i first case two thousand and eighteen three zero five three five mcbride and versus riley and all you may proceed the morning route of it please the court my name is bradley drew and i represent thomas mcbride joe moore and their respective law firms in this appeal at issue in this case is what we call a no look feat order issued by a bankruptcy court pursuant to this court's opinion in cahill which allows a bankruptcy court to establish a presumption of lodestar basically based on johnson and first colonial a bankruptcy court typically will apply an allowable expenses were considered to be reimbursed by virtue of a flat no look fee but it did consider that expenses were being that were being reimbursed under that formula and that was not challenged b attorneys that were operating so it was included in the flat fee you had to take out the three hundred sixty five dollars for this expenses and give it to the client instead of for the lawyer is that right no no tell me though in other words clients would not that i think that from putting the cart before the horse the idea is that in some instances a client may pay the warrior pre partition the amounts of money necessary for the filing fee the credit counseling and the credit report fee the debtors where would put the money in their trust account when those fees expenses were paid out it would be paid out of the trust account and if the attorney used his own credit card he would reimburse himself from the trust account what we're talking about here is and that's perfectly fine nobody's challenging that right no one is challenging that practice but what happens is you want to be able to say no money down bankruptcy basically wri paid through the bankruptcy yes and so how would those be taking care of prior to this new no look order in the western d they were being reimbursed pursuant to that scheme in other words i think it was presumed that you were fronting those costs or if you didn't then you were effectively getting a bonus we would suggest that the prior order was also an abuse of discretion by the bankruptcy court but no one challenged ok so could you get him after the fact with post petition with the with the request would they ever sought after the fact under the prior order yes no they were in one sense they were after the fact to the extent that if you file one of these fia denims to a chapter thirteen plan under the prior order you would state pay i perform these services and this is my presumptive you know hourly rate and i front of these expenses and it either meets or exceeds the amount of the precalculated lodestar and therefore i'm asking for the flat fee rather than filing a formal fia occasion ok so now we come to the if the current procedure that they have there lands on the on the fees and whether you can recover them that's correct the other one specifically denied it but the court has taken the position that they still have the same policy and met you can't get it  so why should you be able to that's trying to get you started off with your argument well i will i will be glad to as far as an out and that will actually probably shorten my argument considerably  this court reviews feel ward for an abuse of discretion however it reviews the bankruptcy courts conclusions of law de novo in this instance the bankruptcy court's decision rests solely on a legal conclusion that the filing fee credit cite in brief particularly cahill which also sides of angel in refining this court has said that a bankruptcy court has to provide a clear explanation for the exercise of a bankruptcy courts discretion in granting or denying fees and if the bankruptcy court does not make that spouse meant then that the determination is essentially reversible and here judge kohli's decision is based solely on a premise of law that these fees are not reimburs to a chapter thirteen debtors attorney and we would take the position that that is legal error against the great weight of authority in the fist circuit and in case law around the country particularly in footnote of our brief on page seventeen then let's say judge all rod for sake of argument that judge what we did have some discretion and saying ok we're going to subsume these expenses into a flat no wifi i would suggest that that would be an abuse of discretion under those courts standard o attorney does not front them and they've been reimbursed on the front end by their client that attorney is receiving a windfall essentially receiving an unwarranted bonus for essentially doing less to help their client they're getting paid more and i don't see how the bankruptcy court can justify saying that the it to an attorney like my clients who will front the filing fee credit counseling fee and credit report fee which are all normal fees that any attorney and any other area of law  front for a client in the prosecution of a case to say that that lawyer should be penalize and paid less than a lawyer who doesn't it just does not make sense to you so you you have an argument under five o three p one and under seventeen again on the on footnote ten of those are five zero three cases but we do think that the three thirty argument is stronger and here is why it could be said that the filing fee does not really benefit the estate now i disagree with that to the extent that the state would not exist if the filing fee does not get paid but let's take the credit report fee that solely relates to the debtors counsel's due diligence in preparing the petition schedules and statements of financial affairs for the client arguably maybe that doesn't benefit the estate but three thirty goes for than five o three in allowing compensation to chapter thirteen debtors lawyers for representing the interests of the debtor and i believe that those fees clearly fall under the language of that part of the statute and the purview of what the courts were trying to accomplish assuming argue ended that the court would agree with you on that when did the court actually make a ruling under but what is involved in following a fee up i found meaning in my chapter eleven practice us eventually have to keep track of all of your time segregate those time entries by project categories which generally you can make them up but most of us use the american bar association standard project categories that's available in most of our billing software you have to make sure all of it is coded properly you have to file a pleading that not only includes your bill but a summary of your bill the blended rate of the hourly rate you try  but if you just are asking for the three hundred sixty five dollars can't you just say that the credit report cost this much to this in only put those items on the less that no you can't file a formal fee at just for those cost it thirty five hundred how much is the amount that is the presumptive amount well it varies but it's roughly three thousand dollars there's a certain and i'd have to go look at the order to be completely accurate on this but there is a certain fee but from normal cases it awards is another different fee and then there are additional fees that are allowed in the no work order for post petition activities by debtors counsel such as filing an amended plan responding to motions to list a and so on it's a comprehensive scheme to avoid filing fee applications which would be overly burdensome given the number of chapter thirteen cases that the judges are handling of a number of cases that the attorneys out there and so there's no other way to seek these  other than a full bore fee application and they lose the benefit of the no look fifty so you know we're going to you know the old stand in order how did explicit provision when was that replaced with the new standing order that a silent on this issue i believe it was i have to check but i want to see it like twenty fifteen we started this appeal right after that process in other words the once the new order was announced my clients read the order and said ok maybe we have a chance to revisit this  issue because this order is silent on the reimbursement of those expenses they immediately began to enter into contracts with their clients where the clients indicated ok i understand that you're going to seek reimbursement of these fees from my chapter thirteen case and they sign filing fees and those typically included in the eastern district are you not aware i am not aware i do not browse chapter thirteen in the middle district if i were to ask you a question about that would you say you weren't aware either i would say i was aware  the local rule there says the debtor has the obligation to pay the filing fee but it doesn't discuss the reimbursement in any they but they do seem to standard form seems to anticipate that the simply asked for the know look the judge god has not tried to address this particular controversy do you think that the reason that texas has so much more explicit rules allowing for these recoveries is because the disciplinary rules are different in texas and so if they didn't explicitly allow for it they wouldn't be able to try to get it whereas the louisiana disciplinary rules or more would allow you to get recovery for these types of things i don't have any thing on that you know i've looked at that and i do not think the disciplinary rules are different in the regards of recovering these filing fees moreover you have to understand that in both texas and louisiana the rules governing debt relief agencies that  present in the bankruptcy you have to expressly put that in your contract under the bankruptcy code notwithstanding the departure of the differences of disciplinary rules in the different states and the thing is this is really a matter of bankruptcy law as to whether under three thirty these  your honour's i would just want to point out that the potential at least for allowing the reimbursement of these fees is going to encourage debtors lawyers to basically extend help to more  people in other words if they're already taking a risk because basically every fifty in a chapter thirteen cases more or less a contingency fee if it's flat because you're basically hoping that the debtor and i think them in good faith not only risking their time but their money on these is a worthy cause thank you thank you the other chapter this is about a no look feel order a specific creation in chapter thirteen for efficiency purposes to help out the courts and others counsel throughout the process and this is about marketing to speak on this is the court's asking this on the on the fly here  and you think that's ok i hear that your honor in the western district of louisiana you know we had a new order new judges signed off on it with the exception of judge summerhayes who is the holdover judge from the original no look f argument that they're being forced to absorb these costs three hundred sixty five dollars three hundred there's an additional debt or perhaps a three hundred eighty seven dollars if they're to debtors in the case they make reference multiple times that they're being forced to absorb want the court to believe that they're representing those rather wasn't barred from the bankruptcy system that's one of their arguments that they make that the bankruptcy court is somehow preventing debtors from filing bankruptcy cases from getting the relief that they  was utilized in this case it's a statutory rule and a rule that is it's there it's clear it's simple it's availably utilize those orders are signed off repeatedly and our division  installment fees i would not say that most people pay in installment fees but those that have the need file a motion and ask for that if the court reviews the orders of some of the the texas division orders and what not it shows that filing a motion for payment of installment fees is one of the things that's included and there are no look feel order it's it's a role it's a practice it's allowed remember the chapter thirteen is for debtors with regular income these are not debtors is not chapter eleven and this is not chapter seven these are better so you have a regular income whether it be from employment from a social security regular assistance from the some other means those they have fonds they are expected to make installment plan payments that are typically in line with what these filing fees are with what these credit report fees are so chapter thirteen it's special and this is focused on on chapter thirteen here what do you do about the  argument that the lawyer sees doing more work by having to take care of the credit report he's having to take care of all of these filing things is getting less money than the lawyer who doesn't have to do the work  a choice that attorneys and made over time when they created the concept of no money down chapter thirteen lower in the clients those farms are better capitalized they bring in more clients they eat the cost in order to gain the clients and over time you have less competition in the market because you have other attorneys that have to choose to eat those costs to or not do you believe that the three thirty a argument is ripe for ruling today  her the court asks a question earlier and as a review judge hallways brief i thought he went through it he did but i really am he said that with our standing order with our no look feel order the only expense that it looks like we're going to grant is additional postage but he also explicitly says that he agrees with the frazier opinion that he cited that attorneys are entitled to seek expense reimbursement but it has not a little  fee or they allow a fee application usually based on the complications that any individual case may may present it's an extremely complicated case where they see double triple the work makes good sense to to do a fee application and they would is the truth of it the throughout the country your honor i don't know for around the country i know for the courts they were actually addressed in the brief filed by the palace and i looked at each of the orders that will follow they've got  additionally the eastern district of texas nothing about the reimbursement of any of the advance fees i think it just uses the words expense reimbursement in there and then you have no other dish that is specifically allows front some expenses they were included in the fee that you were gonna get it's that it's a choice again it's it's a model of doing business oh money is actually it has a good ring to it it's a practice though it is not a requirement it is not forced on us so for should we require the court to explain why it's not allowing  were the two prong test was fail under five o three that these were personal obligations being satisfied for the debtors befit benefit not for the estates been a fit he went through the two prongs has very well made those conclusions as to why the five of three up location didn't apply eyes are pretty they went into three thirty then and it's are pretty very clearly is a very but to the extent of the court the light upon them some kind of view that they couldn't you go through it very very clearly following the standards and the rules that were out there to make a determination i don't know what more would pall of it because i didn't his opinion to me didn't just say i don't have it for them but i think we have your argument thank you thank you your honors i do have to say that i disagree that a rematch and would be beneficial year to allow bankruptcy court to explain why it's exercising its discretion this way i really don't see how a bankruptcy court can properly exercise its discretion where it's going to penalize certain lawyers for a sensually funding costs for their clients which is both ethical and i think helpful and i want to address what i'm going to call the competition fallacy that's been a part of all this i'd like  to imagine standing at an intersection at one corner is santa clause and the other corner is the tooth fairy on the third corner is a lawyer who's thinking about getting into chapter thirteen better practice but doesn't want to because they will have to find filing fees and then the fourth as my client joe moore is sitting right here out of those four only the last one is not a figment of somebodies imagination and that is because in two thousand and five congress passed the bankruptcy abuse prevention and consumer protection act where it increased the duties of debtors counsel probably three fold attorneys fees went up by a thousand dollars a case across the country they're now regulated as debt relief agencies and so like if you're a small town mayor and you're doing bankruptcy work even in your phone book listing you have to state you're a debt relief agency in other words congress in two thousand and five said to the chapter thirteen debtors bar go big or go home and really you're not talking about some small practitioners getting squeezed out of the market because some workers are funding filing fees the truth of the matter is there are sophisticated bankruptcy practices with multiple lawyers and multiple paralegals they're handling hundreds of cases some are willing to take a gamble on their clients some of them are not the ones that own or complaining that these guys are getting some sort of unfair advantage the thing is your honour's the way i look at this when you look at the profession that we all practice as lawyers and judges and then we look at what these folks too for chapter thirteen debtors who are in financial distress and helping them the way i have to look at and what i have to hang my hat on is that what my clients are doing is something to be lauded and not penalize because they're helping their clients thank you