On March 25, 2015, the U.S. Bankruptcy Court for the Southern District of Florida entered an order to reduce a chapter 13 debtor’s attorney’s fee application by more than 70 percent. The order provides a detailed analysis of the Court’s review of the limited case law on fee awards in Chapter 13 cases, as well as an in depth explanation by the Court of the basis for the fee reduction and ultimate award in the case before it. The Order also contains strong words for the fee applicant regarding his application and billing practices.
The chapter 13 debtor had what the court described as a normal chapter 13 case, except for lengthy litigation with a creditor related to its objection to a plan confirmation, which required debtor’s counsel to bill more time than one would normally see in a routine chapter 13 case. At the conclusion of the litigation, debtor’s counsel filed a fee application with the court requesting $125,467.50 in fees and $11,730.78 in expenses.
What Is Reasonable Compensation?
Attorneys are entitled to reasonable compensation and expenses for the actual, necessary services they render. Typically, the attorney’s fees for a chapter 13 debtor fall under a court’s no-look fee guidelines.  The no-look (flat) fee is a presumptively reasonable fee based on local hourly rates and the general amount of work required in a typical chapter 13 case. The Chapter 13 Fee Guidelines set forth different no-look fees for services commonly required in a chapter 13 case. If an attorney seeks compensation or reimbursement of expenses exceeding the no-look limits, he or she must file a formal fee application. The fee application must “describe in detail the actual or estimated services or expenses for which compensation or reimbursement is sought; and (2) include … a copy of the retainer agreement, if any.”
In evaluating the reasonableness of compensation, a court must take into consideration those relevant factors set forth in 11 U.S.C. § 330(a)(3), which is also relevant in a chapter 11 case. However, the fee analysis in a chapter 13 case differs from a chapter 11 case in that the focus in a chapter 13 case is on 8/26/2016 No Surprise: A Court Can and WILL SignificantlyReduce “Exaggerated” and “Overstated” Attorneys’ Fees http://www.abi.org/committee-post/no-surprise-a-court-can-and-will-significantly-reduce-%E2%80%9Cexaggerated%E2%80%9D-and-%E2%80%9Coverstated… 2/3 the “benefit and necessity of services to the debtor [not the estate].”
What Was Unreasonable About this Fee Application?
The court was unable to locate many published decisions on chapter 13 fee applications. Additionally, there were no chapter 13 cases seeking fees anywhere near the six-figure request in this case. After analyzing the applicable law, the court began reviewing the fee application. Sadly, the court found that the only “reasonable portion of the Application [was] … [the] hourly rate [of] $375.00 an hour.” While on the higher side for this attorney’s experience in the consumer bar, the court felt it “was still a reasonable rate.” This, of course, left many other issues for the court to contend with. The following is a nonexhaustive list of the attorney’s practices or requests that the court found unreasonable:
- charging $450 an hour instead of the agreed-upon hourly rate;
- repeatedly overcharging for even the most routine tasks;
- exaggerating time for all charges;
- charging for an opening statement for a motion that did not warrant an opening statement;
- charging several hours for preparing an order that was never submitted and that the court had directed need only state “for the reasons stated on the record”;
- impermissible lumping of time entries;
- charging for drafting 26 amended plans — virtually all arising from calculation errors or when only minor changes were made to the preceding plan;
- charging hourly rates for services when the no-look flat fees were applicable;
- inflating fees and overdoing responses in the Garcia litigation; and
- requesting reimbursement for tax-preparation software.
The court concluded that the attorney exaggerated his time significantly, or took far more time than was appropriate. Moreover, the attorney performed many tasks that were not necessary or provided no benefit to the debtor.
Ultimately, the court determined that a good portion of the work performed by the attorney fell under the no-look fees and allowed compensation as appropriate under the Chapter 13 Fee Guidelines. As for the litigation related to the disputed plan confirmation, the court agreed that it did not fall under the norm for a chapter 13 case and therefore was not subject to the no-look fees. However, the court still determined that the litigation fees were excessive and reduced them from the requested $83,0000 to $26,662.50. 3/3 total, the court reduced the attorney’s fee request from $125,467.50 to $34,075.00.
While there was no specific finding of ethical violations for the unprofessional billing practices, the court did find that the attorney “clearly over exaggerated time and over stated time.” The court admonished the attorney to “make an effort in the future to accurately record his time,” because his failure to do so was an “imposition on all parties and on the court.”
 In re Villaverde, 2016 WL 1179343 (Bankr. S.D. Fla. March 25, 2016).
 11 U.S.C. § 330(a)(1)(A)-(B).
 See, e.g., Bankr. S.D. Fla. Local Rule 2016-1(B)(2)(a) (the Chapter 13 Fee Guidelines).
 In re Younger, 360 B.R. 89, 94 (Bankr. W.D. Pa. 2006); see also In re Howell, 226 B.R. 279, 281 (Bankr. M.D. Fla. 1998) (finding flat rates reasonable as cases are fairly standard and much of work is routine and capable of being performed by paralegals).
 See supra, note 3.
 11 U.S.C. § 330(a)(4)(B).
 Villaverde, 2016 WL 1179343 at *2 (citations omitted).
 Id. at *5.
 The court made an assumption that most time was double the time actually incurred. Villaverde, 2016 WL 1179343 at *5.
 Id. at *5 n.12.
 Id. at *5.
 Id. at *7.