The no-look fee is no good in many bankruptcy cases. It harms debtors, their lawyers, and the system as a whole. It fails to compensate the lawyer for critical work, causing a disincentive to providing proper representation.
We give up a lot when we settle for being paid just the no-look fee.
No-look (or presumptive) fees were instituted to relieve courts of reviewing fee applications in situations where the case was routine. Courts fixed a fee at which they would not look behind the number: it was presumed to be a fair fee for the case. The lawyers who agreed to accept the no-look fee did so in order to stabilize their own case handling procedures. It also enabled lawyers to handle cases without being subject to the vagaries of the whims of their judges.
Courts differ in in their willingness to allow a fee application for fees in excess of the no-look fee. Some judges are open to awarding additional compensation. Others see it akin to an election of remedies: once you chose the convenience of the presumptive fee, you are barred from seeking more. Still others require you to justify in open court why it took more than the no look fee to accomplish your client’s goals.
While the no look fee may work to put a floor under fees in a community and to validate that the case really will take that much, it leads the public to think that bankruptcy representation is a commodity, fungible and routine.
Balderdash! The issues in bankruptcy come in an infinite number of combinations and change through the course of a Chapter 13. We have law that remains new and unsettled, not to mention inconsistent and opaque. We deal with people’s lives, home, businesses and retirement.
Avoiding The No-Look Fee Yields A Happier Client, Happier Lawyer, And Better System
Over time we start looking at the no-look fee as compensation for the bare minimum amount of work a case will take to be successful. There’s no financial incentive to doing more than the bare minimum, is there? We have ethical considerations, to be sure; but there are means of handling a Chapter 13 case that require less work than is optimal without triggering an ethical issue.
If we were getting paid a rate that justified the work, many of us would put the nose to the grindstone as it were. We as an industry would work harder for our clients, creating a better outcome and a more effective system overall. We’d take fewer cases because we’d make more money per case, which would enable our offices to provide a higher level of client care to those we choose to assist.
So Why Don’t We Act In Our Own Best Interests?
In spite of those realities, many bankruptcy attorneys clutch the no-look fee because it’s easier to do so than learn how to draft a compelling fee application.
It’s not just the desire to be paid fairly in a case that drives me to promote filing fee applications. It’s the educational quality of a well written fee app supported by time records on the judges that I treasure.
Recount the issues a case presents, break out the time it takes to do the means test, quantify what endless continuances add to the cost.
Too many of our bankrutpcy judges come from Chapter 11 practice or creditor representation. They find it easy to discount the difficulty of consumer cases because there are fewer zeroes behind the numbers involved.
In the face of that reality, we avoid conflict and stick to the no-look fee.
On Monday, March 23, 2010 at 5:00pm Pacific time / 8:00pm Eastern time I will be teaming up with Jay Fleischman for a one-of-a-kind workshop dealing with the ins-and-outs of fee applications. The workshop will include not only to basics of fee applications in bankruptcy matters but also step-by-step how-to education on getting paid your true value in Chapter 13 cases.
There will be more information tomorrow, at which time a limited number of people will be invited to sign up for the workshop. Look out for more information right here (or by email if you get automatica updates to this blog).
Image credit: S@Z/Flickr