Opinion
Case No. GG 17-05412-jtg
06-15-2020
IN RE: Robert Charles BLACKBURN, Debtor.
Kristen L. Krol, Debt Relief Legal Clinic, PLLC, Lansing, MI, for Debtor.
Kristen L. Krol, Debt Relief Legal Clinic, PLLC, Lansing, MI, for Debtor.
ORDER APPROVING IN PART, AND DENYING IN PART, INTERIM FEE APPLICATION
John T. Gregg, United States Bankruptcy Judge
This matter comes before the court on a fee application [Dkt. No. 32] (the "Application") filed by Debt Relief Legal Clinic, PLLC (the "Applicant"), counsel for Robert Charles Blackburn, the debtor in the above-captioned Chapter 13 case (the "Debtor"). In the Application, the Applicant requests that the court award fees in the amount of $1,398.00 and reimbursement of expenses of $162.04, which is in addition to the $3,200.00 in compensation approved on an interim basis as part of plan confirmation.
The Applicant seeks an hourly rate of $300.00 for the period after January 1, 2020. That rate is in excess of the presumptively reasonable hourly rate established in the Memorandum Regarding Allowance of Compensation and Reimbursement of Expenses, as effective October 1, 2013 (the "Fee Memorandum"). In support of the higher rate, the Applicant filed an affidavit, as corrected [Dkt. Nos. 34, 36] (the "Affidavit"). The Affidavit sets forth attendance at educational seminars, identifies bankruptcy experience and attaches the State Bar of Michigan's 2017 Economics of Law Practice Attorney Income and Billing Rate Summary Report (the "Report"). The Applicant relies on the Report as evidentiary support for her requested rate of $300.00 per hour.
The Application and Affidavit appear to be form documents in large part. During the hearing, the Applicant declined the opportunity to direct the court to any authority that might further support its position, instead electing to rely solely on the Application and Affidavit.
At a telephonic hearing held on June 11, 2020, Kristen L. Krol, Esq. appeared on behalf of the Applicant and Elizabeth T. Clark, Esq. appeared on behalf of the chapter 13 trustee Brett N. Rodgers (the "Trustee"). At the hearing, the Applicant generally relied upon the statements in the Affidavit and represented that another judge of this court has previously approved her $300 hourly rate without identifying the case(s) in which such rate had been approved. At the conclusion of the hearing, the court took the matter under advisement.
The Trustee did not take a position with respect to approval of the Application.
The court is therefore unable to determine whether this case is similar to those case(s).
For the following reasons, the court shall approve the Application in part and deny it in part. Pursuant to 11 U.S.C. § 330(a)(4)(B), the court may award compensation to counsel for a chapter 13 debtor for representing the interests of the debtor. A professional may seek interim compensation subject to final review. See 11 U.S.C. § 331. To determine whether compensation is reasonable, courts are directed to section 330(a)(3) which sets forth a non-exhaustive list of "other factors." 11 U.S.C. § 330(a)(4)(B) ; see In re Boddy , 950 F.2d 334, 337 (6th Cir. 1991). A professional seeking approval of fees and expenses bears the burden of proof by a preponderance of the evidence. In re Ulrich , 517 B.R. 77, 80 (Bankr. E.D. Mich. 2014) (citations omitted) (burden not to be taken lightly, given that "every dollar expended on legal fees results in a dollar less that is available for distribution to the creditors or use by debtor").
In its Fee Memorandum, the court has established presumptively reasonable hourly rates for attorneys representing chapter 13 debtors. Nevertheless, an attorney may always, consistent with the Sixth Circuit's decision in Boddy , request an hourly rate that exceeds those established in the Fee Memorandum. As this court has explained, the presumptive hourly rate is neither a floor nor a ceiling. In re Allison , 578 B.R. 782, 785 (Bankr W.D. Mich. 2018).
In Allison , this court considered whether to award an hourly rate of $300.00 to two board-certified attorneys . Id. The court set forth certain non-exhaustive factors it considers when determining whether an attorney has satisfied his or her burden to justify a higher rate: (1) whether the time spent was appropriate in light of the complexity, importance and nature of the case; (2) whether the services provided were necessary to the debtor's case; (3) whether the applicant has sought compensation for non-substantive services such as administrative or clerical tasks performed by attorneys or paralegals; (4) whether the applicant has limited its services to matters of benefit to the debtor; (5) the attorney's experience representing chapter 13 debtors in various proceedings, including whether the attorney is board-certified; (6) the attorney's attendance at and participation as a speaker at educational seminars beyond the minimum level required by the Fee Memorandum; and (7) any empirical studies as to rates charged by other attorneys. Id. at 785-86. Another factor of particular importance to the court is the potential impact that fees might have on the chapter 13 debtor or feasibility of the plan. Id. at 783.
This court concludes that the Applicant is not entitled to a rate of $300.00 per hour in this case for several reasons. First, this case is not complex. The Debtor's plan was confirmed in early 2018 after the Debtor filed one preconfirmation amendment. The Trustee filed and quickly withdrew one motion to dismiss. One post-confirmation plan amendment was approved without objection. The Applicant did not cite any statutory authority, applicable rules or case law in either the response to the motion to dismiss, the preconfirmation amendment or the post-confirmation amendment. In fact, those documents are only one page each and fairly routine in chapter 13 cases.
Second, the Applicant has on multiple occasions sought fees for non-compensable clerical services or for non-substantive services performed by the Applicant. Section 330 contemplates compensation for legal services, but attorneys may not be compensated for purely clerical work because such work is built into the attorney's overhead. See, e.g. , In re Newman , 270 B.R. 845, 849 (Bankr. S.D. Ohio 2001) (citation omitted). Clerical work involves tasks that do not require the exercise of professional judgment or rendering legal advice. See In re Ulrich , 517 B.R. 77, 81-82 (Bankr. E.D. Mich. 2014) ; see also In re Acevedo , 2014 WL 6775272, at *5 (Bankr. W.D. Mich. Nov. 24, 2014) (compensation for clerical or paraprofessional services should not be at an attorney's rate, regardless of whether attorney in fact performs the services).
In its independent review of the Application, the court notes the following problematic time entries: 0.2 on April 30, 2019 for redacting and forwarding tax returns to the Trustee, 0.1 on October 8, 2019 for saving amended schedules to the file, 0.2 on October 9, 2019 for receiving and filing a certificate of service, 0.3 on November 7, 2019 for filing an affidavit of no objection, 0.2 on November 8, 2019 for receiving an order approving an amendment and forwarding it to the Debtor, and 0.2 on April 20, 2020 for redacting and forwarding tax returns to the Trustee. The time entries on November 7 and 8, 2019 are excessive in length for the tasks performed and seek compensation at an attorney rate for tasks that should have been performed by a paraprofessional. These two entries shall be reduced to 0.1 at the paralegal rate of $95, a reduction of $91. The remaining tasks did not require legal skill or knowledge and were instead clerical in nature. These time entries shall be disallowed in their entirety, a reduction of $116.50.
These time entries in the Applicant's itemized statement are not an exhaustive list, but they are representative of the Application as a whole. In future applications for compensation, the Applicant should be careful to ensure that compensation at an attorney rate is sought only for services requiring skill or expertise and clerical services are appropriately no-charged. In addition, the Applicant should not lump together multiple separate activities in a single entry without providing an amount of time for each individual activity. (Fee Memorandum at ¶ 4.)
Third, while the Applicant has represented chapter 13 debtors for a significant period of time and has attended and occasionally spoken at bankruptcy educational seminars, her experience does not rise to the level of the board-certified attorneys in Allison . Those attorneys had practiced bankruptcy law at a high level for over thirty and ten years, respectively, and had spoken at numerous educational seminars, apart from obtaining board certification. While the Applicant has practiced for twenty-two years, the length of practice is not necessarily synonymous with experience.
Board certification requires an attorney to have substantial practice experience in bankruptcy law, attend continuing legal education in excess of the required amounts in the Fee Memorandum, obtain numerous references from fellow practitioners, and satisfactorily pass a written examination regarding bankruptcy law. In addition, and crucial to the Fee Memorandum's conclusion that board-certified attorneys warrant a higher presumptive rate, attorneys must continue to attend legal education in excess of the Fee Memorandum requirements to retain their certification. The court encourages Ms. Krol to seek board certification.
Fourth, the Report relied upon by the Applicant does not support a rate of $300.00 per hour. The mean rates highlighted by the Applicant in the Report of solo practitioner attorneys with a similar length of time practicing in her geographic area range from $235 to $279, with one outlier at $322. Moreover, Table 7 to the Report provides that the mean hourly rate for bankruptcy debtors' attorneys is $243 and the median rate is $245. Therefore, the court finds that an hourly rate of $250.00 is a reasonable rate for the Applicant based upon her knowledge and bankruptcy experience and the rates charged by similar practitioners. Consequently, the time entries billed at $300 after January 1, 2020 will be reduced to $250, which is a total reduction of $75.00.
In addition, it is unclear whether the Debtor has been provided with notice of the increase in the Applicant's hourly rate from $220, other than the footnote in the Application. The retention agreement [Dkt. No. 6] provides that the Applicant will bill at an hourly rate of $220 which is "subject to periodic change."
To the extent the Applicant believes that the presumptive hourly rates or no-look fees in the Fee Memorandum are no longer representative of the hourly rates for bankruptcy practitioners in the Western District of Michigan, the court suggests that the Applicant take an active role in the Debtors' Bar of West Michigan by assisting it to prepare and submit a written request to increase the no-look fee and presumptive hourly rates. Such increases are long overdue, as the undersigned judge has stated in various decisions and during local bar seminars. See, e.g. , In re Robles , Case No. 14-07258 (Bankr. W.D. Mich. Oct. 22, 2018).
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For the foregoing reasons, the Applicant has not satisfied her burden of establishing an hourly rate of $300.00 per hour. Instead, the court finds that the Applicant is entitled to $250.00 hour, an increase of $30.00 over the presumptive hourly rate in the Fee Memorandum. The court shall award the Applicant compensation in a reduced amount of $1,115.50 and reimbursement of expenses in the amount of $162.04 in this case. Nothing shall preclude the Applicant from seeking a higher or lower rate in other bankruptcy cases based on the factors set forth herein, among others.
IT IS HEREBY ORDERED THAT:
1. The Application is approved in part and denied in part.
2. The Applicant is awarded compensation and reimbursement of expenses on an interim basis in the additional amount of $1,277.54 pursuant to 11 U.S.C. § 331.
3. This court shall retain jurisdiction with respect to all matters arising from or related to the implementation of this Order.
IT IS FURTHER ORDERED that the Clerk shall serve a copy of this Order pursuant to Fed. R. Bankr. P. 9022 and LBR 5005-4 upon Kristen L. Krol, Esq., Elizabeth T. Clark, Esq., the Debtor Robert C. Blackburn and via first-class United States mail, postage prepaid upon:
Matthew W. Cheney, Esq.
Office of the United States Trustee
125 Ottawa Ave. NW, Ste. 200R
Grand Rapids, MI 49503