Opinion ID: 1577466
Heading Depth: 1
Heading Rank: 4

Heading: Cohn's Billing Method

Text: Rather than applying for a fee only once, at the inception of the Chapter 13 case, Cohn testified before the Board, and the documentary evidence reflects, that his general practice was to divide his bankruptcy representation into two parts. First, he charged his clients an initial fee (i.e., the presumptively reasonable fee) to obtain confirmation of their Chapter 13 plans and submitted that fee to the court as his section 329 disclosure. The record shows that in Cohn's section 329 disclosures, he stated that pursuant to a written contract, the fee was for all work through and including confirmation. Second, as provided in Cohn's written contract, Cohn agreed to bill his clients at an hourly rate for all additional work performed after the confirmation of the plan. This proposed billing was not disclosed as required by section 329. According to the testimony and documentary evidence, once a client incurred post-confirmation charges, Cohn did not bill his client, did not itemize his services or hours worked, and did not provide notice directly to the client. Rather than applying for attorney's fees by using section 330, which would have required submitting itemized billing, Cohn filed a proof of claim pursuant to section 1305 as a general creditor with the bankruptcy court for a specific sum, but did not identify the sum as attorney's fees. Section 1305 provides that a proof of claim may be filed by any entity that holds a claim against the debtor, provided the claim is for a consumer debt, that arises after the date of the order for relief under this chapter, and that is for property or services necessary for the debtor's performance under the plan. 11 U.S.C. § 1305(a). However, such a claim shall be disallowed if the holder of such claim knew or should have known that prior approval by the trustee of the debtor's incurring the obligation was practicable and was not obtained. 11 U.S.C. § 1305(c). Examples of the proof[s] of claim authorized by this section and entered in the record reflect that it is a simple creditor's form requiring little detail and no supporting documentation. The trustee testified before the hearing panel that Cohn never obtained prior approval before filing these proofs of claim as a creditor under section 1305. The trustee testified before the hearing panel that due to the high volume of cases and claims in the bankruptcy court, [4] proofs of claim under section 1305 were administratively approved by the trustee's office as a matter of course. Once the proof of claim was approved, a notice of the claim, stamped with the trustee's and the judge's signature, was sent to the client. Clients had ten days to object to the claim, after which no action could be taken by the client. If there was no objection, the fees were added to the estate as an unsecured claim, meaning they would be paid at whatever percentage of their face value had been approved by the court for the plan.