Retention, Fee Agreements, Retainers and Billings in Individual Debtor Chapter 11 Cases

by Daniel M. Press and Brett Weiss

Excerpt:

Most consumer bankruptcy attorneys are used to handling cases on a flat-fee basis, with many jurisdictions strictly regulating the fees that can be charged. As a result, the goal of many consumer bankruptcy firms is to standardize procedures and structure work so that attorney time is minimized and paralegal time is maximized.

This article examines the completely different mindset Chapter 11 cases require when it comes to retention, fee agreements, retainers and billings.

Fee Agreements

Unlike most chapter 7 and 13 cases, in which debtors are charged flat fees, virtually all chapter 11 cases are handled on an hourly basis. While proposals have been made about "commoditizing" fees or breaking tasks down to allow progress billing on an hourly basis, due to the requirement to file fee applications before counsel can be paid, the possible reduction of a higher "task fee" from the comparable hourly fee (as often occurs with chapter 13 fees), and the uncertainty involved in how the chapter 11 case will proceed, these proposals have largely failed (with many adopting them losing a lot of money). Billing hourly means that counsel must contemporaneously track time and expenses, in detail. Law firm staff should also track its time; counsel can bill for paralegal, associate and clerk time, and failing to do so can cost a lot of money.

To properly get paid for time, counsel needs contemporaneous, detailed time records. If one does not contemporaneously track time, the court will not approve anything near what is deserved for the work performed, and may not allow any fee at all. "Reconstructed" hourly bills, where time is not contemporaneously recorded, but instead estimated from the tasks performed, are discouraged by the court. [footnote omitted]

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Daniel M. Press is a bankruptcy lawyer with the law firm of Chung & Press, P.C., in McLean Virginia, and Cumberland and Greenbelt, Maryland. A 1988 magna cum laude graduate of Georgetown University Law Center, he was an editor of the Georgetown Law Journal. He received his B.A. from The Johns Hopkins University. After graduating from law school, Mr. Press served as a judicial law clerk for Judge Jaime Pieras Jr. in the U.S. District Court for the District of Puerto Rico.

Mr. Press practices in the Bankruptcy and Federal District Courts in Maryland, the District of Columbia, and the Eastern and Western Districts of Virginia, as well as other U.S. Appellate, District and Bankruptcy Courts around the country. He is a State Chair for the National Association of Consumer Bankruptcy Attorneys, a contributing attorney with the Bankruptcy Law Network, and is a member of the Section Council of the Consumer Bankruptcy Section of the Maryland State Bar Association. He is a regular speaker on bankruptcy and related topics at Continuing Legal Education seminars and programs locally and nationwide.

Brett Weiss has experience in complex individual chapter 7, chapter 11 and chapter 13 bankruptcy cases, and in chapter 11 small business restructuring and reorganization. He represents individual and corporate debtors and creditors in all phases of bankruptcy.
Mr. Weiss is currently the managing partner at Chung & Press, LLC in Greenbelt, Maryland.
Mr. Weiss has received international media attention in connection with the bankruptcy cases he had handled. He has been inter-viewed by Barbara Walters on The View, appeared on the Montel Williams Show, the Today Show, Good Morning America, ABC News with Peter Jennings and German State television, been interviewed on the BBC World Service, appeared on numerous local radio and television programs, and been quoted in Money magazine, The New York Times, The Washington Post and The Baltimore Sun, among others. At the invitation of John Conyers, Jr., Chairman of the House Judiciary Committee, he has twice testified before Congress on bankruptcy and credit issues.
Mr. Weiss has been involved in a number of cases of first impression, with opinions issued by the U.S. Bankruptcy Court, the Maryland Court of Appeals, and the U.S. Court of appeals. He regularly lectures across the country on various aspects of bankruptcy law.