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In a Chapter 13 bankruptcy, court schedules can lay out the amount of money that an attorney may be awarded. But there are limits to a bankruptcy attorney’s fees in a Chapter 13 bankruptcy, as we see in a recent First Circuit Court of Appeals decision.
In this case, a bankruptcy attorney challenged the fees he was awarded in a Chapter 13 bankruptcy proceeding, claiming that the fees were too meager.
Attorney L. Jed Berliner was retained by debtors to represent them in their Chapter 13 proceedings in 2008. The debtors owed over $115,000 in unsecured debt and had a good income. Berliner anticipated $4,000 in attorney fees and noted this in the retainer agreement. He was paid $3,684 by the debtors.
The Chapter 13 bankruptcy plan was approved by the bankruptcy court. The attorney then filed an application for attorneys' fees with the court.
In an itemized report of the hours he put into the case and after crediting the amount that the debtors paid him, Berliner requested an additional $8,173.36 in fees and expenses. The bankruptcy trustee objected, claiming that the fees were excessive.
The bankruptcy court agreed with the trustee and set the fees at the amount of the retainer, saying that the case was relatively uncomplicated.
Berliner eventually took his request to the First Circuit Court of Appeals. In its rationale, the court noted the standard for awarding attorneys' fees in a Chapter 13, stating that the fees may be awarded in accordance with the benefit and the necessity of the services rendered. Other factors to considered include the expertise of the attorney; the hours expended by the attorney and the reasonableness of the time expended given the nature of the bankruptcy; the reasonableness of the billing rates; and the importance and complexity of the case.
In rendering its decision, the court noted that Berliner had expended duplicative and unnecessary hours, though his hourly billing rate was reasonable. It also noted that the case was relatively uncomplicated and it rejected the attorney's claim that the client required excessive hand-holding which led to an increase in hours.
Thus, the Appellate Court affirmed the lower court's decision and did not grant Berliner's request for attorneys' fees.
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