from the beginning of the representation through 36 months after the date of the order, confirming the plan shall be fully compensated by the base Presumptively Reasonable Fee. An attorney may collect an additional pre-petition amount for the following expenses: the statutory filing fee and any fee charged by a third-party provider for credit counseling and the education course required by BAPCPA.

5. If an extraordinary matter ("Extraordinary Matter") arises during the course of the...