Opinion ID: 1577466
Heading Depth: 1
Heading Rank: 5

Heading: Challenges to Cohn's Billing Method

Text: In 1998, the Chapter 13 trustees brought an action in the bankruptcy court objecting to Cohn's section 1305 fee applications in sixty-one cases filed between 1991 and 1998. The cases were consolidated before Bankruptcy Judge William H. Brown, who ruled that Cohn's fee applications were improper. The court disallowed as procedurally defective all of the post-confirmation claims being challenged and vacated all previously-approved fee orders in the sixty-one cases. In re Phillips, 219 B.R. 1001, 1012 (Bankr.W.D.Tenn.1998). The bankruptcy court ordered Cohn either to reapply for attorney's fees using section 330 of the bankruptcy code or to forfeit the fees. Id. The bankruptcy court later approved a settlement of the active cases only between Cohn and the trustees whereby the litigation was concluded upon Cohn repaying $2,436.85 to the trustees for post-confirmation fees improperly granted. On October 28, 1998, after receiving a copy of In re Phillips , the Board of Professional Responsibility filed a Petition for Discipline alleging that Cohn's practice of filing the post-confirmation claims under section 1305 was unethical and in violation of several disciplinary rules. After considering the testimony and evidence outlined above, the BPR hearing panel released its written findings and ruled that Cohn had violated all of the disciplinary rules alleged in the petition, to wit: DR 1-102(A)(1) (violating a disciplinary rule); DR 1-102(A)(4) (engaging in conduct involving dishonesty, fraud, deceit or misrepresentation); DR 1-102(A)(5) (engaging in conduct prejudicial to the administration of justice); DR 1-102(A)(6) (engaging in conduct that adversely reflects on a lawyer's fitness to practice law); DR 2-106(A) (contracting for, charging, or collecting an illegal or clearly excessive fee); DR 7-101(A)(3) (failing to explain matters to the client such that the client may make an informed decision); DR 7-101(A)(4)(c) (intentionally prejudicing or damaging the client during the course of the professional relationship); DR 7-102(A)(3) (concealing or failing to disclose that which the lawyer is legally required to reveal); DR 7-102(A)(8) (knowingly engaging in illegal conduct or conduct contrary to a Disciplinary Rule); DR 7-106(C)(5) (failing to comply with known local customs of courtesy or practice of the bar or a particular tribunal without giving opposing counsel timely notice of an intent not to comply). Based on its findings, and on the fact that Cohn had received four prior reprimands, [5] the hearing panel imposed three sanctions. First, the panel required Cohn to disgorge within sixty days all funds received from the sixty-one clients identified in the bankruptcy court opinion. Second, the panel ruled that should disgorgement not occur within sixty days, Cohn's license should be suspended until such time as Cohn presents proof of payment to the satisfaction of the appropriate reinstatement committee. Finally, the panel ruled that Cohn should receive a public censure. The panel assigned costs to Cohn. Both Cohn and the Board sought judicial review of the hearing panel's decision by filing petitions for certiorari in the Chancery Court for Shelby County. The trial court agreed with the hearing panel that Cohn had violated the disciplinary rules enumerated in the panel's judgment and affirmed the order of a public censure. The court required Cohn to disgorge $13,996.73 in post-confirmation fees to the bankruptcy court, calculated as the difference between the full amount of post-confirmation fees collected from the sixty-one clients ($16,433.58, according to the bankruptcy trustee's audit presented at the BPR hearing) and the amount Cohn had already paid to the bankruptcy court as part of the settlement of the active cases ($2,436.85). The trial court also held that the hearing panel had erred in imposing a suspension of Cohn's law license should he fail to make the required disgorgement. In reversing the suspension, the chancellor found that Cohn should have known what the law was, but that Mr. Cohn did not attempt to hide or in any way act surreptitiously with regard to collecting the fees, that the trustees took absolutely no action to let Mr. Cohn know that this procedure was not the approved procedure, and that Cohn does make a plausible argument that section 1305 is an alternative method for seeking fees. Both the Board and Cohn appealed the decision of the trial court to this Court.