adherence to congress requirement that bankruptcy lawyers who represent a debtor quickly disclose their compensation agreement their compensation amount and their compensation source this court said in investment bankers that this requirement is mandatory and not permissive further the court said investment bankers the th circuit that attorneys forfeit any right to the fees they received by filing section three hundred and twenty nine dollars in this case the debtor's attorney welch and welch law firm did not disclose their compensation agreement did not disclose their compensation them out and did not disclose the compensation source for over two years to the tune of over three hundred and fifty thousand dollars in fact the court in s c ph at a hearing unrelated to that fee issue the court said caught the fact that this had not been disclosed and the court worried that if it had not been caught that it might never have been as add further to that conduct which is important here is that in depositions the debtor was asked what the compensation to the attorney was and welch did not allow the attorney to say even though congress obviously requires that to happen said important that i understand and in what the district court did it look like that he dressed down pretty much like the conduct in this and that which led me then to look those two to me have totally different meanings in regards to that do you see this as a sanction or disgorgement award this is an important question what three hundred and twenty nine says you must you must disclose this court has said in fact in the great case this court said that the court should lean to one hundred percent this court's myleene i won't go so far say presumption but certainly lean here it is questionable whether the bankruptcy court which is the chord and question here actually ordered discords mn because the three hundred and fifty thousand dollars at issue here the twenty five thousand dollars that was paid you know didn't even come from the three hundred and fifty dollars it was actually taken from additional funds that were held by the end you'll never be which i'll talk about but what the court did was not the order discords meant arguably what the court did was order a sanction and here's where the bankruptcy court got it wrong here's where the error occurred here's where the misapplication of the law heard it is this rather than looking at the law with respect to discordant and three hundred and twenty nine and bankruptcy rule two thousand and sixteen which requires quick disclosure the court decided that the court didn't want to order one hundred percent discoursed mint which is the lien in the circuit one and wanted to do something less so when the court decides and let me say in investment bankers the courts unquestionably this court said at the very end of the opinion that it did look at that and whether the court had discretion to authorize and in the investment bankers case it ordered full of it but then the question becomes if the court is to say there is some measure of discretion what is the measure what is the measure to be use of something less than full this quarter we know there's a lean to full discourse in the circuit but if bankruptcy court wants to do something less than that lean to for one hundred percent discordant the bank the babson ed the th circuit had not said yet what that measure should be and that and i will simply say this what the bankruptcy court did here was pivot away from a from a standard of measure that has been used within this circuit and pivoted pivoted unnecessarily we see in the courts below using what i would call the egregiousness standard if you look at the brown case in the right case in the bankruptcy court for the northern district of oklahoma and then it cited the smitty's case from the prior back the question  if you're if in looking at what the measure should be look at the egregiousness of the nondisclosure i e not the person but the egregiousness of the non disclosure i daresay you'll never find a set of record facts with more egregious conduct and i don't say that to dress down my opponent i'm a bankruptcy lawyer mr welch is a bankruptcy lawyer we're brothers in this practice that's the way i look at it but the actions still remain and here's a key distinction that i would like to make rule eleven sanctions are different from three hundred and twenty nine disgorgement here's why let's think about rule eleven there are often talk that the ruling on a rule eleven issue is often non monetary it often has zero to do with money frankly the attorney is a signatory the attorney is an issue making a representation and sign we know how important it is in the signing this it looks at the attorneys and what's the point to prevent frivolous violence three hundred and twenty nine disgorgement is different and bankruptcy court is different while it's all about money the courts have said in developing this law that the bankruptcy attorney in that situation is looked as if i do sheree so we're talking about money you're looking at the attorney it is and why this court is it is amanda terror mandatory not permissive because it is for several reasons it is for protection of the bankruptcy estate protection of the creditors significantly a quick disclosure is required because it is incumbent upon the bankruptcy judge early on to be able to examine to be able to scrutinize the arrangement that the attorney has the fees that have been set forth and importantly the source of those funds such understand a problem i think that the court does where you're coming from or where i'm going is what prohibits the looking at what the bankruptcy judge and what the bankruptcy judge  said the result of not disclosing is forfeiture so that's why we're saying the bankruptcy court perhaps in an effort to come up with or fair or fashion some lower amount looked what can the court look at with the court looked in the wrong direction is all we're saying and what we're asking ultimately is that it be reversed and remanded with instructions to the proper resolution what is the proper resolution the case law has let's remember here what we're talking about  that says in three hundred and twenty nine you can look to rule eleven go back and do it over yes because but with no guidance no with i just will casually apologize the guidance that we would  suggest and what has developed in the th circuit given given this court strong statement that we should lean to one hundred percent and given this court strong statement it is mandatory not permissive if your book if the bankruptcy court is to be given a measure less than right to the cup if you're going to do less than one hundred percent the courts in this circuit have developed the standard of agree just as to say let's not look at the think about the court in he what is it the bankruptcy judge cannot use sanction as a form of discipline that i have to use disgorgement no i'm not saying that you're i what i'm saying is sanctions fine that's another thing that's a completely minutes and it's all been very abstract and we need to talk about the facts here if we're going to be able to give any guidance but so ever and the facts are quite important to me so let me ask you a little bit about my understanding is that the debtor had already been required in fact settled with the trustee in pay seven hundred and fifty thousand dollars that had been improperly transferred from the state children and was considered an improper fraudulent transfer since there was there was a settlement of that and what i would say simply is this that that the fact of that does not alter the outcome of this case well why do you we are there has not been a determination on that there has been in fact there's a nonstarter ability case that remains pending on that issue and there's a compromise motion that has been ruled on by the court but it doesn't alter the outcome of this case the court   find that for all just answer my questions about the facts i'm trying to i'm not understanding because i can't understand how the judge can decide what the proper result of the three hundred and twenty nine dollars a proceeding should be without having to determine whether the attorney for the was paid out of property of the estate and that was not done in this case was that she never made that determination it is never been made ok and it remain also looks like one reason not to disclose this fee is because it might suggest that there was property of the estate out there from the b p settlement that had not been disclosed to the bankruptcy court either is that correct might disclose and even worse violation yes not not disclosing property of the estate than that should be a consideration here should it not yes and think about so what do you say anything about this well trying to protect your brother in the bar  necessarily what i'm trying to say what i would like to say is it's so it's so important because while think about this had the disclosure occurred two years before when it was supposed to occur then we would have dealt with this early and we wouldn't fraudulent transfer of assets from the estate was that part of what he did when he finally made his disclosure we were then finally after the two years able to see that the work that was done was charged against the fee for work that he did for the debtor which included a lot of that related to the disputed the seven hundred and fifty thousand dollars it related to a larger dispute regarding the fraudulent transfer we actually our position was the fraudulent transfer was worth far more than seven hundred and fifty so the so when the judge says he did a lot of service for the client and that's reason enough in the reviews the key that much that service the client was representing the in not dressing down my opponent it's very difficult to do that just as i said just just regardless of that we are not it's very hard to write an abstract opinion saying this should be the standard what you do is you have facts and about sometimes all you can do is say that was too much that was too much and you could do that here again you could if you could say we have a firm conviction that this is too much and you can and given the will transfer them and that's that's quoted in their brain at that time that will leave for that these claims are going to take a long time to resolve as it turns out the federal court in louisiana set up a procedure and allowed those claims to be resolved in a relatively short time given litigation tykes those claims did thousand dollars cash from the debtor what about claims that the money for the attorney fees in part at least came from the claims by entities that aren't  that were used to pay attorney fees were essentially dividends to the debtor and those and therefore were property of the state well i don't i have to tell you i don't believe that's right because i think entities he was managing partner of each of them this was explained to the bankruptcy trustee and he expressed fully said that i'm not interested in pursuing those and that was transfer had much to do with that there were four adversary actions filed in this case that allege to some form of fraudulent transfer and the defense of that of those claims were involved in the legal fees the transfers themselves were done long before mr welch got involved in this case and he was not the author or the he  how much if any of that would have gone into the estate the three hundred dollars and whatever without you know the theory that he was a if the bankruptcy courts that that was a separate matter but did they determine there had to be a determination if she says all of it or he says all of it is the non debt or how much would have been if that's what the term was there a factual finding ever presented that as to how it became all non better money versus that how much it had to be an argument well or if it's belongs in the estate show water the fact is what are the facts that show that all that goes on on debt or there had to be an argument about it well the facts were that mr wel sands and never being received roughly seven hundred thousand dollars known two hundred thousand dollars and he applied two hundred and three thousand from those leaving seventy one thousand dollars in account there was a tracing of the funds if you will that came from never r applied under their guarantee two hundred thousand dollars to that or to account mr welch who had received a contingent fee and that's documented that he had a separate  the attorneys and alabama who actually handled those b p claims and he applied that so was there ever a determination by the bankruptcy judge that if it was determined that there was a  that's where she started her analysis and also the cases also so you got to look at all the facts of the case this bankruptcy estate received the benefit of rd party fund she'd have to give it back to  party fine she even concluded the rd parties might just go ahead and pay mr welch anyone and she couldn't control it so this is a state was not harm but they never said that has to be the only result in the great case which is where some of the most draconian language is and of course that is a is a conflict of choice and it deals with all the facts of the case we believe this is a discretion standard and you must accept the court's decision even if you think she might have done some could have done something there front unless you got a five day old think in fish when i'm there we don't believe there are any frankenfish here and my time's of and didn't hear evidence didn't allow discovery and you know the court in this case rather than using evidence rather than allowing it indicated that the korten was going to use her personal knowledge of mr wells because they had practiced together do you know which had nothing to do with in court record evidence in this case in fashioning this there was no discussion here we asked for one the other reason for our appeal is haste to say please please church issue to talk about it but you waste your time on that thank you case submitted counselor spews quarters in recess until eight thirty tomorrow morning