Opinion ID: 480745
Heading Depth: 1
Heading Rank: 2

Heading: Determination of the Lodestar

Text: 10 This case is governed by the Bankruptcy Act of 1898 rather than the Bankruptcy Reform Act of 1978, 11 U.S.C. Sec. 101 et seq. (1982). Section 64(a)(1) of the old Bankruptcy Act, 11 U.S.C.A. Sec. 104 (Supp.1976) and Rule 219(c)(1) of the Rules of Bankruptcy Procedure provide that the amount of compensation awarded for legal services to a bankrupt estate must be reasonable. The cases decided under the Bankruptcy Act of 1898, which therefore are controlling in this instance, require the use of economy in awarding attorneys' fees. See Matter of First Colonial Corporation of America, 544 F.2d 1291, 1299 (5th Cir.), cert. denied, 431 U.S. 904, 97 S.Ct. 1696, 52 L.Ed.2d 388 (1977) (the bankruptcy judge ... should award an amount which is 'at the lower end of the spectrum of reasonableness' ) (citation omitted). See also In re U.S. Golf Corp., 639 F.2d 1197, 1201 (5th Cir.1981); Rose Pass Mines, Inc. v. Howard, 615 F.2d 1088, 1092 (5th Cir.1980); In re TMT Trailer Ferry, Inc., 577 F.2d 1296, 1303-04 (5th Cir.1978) (noting strong policy of the Bankruptcy Act of 1898 to use economy in awarding attorneys' fees.) 1 11 The appropriate procedure for determining a reasonable award of attorneys' fees is set out in Johnson v. Georgia Highway Express, 488 F.2d 714, 717-19 (5th Cir.1974). The Johnson standard consists of twelve factors which are to be applied by the court in determining the amount of the fees. The factors are: (1) the time and labor required, (2) the novelty and difficulty of the questions, (3) the skill requisite to perform the legal service properly, (4) the preclusion of other employment by the attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount involved and the results obtained, (9) the experience, reputation, and ability of the attorneys, (10) the undesirability of the case, (11) the nature and length of the professional relationship with the client, and (12) awards in similar cases. 12 We first applied the Johnson factors to an award of attorneys' fees in bankruptcy in Matter of First Colonial Corporation of America, 544 F.2d 1291, 1299 (5th Cir.), cert. denied, 431 U.S. 904, 97 S.Ct. 1696, 52 L.Ed.2d 388 (1977). First Colonial also added two considerations to be used in setting a fee in a bankruptcy case. First, the strong policy of the Bankruptcy Act [of 1898] that estates be administered as efficiently as possible demands recognition and second, the number of peculiarities of bankruptcy practice ... which could lead to the award of duplicative fees or compensation for non-legal services if overlooked. Id. 13 First Colonial further clarified the procedures to be followed in determining a reasonable award of attorneys' fees. The bankruptcy court is to ascertain the nature and extent of the services supplied by the attorney. To this end, each attorney seeking compensation should be required to file a statement which recites the number of hours worked and contains a description of how each of those hours was spent. Id. Once the nature and extent of the services rendered have been determined, the bankruptcy judge must assess the value of those services. Id. at 1300. When both of these steps have been completed, and the amount of compensation that is reasonable has been determined, the bankruptcy judge must briefly explain the findings and reasons upon which the award is based, including an indication of how each of the twelve factors listed in Johnson affected his decision. Id. 14 The Johnson standard has been further refined by this Court's adoption of the lodestar method of calculating attorneys' fees. See Graves v. Barnes, 700 F.2d 220, 222 (5th Cir.1983); Copper Liquor, Inc. v. Adolph Coors Co., 684 F.2d 1087, 1092-93 (5th Cir.1982). The 'lodestar' is equal to the number of hours reasonably expended multiplied by the prevailing hourly rate in the community for similar work. The lodestar is then adjusted to reflect other factors such as the contingent nature of the suit and the quality of the representation. Copper Liquor, 684 F.2d at 1093 (citing Copeland v. Marshall, 641 F.2d 880, 891-94 (D.C.Cir.1980) (en banc)). 15 In determining the lodestar, the bankruptcy court found that Horton and Teofan and their assistants devoted 5,693.65 hours of nonduplicative work time to this case. The court then established reasonable hourly rates for all of the persons who worked on the case. 2 16 Lawler has several objections to the calculations made by the bankruptcy court. In reviewing his contentions, this Court emphasizes that the bankruptcy court has broad discretion in determining compensation for services performed in a bankruptcy proceeding and that its exercise of discretion will not be disturbed unless it has been abused. In re Consolidated Bancshares, Inc., 785 F.2d 1249, 1252 (5th Cir.1986). The bankruptcy court is more familiar with the actual services performed and has a far better means of knowing what is just and reasonable than an appellate court can have. First Colonial, 544 F.2d at 1298 (citation omitted). 17 Lawler generally objects to the procedures used by the bankruptcy court in determining the amount of the fees. It is clear from the record, however, that the bankruptcy court applied the Johnson and First Colonial factors in the lodestar context mandated by Copper Liquor. There is no evidence that the bankruptcy court abused its discretion in so doing. 18 Lawler also claims that Horton and Teofan provided insufficient information as to the amount of hours expended on the case and that the bankruptcy court abused its discretion in setting the lodestar without such information. The bankruptcy court found specifically that the time logs presented by the applicants with their application describe the services rendered by the applicants in sufficient detail and, together with the record of this case, adequately inform the Court as to the extent and quality of the applicants' services. In re Lawler, 47 B.R. 673, 676 (Bankr.N.D.Tex.1985). While the time sheets submitted by Horton and Teofan did not reach an ideal level of completeness, it cannot be said that they lack the necessary information. They show the amount of time devoted to the case by each of the involved persons. The records also show that the work was not duplicative or otherwise prohibited by the Bankruptcy Act. 19 A fee application must be sufficiently detailed to allow the bankruptcy court to make an independent evaluation of whether the hours claimed are justified. The application does not, however, need to detail the exact number of minutes spent nor the precise activity to which these hours are devoted.... Riddell v. National Democratic Party, 545 F.Supp. 252, 257 (S.D.Miss.1982). This Court has specifically rejected the D.C. Circuit's rule that contemporaneous, complete, and standardized time records must be kept and produced before any fee awards will be allowed. Copper Liquor, 684 F.2d at 1094. 20 We do not accept Lawler's contention that the bankruptcy court abused its discretion in determining the lodestar by failing to have Horton and Teofan specify the amount of time devoted to each phase of the bankruptcy proceedings and the time spent preparing the fee application. Although Horton and Teofan provided legal services for the petitioning creditors, the receiver, the trustee in bankruptcy, and the operating trustee, those services were rendered for the common purpose of successfully resolving the Lawler bankruptcy. The services also will be paid from a single source, the Lawler estate, irrespective of the representative capacity in which they were performed. It would have been wasteful and inefficient to require Horton and Teofan to provide an elaborate breakdown of their activities when the information was readily available in the time records submitted to the bankruptcy court. 21 Lawler also objects to the bankruptcy court's use of current hourly rates to compute the amount of the lodestar. He contends that the court abused its discretion by failing to consider the actual hourly rates charged by Horton and Teofan over the course of the proceedings. It already has been determined, however, that attorneys' fees may be calculated at the rate prevailing at the time of the application. Graves, 700 F.2d at 224. No expert testimony was required as to the current hourly rates for attorneys since the bankruptcy and district courts are already very familiar with prevailing community standards. First Colonial, 544 F.2d at 1300. Application of Horton and Teofan's present rates in this case compensates them for the delay in payment. 3 22 For these reasons, we find that the bankruptcy court did not abuse its discretion in determining the amount of the lodestar in this case. 23