Opinion ID: 317782
Heading Depth: 1
Heading Rank: 6

Heading: Fee of Counsel for the Debtor-in-Possession

Text: 83 The court appointed attorneys for the debtor-in-possession, Sokolsky and Friedlander, were granted a compensation award of $197,500 by the Bankruptcy Judge. 84 The attorneys for the debtor-in-possession based their fee application on two exhibits. Exhibit A set forth a chronology of work performed showing the time in most cases attributed to each task. Compensation was calculated at the rate of $50 per hour, and the fees claimed by counsel based on Exhibit A services aggregated $102,669. Exhibit B detailed a listing of 8,842 entries contained in 2,487 applications presented to the Bankruptcy Court for approval and authorization of checks to be issued by the debtor-in-possession. 11 The expenditure applications granted by the Bankruptcy Court during this period totaled $10,762,176.40. The fee claimed by these attorneys based on the services represented by Exhibit B aggregated $97,301. 85 The appellants raised numerous objections to the fee application of these counsel and requested that an evidentiary hearing be held on these objections. The Bankruptcy Court rejected the objections and failed to grant an evidentiary hearing prior to allowing these attorneys a fee of $197,500. 12 86 The appellants allege that the Bankruptcy Judge erred for the following reasons: 1) The attorneys for the debtor-in-possession failed to document their fee application with time records for a major portion of their services, 2) The attorneys for the debtor-in-possession performed ministerial and administrative services not properly compensable as professional services, 3) The attorneys for the debtor-in-possession duplicated services already performed by the attorneys for the debtor, and 4) The compensation award to the attorneys for the debtor-in-possession was clearly excessive. 87 With respect to the first assignment of error, the record indicates that these attorneys failed to document with time records over one-quarter of their claims represented by Exhibit A and all of their claims represented by Exhibit B. Section 62(d) of the Bankruptcy Act, in relevant part, requires: 88 'A receiver or trustee or the attorney for any of them, or any other attorney, seeking compensation for services rendered by him in a proceeding under this title or in connection with such proceeding, shall file with the court his petition setting forth the value and extent of the services rendered, the amount requested, and what allowances, if any, have theretofore been made to him.' 11 U.S.C. 102(d). 89 This statutory provision was implemented by Rule 12(a) of the Bankruptcy Rules of the District Court which, in pertinent part, provides: 90 'A detailed statement shall be attached to each application for attorney fees, showing the items of service rendered, with the charge and date for each item, unless in any given case the court finds that such itemization is not practicable and directs that it may be dispensed with . . .' 91 The Bankruptcy Court never found that the keeping of time records was not practicable and never excused the keeping of such records, not did the Bankruptcy Judge say why he considered the records not kept by counsel more 'unreasonable and extraordinarily costly' than the time records they did keep. 92 The importance of the statutory requirement and the local rule are underlined by 3A Collier on Bankruptcy P62.38, at 1641-42 (14th ed. 1971) wherein counsel is advised to consider the following admonition: 93 'Appointees of the court, whether receiver, trustee, or attorney, must expect their claims to be closely scrutinized by the debtor, the creditors, and by the court, and they should be meticulous in keeping accurate accounts of the various items and elements which go to making up their claim. It will not do to state in a general way services performed, and then ask a bulk allowance.' In re National Accessories, Inc., 13 F.Supp. 278, 281 (D.C.Neb.1936). 94 Many decisions recognize that the keeping of accurate time records by attorneys in bankruptcy proceedings is indispensable. For example, see, In re Roustabout Company, 386 F.2d 354 (9th Cir. 1967); Miller v. Robinson, 378 F.2d 2, 3 (3rd Cir. 1967); In re General Economics Corporation, 360 F.2d 762, 765 (2d Cir. 1966); In re Hudson & Manhattan Railroad Co., 339 F.2d 114, 115 (2d Cir. 1964). 95