Alexandria, Va. — Clifford J. White III, the director of the Executive Office for U.S. Trustees, discusses the U.S. Trustee Program’s (USTP) recently released professional fee guidelines that will apply to cases filed on or after Nov. 1 that list $50 million or more in assets and liabilities. “The new guidelines can make the fee-review process more efficient for the courts, U.S. Trustees and interested parties,” White writes in the August edition of the ABI Journal. “If everyone works together to implement the guidelines in a reasonable and consistent manner, public confidence in the integrity of the bankruptcy compensation process can be restored.”

The USTP spent nearly two years consulting with professionals and reviewing comments submitted from both the public and bankruptcy arena. White explains how these comments reflected the growing view that bankruptcy lawyers were sometimes charging premiums not typically charged outside of the bankruptcy process. Additionally, White identifies significant advances in law office practice and technology, as well as in client-driven cost containment. “The USTP went to extraordinary lengths, beyond even what would be required for regulations under the Administrative Procedure Act, to seek input from judges, professional organizations such as the National Bankruptcy Conference, practitioners, academics and the public on these important procedural guidelines.”

White writes that the final guidelines released in June provide for the following:

- A showing that rates charged reflect market rates outside of bankruptcy. “Applicants will be asked for a concise description of the methodology used to calculate hourly blended rates if the calculation includes items other than hourly billing arrangements, and they are encouraged to supplement as appropriate to explain how the different rate structures of various practice groups affect the blended rate.”

- The use of budgets and staffing plans. “The guidelines ask that attorneys and their clients develop budgets at the outset of a budget period and then later disclose the budget with the fee application. If the fee application materially differs from the budget, professionals should explain the reason for the variation.”

- The disclosure of rate increases that occur during the representation. “The final guidelines clarify that associate step increases for advancing experience do not need to be separately disclosed or justified. However, the USTP will ensure that firms do not disguise rate increases as step increases and will expect that firms that do not distinguish between the two will disclose all rate increases."

- The submission of billing records in an open and searchable electronic format. “Currently, a firms detailed billing records or invoices are provided in a ‘static’ PDF document or paper copy, requiring a labor-intensive and difficult manual review of often thousands of pages of detailed invoices.”

- The use of fee examiners. “The guidelines encourage greater use of fee examiners to help evaluate technical compliance and assess the reasonableness of a fee request.”

- The use of efficiency counsel. “Recognizing the potential efficiencies that such counsel could bring to a case, the USTP agreed that applicants should consider how to assign and staff more routine work and whether lower-cost co-counsel should be retained for discrete types of work.”

By applying the guidelines to cases filed on or after Nov. 1, White writes that the USTP is affording time for law firms to study the guidelines and prepare for the USTP’s implementation. The USTP is also working closely with the courts to encourage them to adopt the guidelines as local rules or administrative orders. Finally, White said that the USTP will publish fillable forms prior to the Nov. 1 effective date as a resource for practitioners.

To obtain a copy of “New Fee Guidelines Enhance Transparency and Promote Market Forces in Billing,” published in the August issue of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at [email protected].

Also, if you would be interested in participating in the abiLIVE webinar on the new guidelines on Aug. 20, presented by ABI’s Ethics & Professional Compensation Committee, please contact John Hartgen. For more information on the program, please click here: http://www.abiworld.org/webinars/2013/EthicsFee/.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.