The DOJ’s United States Trustee Program (USTP), which monitors bankruptcy proceedings, has been pressing for new rules and guidelines on attorney fees in Chapter 11 bankruptcies.  On Monday, members of the agency’s U.S. Trustee Program convened a public meeting to discuss proposed guidelines that would increase government oversight of Chapter 11 filings by companies with more than $50 million in assets. 

Under new rules, law firms working these cases would have to disclose their Chapter 11 billing rates and fee applications, stop rounding up billable hours and work within present budgets.  Clifford J. White III, director of the U.S. Trustee Program, said in an email statement that the proposed changes to the 16-year-old fee guidelines would help “add transparency to the bankruptcy ststem.”

Government officials contend that bankruptcy lawyers charge higher attorney fees than other attorneys—sometimes in excess of $1000 an hour—because their clients are less apt to negotiate discounts.  The DOJ also examined whether law firms justify exorbitant rates by devoting unnecessary hours and personnel to bankruptcy cases.

Law firms and other professional groups argue the proposed changes would actually increase the already high price tag for Chapter 11 cases and create unnecessary work for professionals at a time when their clients are in crisis.  More detailed rate disclosures would be especially tough for law firms, which can be secretive about hourly rates.

CLICK HERE to read New Proposed Fee Guidelines (pdf) and for more information visit http://www.justice.gov/ust/eo/rules_regulations/guidelines/proposed.htm