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The 9^th Circuit Court of Appeals recognized that bankruptcy courts have the “power to establish a presumptive ‘reasonable value’ for legal fees in consumer bankruptcies.”

 In In re Eliapo, 298 B. R. 392, 397 (9th Cir. BAP 2003), the 9^th Circuit reviewed a judgment awarding the debtor’s attorney a portion of his requested fees in a consumer bankruptcy case.  The court affirmed in part and reversed in part holding that: 1) the bankruptcy court's use of the presumptive no-look guideline fees for routine Chapter 13 cases was consistent with 11 U.S.C. section 330; 2) the court's criterion for awarding additional fees beyond the presumptive no-look fees was proper under section 330; and 3) a failure to hold a hearing on the application for additional fees violated Bankruptcy Rule 2017(b).

 The court began its analysis by looking to 11 U.S.C. Section 330 which provides that the reasonableness of an award of attorney’s fees turns on the “nature, the extent, and the value of such services taking into account all relevant factors, including

A)    the time spent on such services;

B)     the rates charged for all services;

C)    whether the services were necessary…or beneficial at the time at which the service was rendered…;

D)    whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue or task addressed; and

E)     whether the compensation is reasonable based on the customary compensation charged by comparably skilled practitioners in cases other than cases under this title.

 
Although not relevant to this pre-reform case, BAPCPA has added another factor to the list of considerations.  The court shall now consider whether the attorney is board certified or otherwise has demonstrated skill and experience in the bankruptcy filed.  See 11 USC section 330(a)(3)(A)-(E).

 Against this statutory backdrop the court examined the Local Rules adopted by the bankruptcy judges of the Northern District of California.  Many bankruptcy courts adopt guidelines for establishing presumptively reasonable fees.  In holding that reliance on presumptive fee guideleines for routine services in Chapter 13 is consistent with section 330, the court noted that presumptive fees in a no-look application:

·        saves attorney time;

·        encourages efficient use of attorney time by providing fair compensation to efficient attorneys and preventing inefficient attorneys from passing on the cost of their inefficiency;

·        saves time that the bankruptcy court would have to spend examining detailed fee applications.

 
The court went on to examine the standard for awarding additional fees beyond the presumptive fees.  The bankruptcy court noted that the debtor’s attorney billed over $2200.00 for “basic services.” The guidelines provide that the maximum fee is $1400.00 for the basic case, absent extraordinary circumstances.  Debtor’s counsel in this case did not demonstrate “atypical” or “out-of-the-ordinary” circumstances.  He resolved two Trustee objections based on ordinary, matter of course problems that bankruptcy practitioners face on a regular basis.  Given this, the court concluded that the bankruptcy court’s standard for awarding additional fees beyond the basic case was appropriate and in keeping with 11 USC Section 330.