RULE 2016-1 COMPENSATION OF PROFESSIONALS

(a)    General.  All applications made pursuant to Sections 330 and 331 for compensation for professional services rendered, with the exception of applications from Trustees seeking compensation as limited by Section 326, must comply with this Rule. If a professional, whose compensation is subject to approval under Section 330, accepts a retainer from any source for future services in a case in this Court, the professional must obtain Court approval before drawing against the retainer. 

(b)    Application Cover Sheet.  Except for compensation in chapter 13 cases described in subdivision (l) of this Rule, each application must begin with an application cover sheet. This document and all forms referenced in these Rules can be found on the Court's website at www.alnb.uscourts.gov/localforms.cfm.  Each cover sheet must include: 

 

(1)  The name of applicant;

(2)  The date the application for employment was filed;

(3)  The date of the order authorizing employment and the authorized terms and conditions of employment, if any;

(4)  To whom the services were provided;

(5)  The period for which compensation is sought;

(6)  The amount of compensation and expenses sought;

(7)  A designation of whether the application is a final or interim application and, if an interim application, designate whether it is a second, third, etc. application;

(8)  If not the first application filed in the case by the applicant, a disclosure of the dates, periods, compensation, and expenses allowed for each of the prior applications;

(9)  The aggregate amount of compensation and expenses allowed to date; and 

(10)  The aggregate amount of compensation and expenses paid to date.

The Bankruptcy Administrator's office must review every application and report to the Court whether the application complies with this Rule. 

(c)    Narrative Summary.  With the exception of interim applications for an amount less than $25,000.00 or final applications for compensation where the cumulative total of compensation sought in the final application and in any interim applications is less than $25,000.00, each application must include a narrative summary that includes the following:

 

(1)  A summary of compensation requested, which explains the general nature of the work performed;

(2)  A description of the individuals who performed the services for which compensation is sought including the following for each:

 

(A)  Name;

(B)  Position within the organization such as partner, associate, paralegal, legal assistant, or law clerk;

(C)  Hourly rate at which each customarily bills time;

(D)  The total hours worked by the individual during the time period addressed by the application;

(E)  The qualifications and experience of each individual who performed work for which compensation is requested, especially the extent of all bankruptcy experience or other specialized experience actually used during the course of the individual's employment in the case; and

(F)  A statement of prevailing market rates in the relevant professional community for similar services performed by professionals with reasonably comparable skills, experience, and reputation to the individuals who performed the services for which compensation is requested as well as a statement of the cost in the community of comparable services in nonbankruptcy cases. If the rates or costs are challenged, the applicant shall provide admissible evidence at a hearing; and

 

(3)  A discussion of the twelve factors first enunciated in Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), a civil rights case, and made applicable to compensation determinations in bankruptcy in Am. Benefit Life Ins. Co. v. Baddock (In re First Colonial Corp. of Am.), 544 F.2d 1291, 1298-99 (5th Cir. 1977).

(d)       Project Summaries.  With the exception of interim applications for an amount less than $25,000.00 or final applications for compensation where the cumulative total of compensation sought in the final application and in any interim applications is less than $25,000.00, each application must include a summary for each project within the case.  The form located on the Court's website at www.alnb.uscourts.gov/localforms.cfm is an acceptable form for project summaries.  Each summary should include the following:

 

(1)  A title for each project;

(2)  The general nature of the project and circumstances involved;

(3)  The amount of the requested compensation attributable to the project;

(4)  The amount of time attributable to the project;

(5)  The objective of the project, such as what the applicant had originally hoped (or hopes if the project is not complete) to accomplish as a result of the effort consumed by the project;

(6)  Any particular problems or difficulties encountered; and

(7)  The disposition (or expected disposition) of the project, including what was actually accomplished as a result of the effort put into the project. 

(e)    Summary of Expenses.  With the exception of interim applications for an amount less than $25,000.00 or final applications for compensation where the cumulative total of compensation sought in the final application and in any interim applications is less than $25,000.00, each application must include a summary of expenses.  The form located on the Court's website at www.alnb.uscourts.gov/localforms.cfm is an acceptable form for summaries of expenses.  A summary should include the following:

 

(1)  Expense items grouped by category;

(2)  The total charges for each category;

(3)  A brief explanation of the necessity for the expense category; and

(4)  An explanation of the method of calculation of the total for each category.

 

(f)     Actual Chronological Time Entries.  Copies of billing records incorporating contemporaneously generated time entries must be attached to the application. All time entries should describe the tasks performed.  Each entry should indicate what type of work was done, such as a telephone call, research, conference, document drafting, or attendance at a hearing or a deposition. Each entry should also include the date the work was done, the time spent performing the work, the individual who performed the work, the subject matter of the work, and, if not readily apparent, the benefit to the estate resulting from the work or the relevance of the work to the administration of the estate. For example:

 

(1)  When describing a telephone conversation, the applicant should name all participants to the conversation and the date and subject matter of the conversation;

(2)  Entries for drafting and reviewing documents should specify the documents involved and the matters to which they pertain;

(3)  Entries for appearing in Court and at depositions should indicate the nature of the hearing attended or the name of the individual deposed and the project to which the hearing or deposition is related.  If more than one applicant from the same organization participated in the hearing or deposition and that applicant also requests compensation because of such participation, the application should clearly indicate why the participation of both applicants was necessary;

(4)  When describing conferences or meetings, the applicant should name all participants and note the subject matter and purpose of the conference or meeting.  If more than one applicant from the same organization participated in the conference or meeting and that applicant also requests compensation because of such participation, the application should clearly indicate why the participation of both applicants was necessary; and

(5)  Time entries for research should note the subject matter of the research and the use of the material.

(g)    Actual Expense Items Grouped By Category.  All expense items must be itemized with the nature of and the necessity of each expense explained.  All items should be grouped by category. Category names should be consistent with the summary category names in subdivision (d) of this Rule.  Total amounts for all line item expenses in a particular category should reconcile with the summary category amounts in the expense summary. Each expense itemization should contain the following:

 

(1)  The date and a description of the expense;

(2)  The specific matter to which the expense relates, excluding de minimis photocopies or de minimis postage;

(3)  The justification for the expense if not readily apparent and an explanation of the expense if it is unusual in type or amount; and

(4)  Copies of all receipts excluding de minimis expenses.

 

(h)     Minimum Time Blocks.  When preparing the application, the applicant should consider that Section 330(a) authorizes compensation for services only to the extent the services are actually performed.  The use of minimum time blocks to report services may frustrate Section 330(a) and should be avoided. The use of minimum time blocks of .1 hours is acceptable.

(i)     Lumping.  Applications must separately indicate itemized time for performing each discrete task. Grouping tasks in a single description within one total time allotment is known as lumping and does not comply with Bankruptcy Rule 2016(a).  The primary problem with lumping is that it precludes the Court from determining the exact time spent performing a single task and prevents the Court from assessing the reasonableness of the time spent or compensation requested for performing the task.  The Court may be unable to segregate compensable services from noncompensable services or be unable to identify services for which the applicant would otherwise be paid if properly described.

(j)     Verification.  The application must contain a statement that verifies the information contained in the application.

(k)     Filing and Service.  At the time of filing, the applicant must serve a copy of each application upon the following:

 

•  the Trustee;

•  the Bankruptcy Administrator;

•  the debtor; and

•  any committee appointed in the case.

The applicant must attach a certificate of service to the application.

(l)         Compensation for Debtors' Attorneys in Chapter 13 Cases. An attorney in a chapter 13 case is relieved from filing a detailed application for compensation as required by Bankruptcy Rule 2016 if the attorney complies with all of the following conditions and requirements: 

 

(1)  Files a Bankruptcy Rule 2016(b) Disclosure of Compensation reflecting that the attorney will perform all required and necessary services for the debtor including, but not limited to,

 

(A)  Counseling with the debtor;

(B)  Preparing and filing the chapter 13 petition and other documents;

(C)  Attending the meeting(s) of creditors and confirmation hearing(s) (the attorney of record or an attorney with the law firm of record must appear and comply with this requirement);

(D)  Reviewing and filing claims and objecting to claims as necessary;

(E)  Filing amendments, motions, adversary proceedings, answers in adversary proceedings, or any other required pleadings;

(F)  Attending all hearings when required;

(G)  Assisting the debtor in petitioning the Court to employ special counsel, to seek approval of settlements or compromises and to request approval of compensation for special counsel;

(H)  Vigorously pursuing all objections to claims and adversary proceedings filed on behalf of the debtor to a final order or judgement; and

(I)  Vigorously defending all adversary proceedings filed against the debtor to final order or judgment.

 

(2)  Charges total compensation that does not exceed the amount set forth on the Court's website at http://www.alnb.uscourts.gov/localforms.cfm.  The compensation charged must be commensurate with the nature and complexity of the case and be based upon the reasonably anticipated amount of time to be expended on the case. 

(3)  Provides competent services consistent with and in compliance with the Code and Bankruptcy Rules. 

(4)  Includes in the chapter 13 plan a detailed proposal consistent with the Code providing how the Trustee will distribute and pay compensation to the attorney and disclosing whether any portion of the compensation was paid pre-petition. 

 

If a debtor's attorney fails to comply with this subdivision (l), the Court may refrain from awarding compensation, reduce compensation, or require the attorney to file an application for compensation. Attorneys are prohibited from advising clients or the public that this Court requires any minimum or maximum compensation for a chapter 13 case. This Rule does not seek to set any compensation in any chapter 13 case, and it does not and is not intended to set any minimum or maximum compensation in any chapter 13 case filed in this Court.

(m)    Seeking Additional Compensation.  If a debtor's attorney is awarded compensation pursuant to subdivision (l) of this Rule and thereafter seeks additional compensation, the attorney must file a detailed application for compensation for all compensation in the case as described in this Rule and pursuant to Bankruptcy Rule 2016(a) and applicable law.  The attorney seeking additional compensation must be prepared at the hearing to provide evidence as to the extraordinary tasks required in the case and the reason additional compensation is sought and due.

(n)    Electing to File Applications for Compensation in Chapter 13 Cases.  A chapter 13 debtor's attorney may elect not to seek compensation under subdivision (l) of this Rule.  In that event, the attorney must file a detailed application for all compensation in the case as described in this Rule and pursuant to Bankruptcy Rule 2016(a) and applicable law.

(o)    Review of Applications for Compensation in Chapter 13 Cases.  The Trustee must review each request or application for compensation described in subdivisions (l), (m), and (n) of this Rule based on the complexity of the case, the services provided by the debtor's attorney, and relevant factors regarding awards of compensation, including the attorney's skill, experience, and competence.  The Trustee must object to the requested compensation if the request appears to be unreasonable, excessive, or inconsistent with the Code or Bankruptcy Rules.  The Trustee must advise the Court if the attorney fails to appear in person at any creditor meeting or hearing.

(p)    Dismissal or Conversion.  In the event no plan is confirmed and the case is dismissed or converted, the Court may award compensation in accordance with the Code, the Bankruptcy Rules, and applicable law.

(Eff. 7/1/2010)