Opinion
Case No. 02-45992-JBR
June 26, 2003
Francis Lafayette, Palmer, MA, Representing, Cesar A. Martinez and Flavy D. Martinez, Debtors.
Denise M. Pappalardo, Worchester, MA, Representing Chapter 13 Trustee.
ORDER ON APPLICATION FOR COMPENSATION [#30]
This matter came before the Court on the Application For Compensation of Attorney Francis Lafayette, debtors' counsel. Attorney Lafayette is seeking fees in the amount of $3,146.75 and expenses of $450.87. Because the Fee Agreement between Attorney Lafayette and the debtors provided that Attorney Lafayette would charge a flat fee of $3,000 for services through confirmation, the Court had ordered that he file a fee application to which the Chapter 13 Trustee objected. See MLBR 13-7. The central issue to be decided is a recurring one for Attorney Lafayette, namely whether his hourly rate is reasonable.
The Fee Agreement provides in relevant part:
The Attorney has received $500 as retainer on account of a fixed fee of $3,000 to perform the following services: (a) Analysis of the debtor's financial situation and rendering advice to the debtor in determining whether to file a petition in bankruptcy; (b) Preparation and filing of any petition, schedules, statement of affairs and plan which may be required (c) Representation of the debtor at the meeting of creditors and confirmation hearing, and any adjourned hearings thereof [sic]. This fee does not contemplate any additional services. . . .
The Rule 2016 Statement of Disclosure indicates that at the beginning of the case Attorney Lafayette's rate was $310 per hour and would increase to $320 per hour as of November 11, 2002 and increase by $10 each November 11 thereafter. The fee Agreement indicates that the operative date for rate increases is November 18.
Mr. and Mrs. Martinez filed a voluntary petition pursuant to chapter 13 of the Bankruptcy Code without any schedules, statements, or a chapter 13 plan on October 1, 2002. One creditor, DaimlerChrysler Services North America LLC, objected to confirmation on the grounds that the proposed plan undervalued DaimlerChrysler's secured claim. The objection was resolved by agreement of the parties without the need for any hearings. The plan was modified to reflect the stipulation and was subsequently confirmed on January 10, 2003.
Attorney Lafayette was ordered to file a fee application within 30 days of confirmation but failed to do so. On April 8, 2003 Attorney Lafayette sought, and was subsequently granted, permission to file his application late. In the application. Attorney Lafayette seeks fees of $3,146.75 and expenses of $450.87. The Chapter 13 Trustee objected for two reasons. First, the application failed to include biographies as required by the Massachusetts Local Bankruptcy Rules, a problem that has been rectified by subsequent pleadings. More importantly, the Chapter 13 Trustee, citing to this Court's prior decision involving the same applicant, In re Bernier, Case No. 02-46102-JBR (February 27, 2003), objected that the rate charged by the applicant is excessive. At the hearing on his application, Attorney Lafayette sought and was granted additional time to submit a memorandum in support of his application.
In his Memorandum, Attorney Lafayette cites his own and his office staffs efficiency as one reason to justify his hourly rate. That argument, however, is undercut by Attorney Lafayette's pleadings in this case. He had the wrong case number, the wrong judge, he has misspelled his clients' name in some pleadings, he failed to sign his Memorandum, and he even missed the deadline to file his fee application, an oversight that went unnoticed by Attorney Lafayette until he received an order to show cause. Moreover, as noted previously, the Rule 2016 Statement of Disclosure and the Fee Agreement indicate that at the beginning of the case Attorney Lafayette's rate was $310 per hour and would increase to $320 per hour as of November 11, 2002 and increase by $10 each November 11 thereafter. Exhibit A to the application indicates that his "current" rate was $320 per hour and would increase to $330 on November 18, 2003. Yet the time records following Exhibit A to the application indicate that Attorney Lafayette billed 6.4 hours prior to November 11, 2002 and 3.1 hours thereafter. Using the rates set forth in the Fee Agreement and assuming that the rate increased on November 11 and not November 18, 6.4 hours of Attorney Lafayette's time should have been billed at $310 per hour and 3.1 hours billed at $320 for a total of $2,976.00. If the operative date for the rate increase was November 18, the total charged for Attorney Lafayette's time should have been $2,966.00. The "Recap of Professional Services" at the end of the time records states that Attorney Lafayette billed 9.4 hours at $320 per hour resulting in fees attributable to his time of $2986.00 even though 9.4 hours at $320 per hour would result in a fee of $3,008. Suffice it to say that there were errors in all aspects of the calculation.
Attorney Lafayette charges the time of staff members described as paralegals and legal assistants. Yet the tasks performed by these individuals are largely clerical and should be included within overhead even if his rates were comparable to those charged by other practitioners but it is especially true when Attorney Lafayette seeks rates significantly higher than other comparable attorneys in this area. See In re ACT Manufacturing, Inc., 281 B.R. 468, 486-88 (Bankr. D. Mass. 2002).
In addition, based upon the Court's own experience and familiarity with fee applications of other attorneys for chapter 13 debtors, the Court continues to find that Attorney Lafayette's rate is excessive. As the Court noted in Bernier, comparable attorneys in this area charge rates between $150 and $225 per hour, substantially less than Attorney Lafayette.
Simultaneously with filing the Memorandum, Attorney Lafayette filed an Amended Rule 2016 Statement of Attorney Compensation to clarify that $500 was for post-confirmation services. In his Memorandum, however, Attorney Lafayette states "[w]hile the agreement of the parties, [sic] anticipates an additional amount of $500 post-confirmation, debtor's counsel understands that such additional fee is contingent upon confirmation of the plan and then upon the debtor making plan payments."
At the very least, the Court needs to clarify a misunderstanding that many attorneys who represent chapter 13 debtors appear to hold and it is the one set forth in the above quoted language. Simply because a plan is confirmed and the debtor makes his plan payments does not entitle his attorney to $500 post-confirmation. The $500 that may be charged for post-confirmation services without the need for a fee application, MLBR 13-7(b), must be earned by providing at least $500 worth of services post-confirmation. In those cases in which there are no post-confirmation services rendered, or the time spent rendering those services times a reasonable hourly rate is less than $500, no counsel should charge or expect to receive the full $500.
With the clarification that Attorney Lafayette is expected to earn any post-confirmation fees by providing actually providing services to the debtors, the Court will allow Attorney Lafayette $2,500 for pre-confirmation services. The Court bases this award in large part upon the local rules. Although the local rules do not guarantee a minimum fee, they provide some recognition that even an uncomplicated chapter 13 case generally requires approximately 10 hours of counsel's time, See In re Pearson, 156 B.R. 713, 717 (Bankr. D. Mass. 1993), and thus a fee of $2,500 or less for services through confirmation ordinarily will not require a fee application. That is not to say that when counsel is required to file an application, he may be assured that he will receive this amount at a minimum. No more assurance should be drawn from this Order or the local rules. The Court finds those fees reasonable for pre-confirmation services in this case. The Court also awards $500 for post-confirmation services but only if Attorney Lafayette provides post-confirmation services equal to or in excess of $500 based upon an hourly rate of $225. If he does not render such services, the Court expects that Attorney Lafayette will notify the Chapter 13 Trustee so that payments may be adjusted accordingly.