In re Moss

United States Bankruptcy Court, E.D. Virginia, Richmond DivisionFeb 13, 2001
Case No. 98-38727-T, Chapter 13 (Bankr. E.D. Va. Feb. 13, 2001)

Case No. 98-38727-T, Chapter 13

February 13, 2001

Laura Taylor Alridge, Esquire, Carl M. Bates, Esquire, G. Russell Boleman III, Esquire, Mark C. Leffler, Esquire, Steven P. Richards, Esquire, Boleman Law Firm, P.L.C., Richmond, VA, Counsel for Debtors.

Robert E. Hyman, Esquire, Richmond, VA, Chapter 13 Trustee.


DOUGLAS O. TICE, JR., Chief Judge.

Hearing was held on January 31, 2001, on debtors counsel's supplemental fee application. Counsel for debtors filed the application on January 11, 2001, requesting $1,500.00 in additional legal fees beyond the $1,250.00 in previously contracted fees and costs. Debtors' counsel itemized additional services relating to Wachovia Mortgage's motion for relief from stay, plan modifications associated with a vehicle surrender, Wachovia Bank's motion for relief from stay, further plan modifications associated with a vehicle surrender, and Ford Motor Credit's motion for relief from stay. No objections were filed to the supplemental fee application. At the conclusion of the hearing, the court took the application under advisement.

After review of counsel's fee application and supporting time detail, the court has determined that counsel for debtors' billing detail under the original fee application did not exhaust the entire original fee amount of $1,250.00 requested, even when total costs requested of $215.13 were subtracted from the "cushion" of fees billed but not yet earned. Similarly, there is routine work associated with representation of chapter 13 debtors that must be deducted from the additional hours billed in this supplemental fee application. Therefore, the court finds it necessary to reduce the award of additional fees and costs to counsel for debtors under the supplemental fee application at issue. Counsel's total additional fees of $1,500.00 will be reduced to a supplemental award of $913.63 for the reasons discussed below.

$966.50 in attorney and paralegal time was billed according to the detail supplied for the original portion of work performed for debtors, according to the time detail supplied with the supplemental fee application now at issue before the court. Subtracting $966.50 from the $1,250.00 originally billed, the remaining "cushion" of fees billed but not yet earned is $283.50, from which the total requested costs of $215.13 are subtracted. Therefore, a remaining reduced "cushion" of $68.37 of fees billed but not yet earned results, and should be deducted from the supplemental fee amount currently requested. See pg. 4 for further detail.

When counsel seeks an award of additional fees, the court expects counsel to demonstrate that the total fee requested is reasonable in light of all surrounding circumstances. See In re Harris, No. 96-36765-T, 1998 WL 408896, at *2 (Bankr.E.D.Va. Apr. 14, 1998); see 11 U.S.C. § 330(a)(3) and (a)(4)(B). Further, even absent objections, "the court has a duty to review professional compensation awards for reasonableness." In re Harris, 1998 WL 408896, at *1. In the final analysis of a supplemental fee application, the "total fee still must pass muster under the standards for determination of reasonable compensation." Id. at *2. The court's reasonableness evaluation takes into consideration twelve factors:

(1) the time and labor expended; (2) the novelty and difficulty of the question raised; (3) the skill required to properly perform the legal services rendered; (4) the attorney's opportunity costs in pressing the instant litigation; (5) the customary fee for like work; (6) the attorney's expectations at the outset of the litigation; (7) the time limitations imposed by the client or circumstances; (8) the amount in controversy and the results obtained; (9) the experience, reputation and ability of the attorney; (10) the undesirability of the case within the legal community in which the suit arose; (11) the nature and length of the professional relationship between attorney and client; and (12) attorney's fees awards in similar cases.

Id. at *3 n. 1.

Ordinarily, the flat fee charged for debtor representation in a chapter 13 bankruptcy such as this case, should cover such services as "interviews with the client, contacting creditors . . . and verifying other information for the statements and schedules, preparation of [the] petition, schedules and a confirmable plan, attendance at the § 341 meeting of creditors, and . . . attendance to other more routine matters encountered in the case." Id. at *1. In addition, in those instances when problems can be anticipated by counsel, the flat fee charged for legal services in the first instance should encompass such predictable services.

However, additional, non-routine legal services may warrant an award of supplemental compensation. For example, additional services usually relate to a client's ongoing financial problems, and most frequently involve objections to confirmation of debtor's plan and creditors' motions for relief from stay. Here, there were three motions for relief from stay and two plan modifications necessitated by vehicle surrenders. The court finds the additional fees billed for the two plan modifications to be objectionable and questions the reasonableness of counsel's additional time charges for preparing modified plans in instances that might have been anticipated within the realm of representation of chapter 13 debtors. Therefore, some adjustment of the additional compensation charges is warranted.

First, upon examination of the time detail and billing records attached to counsel's application, the court finds that counsel's additional fees of $1,350.00 for 9.0 hours should be reduced by 2.8 hours, and counsel's related additional paralegal time of $240.50 for 3.7 hours should be similarly reduced by 2.1 hours for time inappropriately billed for the two routine plan modifications the court deems capable of being anticipated by debtor's counsel. The total charges for attorney and paralegal time billed for additional services (two plan modifications and three motions for relief from stay) is $1,538.50, so after the reduction associated with the plan modifications that amounted to $556.50, the court finds that counsel is reasonably entitled to $982.00 in total additional attorney and paralegal fees subsequent to the § 341 meeting.

The plan had to be modified twice to reflect the surrender of two vehicles by debtors, which amounted to charges of 2.8 hours in additional attorney time and 2.1 hours in additional paralegal time. The total fees associated with the additional attorney time are 2.8 hours x $150.00 per hour for a total of $420.00. The total fees associated with additional paralegal time are 2.1 hours x $65.00/hour for a total of $136.50. Thus, total additional attorney and paralegal time charged for the two plan modifications is $420.00 + $136.50, or $556.50.

9.0 hours of additional attorney time at $150.00 per hour total $1,350.00. In addition to the $1,350.00 in attorney time, 2.9 hours of additional paralegal time at $65.00 per hour totals $188.50. The combined total for additional services including attorney and paralegal time is $1,538.50.

However, there is a second aspect of counsel's supplemental application that warrants a similar reduction. From the outset, counsel's fee request seems slightly higher than necessary, even before consideration of the additional services component. Specifically, the legal fees (including attorney and paralegal time) charged from the initial client interview through representation at the § 341 meeting amount to $966.50. Subtracting the $966.50 in initial hours billed from the original amount of fees requested for allowance by the court of $1,250.00, it is apparent that there is an approximate $283.50 cushion to apply to the attorney's performance of additional services after the § 341 meeting, and if possible, also to the total administrative costs accrued by counsel. Even deducting the total costs included in counsel's supplemental application of $215.13, the court finds a resulting cushion of $68.37 that should be applied to fees charged for additional services. Therefore, the previously reduced award for additional services of $982.00 will be further reduced by the $68.37 cushion, for a resulting allowance of total additional compensation in the amount of $913.63. Accordingly,

An alternative calculation method results in this same total of $913.63. $1,250.00 was previously awarded in fees to counsel, and from that amount, $966.50 in billed attorney and paralegal time for initial services through the § 341 meeting should be subtracted. This results in a total cushion of $283.50 from the initial billing to apply to costs and additional services. If $215.13 in total costs is subtracted from this cushion, a resulting cushion of $68.37 remains. Then, from the $1,538.50 in additional time billed, this cushion of $68.37 must be subtracted. The resulting total of $1,470.13 must be further reduced by the $556.50 in attorney and paralegal fees associated with the two routine and reasonably-anticipated plan modifications that the court deems inappropriate to pass along in a bill for additional services. The final calculation results in an award of supplemental fees and costs for debtors' counsel of $913.63 (under either method of calculation).

IT IS ORDERED that counsel for debtors is entitled to an award of supplemental fees and costs in the reduced total amount of $913.63.