In re Jessica & Christopher Addison, Case No. 07-62855-aer13
PUBLISHED opinion by Judge Albert E. Radcliffe
In this opinion Judge Radcliffe sanctioned debtors' attorney by denying him of all attorney fees in the Chapter 13 case, and by ordering him to pay on behalf of the client-debtors all the attorney fees of a successor attorney. Why: For the attorney's grossly negligent failure to comply with attorney fee disclosure requirements.
QUERY: Are you always attaching your fee agreement when filing the LBF 1305 fee disclosures?
Although perhaps nobody reading this would behave so negligently or recklessly as did the debtors’ attorney here, but this opinion by Judge Radcliffe still gives important guidance AND MOTIVATION for complying with the fee disclosure rules. The Salem attorney in this Chapter 13 case had to forfeit $1,100 in fees and likely had to pay his successor’s fees.
The attorney’s negligent or reckless disregard for the fee disclosure rules do not need to be detailed here—they covered many pages of this decision. Indeed Judge Radcliffe took the time to lay out the facts of two other recent unrelated Chapter 13 cases involving the same debtors’ attorney, to show a consistent “pattern of disdain for disclosure requirements”. In the Addison case itself it is enough to point out that there were inconsistencies between the disclosure form and the Plan terms, the fees were paid in part by legal insurance but not fully disclosed as such (as also occurred in the other two cases detailed by the judge), and, perhaps most galling, debtors’ attorney failed to attach the fee agreement to LBF 1305 three successive times, even after stating at a hearing that he would do so.
BOTTOM LINE LESSONS: 1) The fee disclosure rules are applied literally, so that mistakes through negligence or inadvertence are still sanctionable, even if the actual fee arrangements were perfectly appropriate. Inaccurate or insufficient disclosure is in itself grounds for sanction. 2) “All pertinent information should be set forth on LBF 1305” itself: it is not sufficient for other information to be disclosed elsewhere, such as on the plan or the Statement of Financial Affairs. 3) Retain evidence that clients understand the terms of the fee agreement, especially in unusual situations such as when there is payer other than the debtor. 4) If an attorney learns about a fee disclosure problem, she should bring it to the court’s attention instead of waiting for a client, the US Trustee, or the Court itself to do so.
QUERY: Are you always attaching your fee agreement when filing the LBF 1305 fee disclosures?
Although perhaps nobody reading this would behave so negligently or recklessly as did the debtors’ attorney here, but this opinion by Judge Radcliffe still gives important guidance AND MOTIVATION for complying with the fee disclosure rules. The Salem attorney in this Chapter 13 case had to forfeit $1,100 in fees and likely had to pay his successor’s fees.
The attorney’s negligent or reckless disregard for the fee disclosure rules do not need to be detailed here—they covered many pages of this decision. Indeed Judge Radcliffe took the time to lay out the facts of two other recent unrelated Chapter 13 cases involving the same debtors’ attorney, to show a consistent “pattern of disdain for disclosure requirements”. In the Addison case itself it is enough to point out that there were inconsistencies between the disclosure form and the Plan terms, the fees were paid in part by legal insurance but not fully disclosed as such (as also occurred in the other two cases detailed by the judge), and, perhaps most galling, debtors’ attorney failed to attach the fee agreement to LBF 1305 three successive times, even after stating at a hearing that he would do so.
BOTTOM LINE LESSONS: 1) The fee disclosure rules are applied literally, so that mistakes through negligence or inadvertence are still sanctionable, even if the actual fee arrangements were perfectly appropriate. Inaccurate or insufficient disclosure is in itself grounds for sanction. 2) “All pertinent information should be set forth on LBF 1305” itself: it is not sufficient for other information to be disclosed elsewhere, such as on the plan or the Statement of Financial Affairs. 3) Retain evidence that clients understand the terms of the fee agreement, especially in unusual situations such as when there is payer other than the debtor. 4) If an attorney learns about a fee disclosure problem, she should bring it to the court’s attention instead of waiting for a client, the US Trustee, or the Court itself to do so.
by Andrew Toth-Fejel, Bankruptcy Litigation Services for Attorneys, Andy@BLSforAttorneys.com
© 2008 Bankruptcy Litigation Support for Attorneys
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