Visit our website | Click here to view online
Contact the Newsletter Editor

Vol 13, Num 5 l September 2015

Ethics and Professional Compensation

► In This Issue:

Failure to Withdraw Baseless Lawsuit to Gain Settlement Leverage Is Grounds for Sanctions

ABI

Jason I. Blanchard
U.S. Bankruptcy Court (E.D.N.Y.)
Central Islip

ABI

Richard J. Corbi
U.S. Bankruptcy Court (E.D.N.Y.)
Central Islip

Bankruptcy courts are vested with the inherent and statutory authority to sanction litigants for acting in bad faith and engaging in otherwise unreasonable or inappropriate conduct. Rule 9011 authorizes a bankruptcy court to impose sanctions upon attorneys, law firms or parties for the filing and prosecution of pleadings and other papers that are found to be frivolous under Rule 9011(b). There are both procedural and substantive requirements that a court is to consider prior to imposing Rule 9011 sanctions. Section 1927 of Title 28 of the U.S. Code authorizes all federal courts, including bankruptcy courts, to sanction an attorney “who so multiplies the proceedings in any case unreasonably and vexatiously,” and may require the offending attorney to personally pay the “excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.”

Recently, the U.S. Bankruptcy Court for the Southern District of Texas addressed both of these remedies in In re Harris in the context of whether a party could be sanctioned for failing to timely withdraw a frivolous pleading. After reviewing the standards of both Rule 9011 and § 1927, the court held that once the chapter 7 trustee knew his malpractice lawsuit against debtor’s counsel was not legally viable, his failure to diligently withdraw the suit constituted unreasonable and vexatious behavior that warranted the imposition of sanctions pursuant to § 1927, but not under Rule 9011.
 » Read More

Effects of the ASARCO Decision in Cases with a Fee Examiner

ABI

John F. Theil
Stuart Maue
St. Louis, Mo.

On June 15, 2015, in Baker Botts LLP v. ASARCO LLC , the U.S. Supreme Court ruled in a 6-3 decision that § 330(a)(1) of the Bankruptcy Code does not permit bankruptcy courts to award attorneys’ fees to § 327(a) professionals for defending fee applications. Justice Thomas, writing for the majority and using a narrow statutory interpretation, held that the statutory provisions of §§ 330 and 327 failed to provide a basis for recovery of fees for fees. Rather, the Court held that the longstanding principle known as the American Rule, which provides, “Each litigant pays his own attorney’s fees, win or lose, unless a statute or contract provides otherwise,” applied, and that Congress did not intend to depart from the American Rule in § 330(a)(1).
» Read More

Findings of Fact Required to Protect a Fee Order on Appeal

ABI

Candace C. Carlyon
Morris, Polich & Purdy, LLP
Las Vegas

n In re Halloum, the Ninth Circuit Bankruptcy Appellate Panel reversed an order granting a fee expense award in excess of $116,000 based on the failure of the bankruptcy court to make supporting findings of fact. While the decision lends little support to the debtor’s claim that counsel agreed to handle the entire case for a flat fee of $40,000, the BAP held that the total absence of findings by the bankruptcy court left it with no basis for evaluating whether the court abused its discretion in making the award, and remanded for required findings.
» Read More

Kurt Summers, the City of Chicago's Treasurer, to Speak at this Year's Professional Development Program!

ABI announces program and fantastic keynote for this year's Mid-Level Professional Development Program. Kurt Summers, City of Chicago Treasurer and head of the City and Board of Education Pension Funds, will join us on Wednesday, October 28th, to give the Keynote Presentation. Session topics include oil and gas restructurings, coal mining, and more. Register by September 30th and save $50 with coupon code PDPSAVE50 at check out. Register today.

Webinar 10.05.15: Does It Pay to Be a Bankruptcy Lawyer Anymore?

 

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

66 Canal Center Plaza, Suite 600, Alexandria, VA 22314
www.abi.org | support@abiworld.org
Tel. (703)-739-0800
Follow ABI on Twitter Follow ABI on Facebook Follow ABI on Linkedin

Copyright © 2015 American Bankruptcy Institute.