UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF KENTUCKY
WILLIAM LYNN CASTLE
DEBTORS CASE NO. 94-70140
DEBTOR CASE NO. 94-70344
These cases are before the Court on a common question of approval of attorney fees. The debtors are represented by the same attorney. No objections were filed in regard to the fee applications. However, this Court has the duty to examine sua sponte the reasonableness of the requested fees. See
In re J.F. Wagner's Sons Company, 135 B.R. 264, 266 (Bkrtcy.W.D.Ky. 1991).
The compensation of professionals is governed by 11 U.S.C.'330, which provides for "reasonable compensation for actual, necessary services." The burden is on the fee applicant to prove entitlement to fees. In re Wildman, 72 B.R. 700, 708 (Bkrtcy.N.D.Ill. 1987). The starting point for determining an award of attorney fees is the application of the "Lodestar" method, whereby "the attorney's reasonable hourly rate [is multiplied] by the number of hours reasonably expended." In re Boddy, 950 F.2d 334, at 337 (6th Cir. 1991). It is the Court's task to determine what is "reasonable".
The Court first notes a problem with the attorney's method of timekeeping. Review of the fee applications reveals that the attorney charged his time in minimum increments of one-quarter hour. This is no longer an acceptable practice in most bankruptcy jurisdictions. As stated in In re Jefsaba, Inc., 172 B.R. 786 (Bkrtcy.E.D.Pa. 1994):
[A]ll time should be recorded in increments of one-tenth of one hour or six minutes. As stated by one bankruptcy court, 'minimum charges of .10-hour increments more fairly reflect actual time involved, than do quarter hour segments.' In re Corporacion de Servicios Medico-Hospitalarios de Fajardo, Inc., 155 B.R. 1 (Bankr.D.P.R. 1993). Similarly, the bankruptcy court in In re Price, 143 B.R. 190 (Bankr.N.D.Ill. 1992) stated that the attorney's practice of billing in quarter hour increments 'inherently inflates and distorts the time actually expended, and hence is unacceptable.'
At page 801.
The Court is not suggesting that the attorney intentionally overbilled on any item. However, his use of quarter-hour increments (which for many years was accepted practice in bankruptcy courts in Kentucky) does not give an accurate picture of the time he actually spent performing the tasks for which he requests compensation.
The Court further notes that each of the fee applications under consideration here contains items that are exactly the same in every instance. The attorney bills two hours for the initial consultation and interview, for the preparation and filing of the petition, and for attendance at 341 meetings. Receipt and review of any pleading or correspondence is billed at one quarter hour. This kind of billing gives the impression that the attorney is not keeping track of the actual time he has spent, but is generating a sort of "boiler plate" fee application which varies only slightly from case to case. This is not an acceptable practice.
This Court has compared the fee applications in the present matter with several other cases in which it previously entered orders on similar fee applications: Kenneth L. Martin II and Melissa D. Martin, Case No. 94-10260; Wilma Ison, Case No. 93-10372; Eliza McKenzie, Case No. 94-70128; and Deborah L. Preston, Case No. 94-70359. The practices delineated above appear to be present in each of those cases, and the Court made appropriate fee reductions in each case. The Court will reduce the fee applications under consideration here by 25% as well.
The Court further directs the attorney to bill in one-tenth hour increments, and to bill for actual time spent performing the services for which he requests compensation. An order in conformity with this opinion will be entered separately.
By the Court -
Paul D. Deaton, Esq.
Chapter 13 Trustee