Just a couple of thoughts on ASARCO.

I think that the dissent was closer to being right than the majority opinion was (of course I think so:  I was one of four folks on this amicus brief), and that Congress should fix the problem by adopting the test that we proposed in our brief (fees for substantially prevailing).  The majority opinion will tempt parties who like objecting to fees for strategic reasons to do more of these types of objections; professionals may respond by increasing their base rates (or increasing them more rapidly) to take the possibility of objections (and unreimbursed defenses) into account; and a court's only likely response is to consider whether really obviously strategic-only objections were actually frivolous.  On the other hand, there's still the "you don't object to mine, and I won't object to yours" behavior, so maybe the opinion won't have as drastic an effect as I fear.

Our amicus brief in ASARCO was filed yesterday.

And it's here (and here). 

A short interview about bankruptcy fees on Morning Marketplace.

Here.  Thanks, Ann Heppermann!

A shout-out to a wonderful lawyer.

Patrick Driscoll took on a case that I feared was hopeless, thanks to the client's former lawyer.  Patrick stepped in, fixed the multiple mistakes that the prior lawyer had made, and got the client's plan confirmed.  BRAVO, Patrick, and thank you!

New studies on rate increases at law firms--UPDATED

The Wall Street Journal's Jennifer Smith reports that law firms are increasing rates again (here).  I'd love to see those studies mentioned in her article.  The issue of raising rates is, of course, tied to whether those higher rates are collectible.  I could raise my rate to $10,000/hour, but I don't think I could collect any fees at that rate.  And in those practice areas in which rates are reviewed by courts (like my own area of bankruptcy law), raised rates are not a slam dunk.  I'm looking forward to following this story.

Now compare that story to the one that just broke about Weil, Gotshal & Manges laying off sixty associates (here).   That leads credence to my suspicion that, although rates may be going up, the ability of any law firm to collect 100% of the bills based on those new rates may not be going up. 

Best Practices for Working with Fee Examiners

Lois Lupica and I just published an article in the ABI Journal on how best to work with fee examiners in chapter 11 cases (here).  Given the recent publication of the new USTP fee guidelines in larger cases, we think that our article is particularly timely.  We hope that you do, too.

Hey, thank you, Credit Slips!

Lois and I had a blast guest-blogging (and Lois did all of the heavy lifting). 

Today's post on Credit Slips--the ABI National Ethics Task Force's Report on compensation via section 328

Here.

This morning's Wall Street Journal article on the costs and benefits of bankruptcy examiners.

Here.  Among the article's points is that the cost of an examiner has to be compared to the benefits.  That's different, I hope, from demanding that the examiner find enough "bad things" to completely offset his costs.  The idea of "funding by bounty" creates a bad incentive to look at trees instead of forests.

But I've seen good examiners (and good fee examiners) in action.  The ability to figure out what went wrong is a necessary part of a reorganization that's successful in the long term.  And to do that, someone needs to be tasked with taking a good, hard look at what happened to create the need for a bankruptcy filing.

I particularly enjoyed the quotes from William Snyder, now at Deloitte, who's been one of the best CROs I've seen over the years.  His common-sense approach, and his ability to deflect what is often very nasty and personal comments as he's working out causes and solutions, is what makes him good.

But back to costs and benefits.  I'm an occasional fee examiner (yes, and a law professor who studies fees, among other things).  I don't think of myself as saving a lot of monetary costs.  Do I find things that should be cut or reduced?  Sure.  Professionals make mistakes, either clerical or in judgment, and typically they're comfortable fixing those mistakes themselves before I have to bring them to the court's attention.  What I do save is time--the amount of time that my team and I spend going over fee applications is time that a busy and understaffed court really can't devote to the same line-by-line review.

That time savings is also true of examiners generally.  If they do their job well, and if they're mindful of what they are costing the estate, then they can get to the bottom of things in a way that other players in a bankruptcy case just won't have the time or financial resources to do.  There is a law of diminishing marginal returns, of course, and examiners who chase down rabbit holes for too long are overspending other people's money.  But a court can take a gander at interim reports versus fees to see whether an examiner is getting out of line.  (And yes, fee examiners can chat with examiners about their bills, too.)

Bottom line?  Look at the need for an examiner and figure out in advance what goals you want that examiner to achieve.  Make sure that those goals are in the order authorizing employment, and monitor the progress of the examiner's work.  And make sure those goals are aligned with the incentives for compensating the examiner.  Avoid a bounty approach, and you're likely to get what you need to get from your examiners.

National Ethics Task Force Report--Duties of Counsel for the DIP (up on Credit Slips)

Here.

ABI National Ethics Task Force Report--Limited Scope of Representation (up on Credit Slips).

Here.

ABI National Ethics Task Force's Report -- post on Credit Slips about new proposed rule 2014

Here. 

Lois Lupica and I are guest-blogging at Credit Slips about the ABI's National Ethics Task Force Final Report.

Here's the first post, and here's Bob Lawless's very kind intro. 

Missing the point about out-of-control fees and expenses.

See this story about a court disallowing some over-the-top expenses (here), especially the last three paragraphs.  Hat tip to Prof. Jessica Gabel for sending me the link to that article.

My take:  orders to show cause can be embarrassing.  Being the focus of a story about one's out-of-control expenses is always embarrassing.

Maybe the speed of law practice is such that it makes it difficult for those lawyers submitting fee apps to a court from reading the line-by-line detail of each bill, but scrimping on time reading attachments that get filed with a court is probably not the best place to save that precious time.  I would hope that the same billing judgment that should operate when sending bills to a client would also apply when submitting fees and expenses to a court.

I wrote a couple of articles about fees and expenses:  see here and here. The latter piece includes a long discussion about the book Professional Fees in Corporate Bankruptcies, by Professors Lynn LoPucki & Joseph Doherty.  I agreed with a significant portion of what LoPucki & Doherty said in the book.  (I disagreed with some other parts, but then, no book's perfect.)  The book is a good read:  useful and clear, with some striking discussions about their data.

Bottom line about this news story that started my post:  not everything is billable.  Not by a long shot.  And until lawyers return to the days where they understand that concept, there will be more stories like the one in law.com.

The transcript from the USTP Fee Guidelines meeting is up:

See here.

Thanks, Legal Ethics Forum!

Sure did appreciate this post. 

Dear Dad: OK, maybe now.

Got to say that today's NYT letter to the editor by Donald Bernstein made my day (here).

More shameless self-promotion: my article on fees in chapter 11 cases is out.

You can download it here.

Bloomberg Law podcast on bankruptcy ethics.

Here.  Thanks to Bill Rochelle and Lee Pacchia for inviting me to do one of their podcasts.

A don't-miss read over at The Faculty Lounge.

My buddy Bernie Burk's take (here) on the latest job news in yesterday's WSJ (here).  Given that I've just filed a court document bemoaning law firms' decisions to try to bill summer associate time in bankruptcy cases w/o a good explanation, and given that I'm going to talk about fees in bankruptcy this coming Thursday, this topic is near and dear to my heart.