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scheduled hearings; a show cause order was entered as to 21 motions, asking the firm to demonstrate that it intended to pursue those to hearing, and the court found a pattern of abusive filings with no intent to proceed to hearing. The 21 filings were in violation of Rule 9011(b) (3)'s requirement for evidentiary support. In re Cabrera-Mejia, 402 B.R. 335 (Bankr. C.D. Cal. 2008).
Fee application filing eliminates option of standard fee. When the bankruptcy court reduced the requested fee, making findings of excessive time, the debtor's attorney lost the opportunity to ask for "at a minimum [the] standard" or no-look fee. Colpitts v. Eck (In re Rogers), 401 B.R. 490 (B.A.P. 10th Cir. 2009).
Flat fee not necessarily reasonable. When the Chapter 13 trustee objected to flat fee of $3,500 agreed upon between debtor and attorney, the court examined whether a flat fee is necessarily reasonable, holding that the is no per se reasonable or unreasonable fee. Reasonableness under § 330 depends on the facts and circumstances of each case, observing that the trustee or other party should not object to a fee before consulting with the attorney about the facts and circumstances underlying the fee requested. If dissatisfied with the explanation and objection is filed, the attorney even in a flat fee case has the burden to produce evidence of the unique facts and circumstances, as well as the attorney's experience, to justify the requested fee. In re Dabney, 417 B.R. 826 (Bankr. N.D. Ga. 2009).
Portions of no-look fees not paid prepetition were dischargeable and attorney's acceptance of postdated checks violated disciplinary rules. In a motion for disgorgement filed by U.S. Trustee, the court wrote an extensive opinion on issues involving no-look or flat fees in Chapter 7 cases, discussing majority and minority views and holding that those portions of such fees that were not paid prepetition were prepetition debts that were dischargeable in the Chapter 7 cases, and attorneys may not accept postdated checks for such unpaid fees with the expectation that they may cash those checks postpetition; by accepting such checks for dischargeable debts, the attorneys fell into a conflict of interest with their clients under Tennessee's Disciplinary Rule 1.8. Although under Buckeye Check Cashing, Inc. v. Meadows (In re Meadows), 396 B.R. 485 (BAP 6th Cir. 2008), the presentment of a postdated check doesn't violate the automatic stay, other collection activities by the attorneys did constitute stay violations, including telephone calls, letters and charges for returned checks. The debtors' attorneys were obviously aware of the bankruptcy filings, making the violations willful under § 362(k), and some actions were violations of discharge injunctions. Failure of the attorneys to disclose to clients that the postdated checks were dischargeable debts resulted in denial of fees, and all fees collected must be disgorged. In re Waldo, 417 B.R. 854 (Bankr. E.D. Tenn. 2009).
©2010 Keith M. Lundin
