JAMES S. STARZYNSKI, Bankruptcy Judge.
The Amended Application for the Allowance of Fees for the Period of February 23, 2009 to November 30, 2009 (doc 25), filed by Debtor's counsel ("Counsel"), together with the objection thereto filed by the Chapter 13 Trustee (doc 26), came before the Court for an oral argument on February 9, 2010. Based on the oral argument and the record, the Court grants the application but in a smaller amount than requested by Counsel. Specifically, the Court rules that Counsel's rate should be allowed at the rate of $200 per hour for the work done, 1.2 hours of Counsel's time should be subtracted from the billing, and the time for preparing the fee application should be allowed at one hour.
Counsel appeared and argued on behalf of the application; the Chapter 13 Trustee, with the permission of the Court, did not appear. The Debtor did not take a position on the fee application; the Court assumes that the Debtor saw and approved the application before it was filed.
The application seeks approval of a total of $4,635.73, comprised of $3,450.00 of attorney fees for Counsel at the rate of $250 per hour (13.8 hours), $611.00 for paralegal services at $65 per hour (9.4 hours), $294.53 for reimbursement of costs (including $274 of the filing fees), $278.79 for reimbursement of New Mexico gross receipts tax ("GRT") on the fees, and $1.41 for reimbursement of the GRT on the costs.
The Chapter 13 Trustee's Objection to Application for Compensation raised two objections, to the rate of $250 per hour as too high and to the failure to timely file the Statement of Financial Affairs that resulted in a continued section 341 meeting.
The CM file shows that the case was filed on August 26, 2009 (doc 1); the section 341 meeting was first set for, and was initially conducted on, October 7, 2009; on October 7 the Chapter 13 Trustee continued the section 341 meeting to October 21, 2007, on which date she conducted and concluded the continued meeting; the Debtor successfully moved for valuation of the 2005 Dodge Ram pick up (docs 14 and 18) without objection from the creditor
The time sheets reflect representation that commenced on February 23, 2009 and preparation of the case that began on May 1, 2009, and filing, as noted above, on August 26, 2009. Doc 25, items 3 and 4. The time sheets show the extensive and appropriate use of a paralegal to do much of the work, a necessity for cost-efficient representation of chapter 13 debtors. And they show a billing for Counsel of .2 hour ($50) on October 20, 2009 for preparation for the continued 341 meeting and one hour ($250) on October 21, 2009 for attending the continued section 341 meeting.
The CM file, including items such as the schedules and statement of financial affairs, does not disclose or suggest anything unusual about the case. Debtor owned a home valued at $125,000 securing repayment of two mortgage notes totaling $106,000
The management of the case was also quite simple, about as simple as it gets in chapter 13. The time sheet entries of October 7 and October 22 do not show any negotiations with the creditor concerning valuation of the vehicle, and the standard form plan required only a few blanks to be filled in (doc 4). There were no objections to the valuation motion or to the plan.
At oral argument Counsel correctly framed the discussion: the ultimate question
§ 330. Compensation of officers
11 U.S.C. section 330(a).
By these standards, and based on the evidence
To begin with, Counsel's services overall clearly benefitted both the estate and the individual debtor. Therefore the application is allowable in some amount.
However, Counsel should not be compensated for the time spent preparing for and attending a second section 341 meeting occasioned by Counsel's oversight in failing to prepare and file the SOFA. That oversight benefitted neither the estate nor the Debtor and therefore cannot be compensated.
Regarding the proposed $300.00 flat charge requested for preparing and filing the fee application, increased by costs and GRT on both the $300 and the costs, for a total of $351.21, Exhibit 1 to the application does not say how much time was incurred by whom in preparing the application. A reasonable fee for preparing a fee application is compensable, of course. In re Ewing, 167 B.R. at 236; In re Fibermark, Inc., 349 B.R. 385, 397 (Bankr.D.Vt.2006) ("Reasonable time spent preparing a fee application is compensable...." Citation omitted.). The Court finds that one hour should be a reasonable time for a simple Chapter 13 fee application. Counsel should review the monthly bills each month when they are sent to the client, and adjust them as needed.
On the issue of what rate should be permitted, this judge's practice up to now
On the other hand, ruling on the hourly rate in the context of a fee application rather than at the outset in an employment application permits the parties and a court to judge the value of services after the fact rather than predicting it beforehand. That is, in addition to counsel setting out the number of hours billed and what was accomplished for the estate and the debtor, counsel may also seek approval of the billing rate in the context of the fee application.
This approach of ruling on the hourly rate in such a manner that takes into account the value of the results in determining the hourly rate of counsel might at first blush seem to run afoul of the ruling in Perdue v. Kenny A. ex rel. Winn, ___ U.S. ___, 130 S.Ct. 1662, 176 L.Ed.2d 494 (2010) (in 42 U.S.C. section 1988 litigation, fee enhancements above lodestar figure are prohibited if based on factors incorporated into the lodestar calculation; fee enhancements above the lodestar consequently will be rare). In Perdue, the United States Supreme Court reversed a 75% fee enhancement in a civil rights case in which counsel sought compensation under section 1988(b).
Other than the commonality of the lodestar as the subject of Perdue and of this case, which commonality arises from the fact that the lodestar methodology for calculating fees became commonplace after the practice of hourly billing had become widespread, id. at 1672, the holding in Perdue is irrelevant for this inquiry. The underlying inquiry in section 1988 fee cases is whether the lodestar fee is adequate to attract competent counsel to do that sort of work for plaintiffs. Id., at 1674, citing Blum v. Stenson, 465 U.S. 886, 897, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). While Counsel made that very argument for a higher rate in chapter 13 cases, the proof submitted by Counsel and this Court's observations of chapter 13 practice conducted before it suggest no significant dearth of attorneys competently representing chapter 13 debtors. Some examples of the enormous differences between chapter 13 debtor work and civil rights contingency work illustrate why that is the case. Chapter 13 work involves relatively small fees for each case—typically a few thousand dollars—and between the usual up-front payment and relatively quick and sure distribution from the chapter 13 trustee, chapter 13 debtor's counsel are reasonably assured (albeit not guaranteed) of payment. In major civil rights' cases, on the other hand, the required outlay of resources may be massive (in Perdue, approximately 24,000 hours of attorney and paralegal time); Kenny A. ex rel. Winn v. Perdue, 454 F.Supp.2d 1260, 1287 (N.D.Ga. 2006), aff'd 532 F.3d 1209 (11th Cir.2008), rev'd and remanded ___ U.S. ___, 130 S.Ct. 1662, 176 L.Ed.2d 494, payment often comes only years later, Perdue at 1675, it may not come at all, id., or it may come in a reduced amount, and it may be subject to advancing costs of litigation (in Perdue, $1.7 million over a three-year period with no interim reimbursement; Kenny A. ex rel. Winn v. Perdue, 454 F.Supp.2d at 1288). Perdue, at 1676. Fortunately none of these perils or burdens exist for the most part in chapter 13 debtor work, and thus the concern addressed in section 1988(b) to ensure incentives to counsel to undertake civil rights cases does not exist for chapter 13 debtor representation. More directly, section 1988(b) addresses the specific problem that its plaintiffs almost by definition do not have the resources to fund the litigation they need to vindicate their rights. Chapter 13 debtors, on the other hand, if they are appropriately in a chapter 13 case, presumably do have the resources to pay their attorney. In consequence, Perdue does not preclude this Court from adjusting the rate charged by a chapter 13 debtor's attorney
With that preface, the Court considers the issue of the rate charged by Counsel. The Court first notes that, in complying with section 330(a)(3)(F)— "whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title"—Counsel submitted a chart showing only the range of fees charged by other chapter 13 debtors' attorneys. Exhibit 3. He did not submit evidence of rates charged by creditors' counsel, nor did he submit any evidence of rates charged in any comparable area of law. And what exhibit 3 showed was a range of hourly rates from $185 to $200. In consequence, the only evidence this Court has on the issue of comparable rates shows Counsel's rates as an outlier on the upper end of the rates scale.
Counsel also argued that his reputation in the legal community was such that 90% of his cases were referrals from other attorneys, and that he tended to get the more complicated, business type of chapter 13 cases.
More broadly, the Court concurs strongly with the rationale and the conclusion in Romero, whereby Counsel was permitted to charge $200 per hour. Acknowledging that chapter 13 cases are not at all necessarily simple or routine
Romero, at *5-6. (Footnotes omitted.) To be clear, the Court is not discouraging any attorney who is competent to manage a complex chapter 11 case from representing a chapter 13 debtor; indeed, given the rising need for competent debtor representations in the current economic circumstances, such representation is welcome. Rather, the limitation is only on what hourly rate the chapter 13 estate and debtor should be charged.
Counsel argued that simpler cases result in less time spent, and therefore result in a lower fee even with a higher hourly rate. In a similar vein, Counsel also urged that if the Court determined that overall the fees charged were too high, the Court could adjust the total fee by reducing the hours instead of the rate.
More to the point, a straightforward accurate accounting for the time spent on a case is most useful for every participant in the process. Reducing the hours for which counsel may be compensated makes sense when time has been inappropriately billed for some task, either because the task did not need to be performed to begin with (e.g., attending a continued section 341 meeting because counsel failed to prepare and file a critical document) or because too much time was devoted to the task. This approach addresses the "too much time spent on the problem" issue directly. Reducing hours is a very indirect and therefore much less useful way of addressing the issue of what rate should be charged.
Based on the foregoing, the Court has recalculated what Counsel is allowed for the application in Exhibit A, attached hereto. Based on the foregoing analysis, the Court allows the application in the total amount of $3,829.82, which sum, less the $1,000 retainer drawn down by Counsel, entitles Counsel to payment from the estate of $2,829.82. An order conforming to this memorandum opinion will enter.
EXHIBIT A to MEMO OPINION IN In re: Jeffrey David Heise, Debtor. No. 13-09-13824 SA ------------------------------------------------------------------------ Biller Rate Time Lodestar Add GRT* Amount Total ------------------------------------------------------------------------ 1H09 ------------------------------------------------------------------------ Counsel $ 200.00 .8 $ 160.00 6.750% $ 10.80 $ 170.80 ------------------------------------------------------------------------ Paralegal $ 65.00 1.9 $ 65.00 6.750% $ 4.38 $ 69.38 ------------------------------------------------------------------------
Costs $ 1.40 6.750% $ 0.09 $ 1.49 ------------------------------------------------------------------------ 2H09 ------------------------------------------------------------------------ Counsel $ 200.00 11.8 † $ 2,360.00 6.875% $ 162.25 $ 2,522.25 ------------------------------------------------------------------------ Paralegal $ 65.00 7.5 $ 487.50 6.875% $ 33.51 $ 521.01 ------------------------------------------------------------------------ Costs $ 23.13 6.875% $ 1.59 $ 24.72 ------------------------------------------------------------------------ 1H10 ------------------------------------------------------------------------ Fee app prep $ 200.00 1.0 $ 200.00 6.625% $ 13.25 $ 215.25 ------------------------------------------------------------------------ Noticing $ 29.00 6.625% $ 1.92 $ 30.92 ------------------------------------------------------------------------ PLUS: ------------------------------------------------------------------------ Filing fee $ 274.00 $ 274.00 ________________________________________________________________________ GRAND TOTAL: $ 3,829.82 ________________________________________________________________________ Note: The numbers are drawn from the exhibits to the fee application. Doc 25.
