Seal of the United States Department of Justice (Photo credit: Wikipedia)

The United States Trustee Program (USTP), an agency of the U.S. Department of Justice tasked with “overseeing the administration of bankruptcy cases and private trustees,” has issued updated proposed guidelines for attorney compensation in chapter 11 cases with $50 million or more in assets and liabilities.  The bankruptcy code includes in Section 330, factors for the court to consider when determining reasonable attorney compensation. These include:

i. The time spent.

ii. The rates charged.

iii. Whether the services were necessary to the administration of, or beneficial towards the completion of, the case at the time they were rendered.

iv. Whether services were performed within a reasonable time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed.

v. The demonstrated skill and experience in bankruptcy of the applicant’s professionals.

vi. Whether compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under title 11.

The proposed guidelines also provide wide ranging billing requirements, including:

c. Time should be recorded contemporaneously in increments of no more than one tenth of an hour. A disproportionate number of entries billed in half‐or whole‐hour increments may indicate that actions are being lumped or not accurately billed.

d. Services should be described in detail and not combined or “lumped” together, with each service showing a separate time entry. Each timekeeper, however, may record one daily entry that combines tasks for a particular project that total a de minimis amount of time if those tasks do not exceed .5 hours on that day.

e. Entries should give sufficient detail about the work, identifying the subject matter of the communication, hearing, or task and any recipients or participants.

f. If more than one professional attends a hearing or conference, the applicant should explain the need for multiple attendees.

While the USTP’s proposed guidelines are meant for large bankruptcy cases and some of the requirements may not be appropriate for smaller non-bankrutpcy cases, they are instructive for all legal consumers.  LPR encourages legal consumers to read all 57 pages of the proposed guidelines, looking for nuggets that may be applicable to their cases.

You’ve got options.  The Center for Legal Practice Reform can help you navigate the attorney/client relationship and level the playing field.  Call LPR today for a free consultation – (301) 351-7970.