Client buy- in and time records saved a Florida bankruptcy attorney from disgorging fees twice the local average for a no asset Chapter 7. How?
Marilyn J. Hochman is the poster child for the benefit in keeping meticulous time records when you’re representing consumer debtors. Even though you’re likely working on a flat-fee agreement, the need to justify the value of your services is of paramount importance. In a recent case before the U.S. Bankruptcy Court in Orlando, Hochman was the subject of a lengthy two-day hearing on whether her $3,500 legal fee in a standard Chapter 7 bankruptcy case was valid.
After two grueling days of testimony, the court rejected the UST’s motion, finding that even though the fees charged exceeded the local market average, the fee was fair based on the time spent by the attorney on the matter.
Up front, counsel had advised the clients that her fees were higher than many, that she offered a personalized service to clients and offered the debtors a referral to less expensive attorneys. The court found her hourly rate was reasonable for the services she provided (and substantiated with time records).
The back story, discussed in the opinion, included this chilling tidbit: testimony of other volume filers in the area was that “many Chapter 7 attorneys currently charge fees less than the actual cost of providing legal services. Thus many attorneys, even those with extensive experience, actually are losing money with every Chapter 7 case they file”.
The Bankruptcy Code rightfully attempts to ensure that vulnerable debtors benefit from their bankruptcy attorneys by subjecting attorneys’ fees to reasonableness review. This should not be, however, an invitation for the bankruptcy court to impose upon the market what it thinks attorneys fees should be.”
So if your court has “invited” you to accept a standard fee that the court deems reasonable for all, decline the invitation. Go instead to your computer and keep track of your time. Be prepared to justify the flat fee charged, and ask for the real value of your services when representing consumers in Chapter 13 bankruptcy cases.
Not sure how to go about doing all that? Something tells me I can help with that.