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Vol 13, Num 4 l August 2015

Ethics and Professional Compensation

► In This Issue:

A Review and Analysis of the Chapter 13 “Best Interest of the Creditors Test”


Ted Stuckenschneider
Ted Stuckenschneider, P.C.
Birmingham, Ala.

For consumer debtor attorneys, getting paid has become quite a challenge. A debtor’s attorney must either get paid pre-petition in a chapter 7, diminishing what would otherwise be nonexempt property of the debtor, or get paid out of “projected disposable income” in a chapter 13. In re Goudreau primarily focuses on 11 U.S.C. § 1325 (a)(4)’s “best interest of creditors test,” which must be satisfied for confirmation of any chapter 13 plan. In Goudreau, in an attempt to get a composition case confirmed at the lowest dollar amount possible, debtor’s counsel utilized a calculation different than that ordinarily used to meet the § 1325(a)(4) test. While ultimately unsuccessful, the attempted approach provides interesting food for thought.
 » Read More

Overzealous Multiplication


Michael R. Herz
Forman Holt Eliades &
Youngman, LLC

New York

In light of the Third Circuit’s recent decision in In re Prosser, bankruptcy practitioners in the Third Circuit (which includes the highly trafficked District of Delaware) should have a heightened awareness of the line between zealous advocacy and abusive and vexatious conduct. If an attorney crosses this line through filings that “multiply” the bankruptcy proceedings, he or she, like debtor’s counsel in Prosser, may be subject to sanctions under 28 U.S.C. § 1927.

In Prosser, the chapter 7 trustee commenced an adversary seeking a denial of the debtor’s discharge based on testimony given by the debtor’s former personal assistant earlier in the main case. Trying to discredit the former assistant’s earlier testimony, debtor’s counsel deposed the former assistant.
» Read More

The Fab Five: Why Sanctions for Frivolous Objections Are Insufficient Based on ASARCO


Marta Alfonso
Morrison, Brown, Argiz
& Farra, LLC


Under the recent landmark opinion ASARCO, the Supreme Court noted that the bankruptcy court had awarded ASARCO’s bankruptcy counsel, Baker Botts, L.L.P. and Jordan, Hyden, Womable, Culbreth & Holzer, P.C., (collectively, “Counsel”), more than $5 million for legal fees incurred in defending against the parent company’s claims concerning the reasonableness of Counsels’ legal fee applications. In oral arguments to the Court, Justice Samuel Alito remarked that sanctions relating to frivolous objections regarding legal fees was a better solution because the economic impact “fell on the party causing them rather than on the estate.”

In my assignment to develop persuasive arguments that sanctions for frivolous objections are an insufficient solution in the recovery of disputed legal fees, I looked to what a culture icon like David Letterman would do to illustrate such arguments.
» Read More

New Webinar Announced: Does it Pay to Be a Bankruptcy Lawyer Anymore?

Moderated by Jennifer McLemore (Christian & Barton, LLP), G. Eric Brunstad, Jr. (Dechert) and Dylan Trache (Nelson Mullins Riley & Scarborough LLP) will discuss the Supreme Court’s ASARCO opinion, the practical impact of the opinion on your practice, and developing case law and arguments to be made in defending your fees.  Is there a "work-around" where the retention agreement legally permits professionals to be compensated for defending fee awards?

This timely webinar will be held on Monday, October 5, from 4:00 - 5:15 pm ET. We hope you can join us!

Click here to register.

NEWSnazzy New Website Available for the 27th Annual Winter Leadership Conference

ABI has launched a new website and registration page for this year’s Winter Leadership Conference! Join us Dec. 3-5, 2015, at the historic Arizona Biltmore in downtown Phoenix for CLE, networking and breath-taking views. Offering up to 12/14 hours of CLE/CPE credit and 2.75/3 hours of ethics, there are a variety of sessions with topnotch speakers for consumer and business practitioners, as well as financial advisors.

Included in this year’s schedule is the Ethics & Professional Compensation and Mediation committees’ joint session titled Ethical Issues in Professional Fee Disputes: Mediation vs. Litigation. Scheduled for Friday, from 11:00 am – 12:15 pm, speakers for this session include Robert M. Fishman (Shaw Fishman Glantz & Towbin LLC; Chicago), Hon. Pamela Pepper (U.S. District Court, Eastern District of Wisconsin; Milwaukee), and Catherine L. Steege (Jenner & Block LLP; Chicago).

NEW Highlights from the conference include:

  • Optional events, including a golf tournament, kayaking, tennis, horseback riding and much more
  • Great Debates on chapter 11 plans, whether a bankruptcy judge can disband a creditors’ committee and must a creditor file a proof of claim
  • BAPCPA Consumer Issues: 10-Year Anniversary Special
  • Nine joint committee sessions, provided by ABI’s 18 committees
  • A live Bloomberg “Eye on Bankruptcy” luncheon presentation
  • A special Casino Night!
  • A judges’ roundtable on hot-button issues
Early-bird registration ends Oct. 2, so be sure to register to take advantage of the savings

Southwest Bankruptcy Conference - Sept. 10-12 - Las Vegas


20th Annual Views from the Bench - 10/09/15 - Washington, D.C.

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Tel. (703)-739-0800
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