In re Savell

517 B.R. 680, 2014 Bankr. LEXIS 4063, 2014 WL 4748515
CourtUnited States Bankruptcy Court, W.D. Louisiana
DecidedSeptember 19, 2014
DocketNo. 11-11805
StatusPublished
Cited by1 cases

This text of 517 B.R. 680 (In re Savell) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Savell, 517 B.R. 680, 2014 Bankr. LEXIS 4063, 2014 WL 4748515 (La. 2014).

Opinion

MEMORANDUM OPINION AND ORDER

JEFFREY P. NORMAN, Bankruptcy Judge.

It has been common practice in the Shreveport division for attorneys to seek and obtain court approval for the payment of some post-petition and post-confirmation attorney’s fees directly from debtor(s). These include “no look” post-confirmation attorney’s fees pursuant to the Amended Standing Order Regarding “No Look” Fees in Chapter 13 Cases entered September 19, 2013, and post-petition fees not encompassed by the standing order for which a fee application is required. The “No Look” standing order includes a no look fee for certain post-confirmation legal services which are enumerated in the order. These fees include $500.00 for the defense of a motion for relief from the stay, the defense of a motion to dismiss, or a plan modification, $750.00 for the combined defenses of a motion for relief from the stay or motion to dismiss and a plan modification resulting therefrom, $350.00 for post-confirmation motions to sell, incur debt or “substitute collateral-use of cash collateral,” and finally $250.00 for post-confirmation objections to claims. In these instances reviewed by the court, these fees were paid directly by the debtor to the attorney prior to seeking court approval of the post-petition fees or the filing of any Rule 2016(b) statement. The fees were paid by the debtor directly to the attorney or law firm who then by motion, application, or by way of response sought court approval of the prior direct payment from the debtor(s).

Pre-confirmation attorney’s fees, except retainer amounts, are always paid by the Chapter 13 Trustee pursuant to that same “No Look” standing order or by fee application. Many Chapter 13 cases are filed in this division with no attorney retainer and are commonly referred to as “no money down” cases. This bifurcation of pre-con-firmation fees being paid by the Chapter 13 Trustee and some but not all of the post-petition and post-confirmation attorney’s fees being paid directly by the debt- or is troubling to the court, and this practice predates this Judge’s appointment. The court sua sponte has raised the issue of whether these payments are appropriate, if they violate the Bankruptcy Code and/or Bankruptcy Rules, and if, for the orderly administration of Chapter 13 cases, the court should require all Chapter 13 attorney fees post-petition to be exclusively disbursed by the Chapter 13 Trustee. This is not an insignificant issue, as legal fees disbursed by the Chapter 13 Trustee based on her last audit published by the United State Trustee in 2013 to[683]*683taled $7,480,383, and the court is unable to track or account for the fees that were directly paid by debtor(s) to their lawyers. The amount paid to debtors’ attorneys by the Chapter 13 Trustee is 12% of the total amount disbursed by the Chapter 13 Trustee ($62,624,577) in her fiscal year of 2013 (see http://www.justice.gov/ust/eo/private_ trustee/data_statistics/chl3.htm). Post-confirmation services of the types described by the “No Look” fee order are routine, common, and incur in almost every Chapter 13 case. In a division with a current Chapter 13 case load of 10,473 (per the court’s August 2014 Statistical Reporting), if just a quarter of the pending Chapter 13 cases each year requires post-confirmation legal services with a no look post-confirmation attorney’s fee that averages $450.00, then over $1,000,000.00 in “No Look,” post-confirmation fees are paid to attorneys each year in the Shreveport division.

The Chapter 13 Trustee argues that debtor’s counsel is prohibited from accepting post-petition fees directly from a debt- or without prior disclosure to the court and urges that a formal Disclosure of Compensation be filed whenever an attorney is to be compensated for work performed. The Trustee bases her arguments primarily on four (4) sources of law: 1) F.R.B.P. 2016(b); 2) 11 U.S.C. § 329; 3) 11 U.S.C. § 330; and 4) Barron v. Countryman, 432 F.3d 590 (5th Cir.2005). It is important to note, however, that the Trustee raises this argument only after being directed by the court to brief the issue and that the Trustee’s office appears to have remained silent on the issue for many years until this court brought the matter to her attention.

Debtor’s counsel argues that the procedure for allowing post-petition direct payments of “No Look” fees in select circumstances “can be efficient, economical, and in the best interest of the debtor and the estate.” Counsel points out that the “No Look” fee of $500.00 for his services in this case is not an issue, in that it is “a pre-calculated lodestar no look fee for [the] post-confirmation defense of a motion for relief from stay pursuant to Section (4)(A) of the Amended Standing Order Regarding “No-Look” Fees in Chapter 13 Cases,” entered on September 19, 2013. Counsel claims the $500.00 fee is not at issue, as it is predetermined, and that § 330 is only important in so far as its requirement for notice and hearing. Debtor’s counsel further claims that 11 USC § 329 is only implicated for disclosure requirements and review for excessiveness, in that post-petition monies paid to counsel constitute property of the estate.

Finally, counsel suggests a procedure for use by this court whereby a direct payment by a Debtor to his attorney for post-petition services could be made that would be in compliance with Barron. That procedure is as follows: (1) a detailed written contract between the debtor and counsel would be executed; (2) the contract would reflect that the fee is a “fixed no look fee for a designated service that will be held in trust and will not become property of the attorney until approved by the court;” and (3) counsel will then file a Notice of Application to Approve Direct Payment as Compensation for Post-Petition Services, which will disclose the total amount previously approved for all services rendered in the case and will comply with Rule 2002(6).

FINDINGS OF FACT

Debtor, Kelly Deon Saveli filed a voluntary petition for relief under Chapter 13 on July 15, 2011, and was represented by Mr. Sam Henry, IV. Pursuant to F.R.B.P. 2016(b), Mr. Henry filed his Disclosure of Compensation and therein certified that he agreed to accept the “No Look” fee of $2,800.00, which was not objected to. On [684]*684September 27, 2011, a plan was confirmed and the $2,800.00 fee for Mr. Henry was approved. Subsequent thereto, but before debtor changed counsel, all of the $2,800.00 fee was paid to Mr. Henry.

Nearly three (3) years later, on July 23, 2014, a Motion for Relief From Stay was filed by Select Portfolio Servicing (hereafter “Select”), requesting that the Automatic Stay on debtor’s principal residence be lifted due to a post-petition default in her direct payments to Select. At that time the debtor’s original counsel was not practicing in this division, and the debtor sought the services of another attorney, Mr. Robert Raley, for purposes of enrolling as new counsel and responding to the motion for relief. Debtor’s counsel then filed a Motion to Enroll, which was granted on July 28, 2014.

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Cite This Page — Counsel Stack

Bluebook (online)
517 B.R. 680, 2014 Bankr. LEXIS 4063, 2014 WL 4748515, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-savell-lawb-2014.