In 1996, in accordance with 28 U.S.C. § 586, the United States Trustee Program (“USTP”) promulgated Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses filed under 11 U.S.C. § 330 (“1996 guidelines”).  The fee guidelines are statements of policy that the USTP follows when reviewing applications for compensation.  The USTP is revising the 1996 guidelines in phases.  On November 4, 2011, the USTP posted for public comment proposed guidelines for reviewing applications for attorney compensation in larger chapter 11 cases (more than $50 million in combined assets and liabilities, aggregated for jointly administered cases) (“proposed guidelines”).  The comment period on the proposed guidelines ended on January 31, 2012.   The comments received as of that date, along with the proposed guidelines and the 1996 guidelines, are available for review below.

Many of the commenters, as well as some who did not submit written comments, requested the opportunity to meet with representatives of the USTP to discuss the proposed guidelines.  Accordingly, the USTP will hold a public meeting on the proposed guidelines in Washington, DC, on June 4, 2012, from 9:30 a.m. to 12 noon, at the United States Department of Justice, 950 Pennsylvania Ave., NW (7th Floor Conference Room). 

In conjunction with the public meeting, the USTP has re-opened the comment period both for supplemental comments from those who have already commented, as well as for new comments from those who did not submit comments during the initial comment period.    Supplemental and new comments will be accepted through May 21, 2012, and should be submitted to USTP.Fee.Guidelines@usdoj.gov.  All written comments will be made available for public inspection online at www.justice.gov/ust.  See Privacy Act Notice below.

The June 4, 2012, public meeting will be conducted by representatives of the USTP.  Participants who have submitted written comments may sign up to make an oral presentation of no longer than five (5) minutes.  The oral presentation should be a summary of the written comments, and participants should be prepared to respond orally to questions from representatives of the USTP.  The meeting will be transcribed, and the transcript will be publicly posted on the USTP’s Web site.  See Privacy Act Notice Below.

Those who plan to attend the public meeting should RSVP to USTP.Fee.Guidelines@usdoj.gov no later than May 21, 2012.  The RSVP must include the participant’s name, address, phone, and email address, and must indicate whether the participant intends to make an oral presentation.   An email confirming receipt of the RSVP will be provided.

All those attending the meeting must be on the confirmed attendance list, present government-issued photo identification (such as a valid driver’s license), and enter the Department through the visitor’s entrance on Constitution Avenue, NW, between 9th and 10th Streets.  Attendees may begin arriving at 8:30 a.m. ET and should allow a minimum of 15 minutes to clear security and be escorted to the meeting room before 9:30 a.m.

After the public meeting, the USTP will review and analyze the written comments and the oral statements from the meeting and finalize the guidelines.  The final guidelines will be published in the Federal Register or otherwise be publicly available, along with the USTP’s analysis of the comments.

Any press inquiries regarding logistics should be directed to the USTP’s Public Information Officer at jane.limprecht@usdoj.gov.

 *Please note that all written submissions, including comments and statements, and the meeting transcript will be made available for public inspection online at www.justice.gov/ust and will include the identity and professional affiliations, if any, of the commenter or speaker.  The posted materials will include information voluntarily submitted by the commenter or speaker, including personal identifying information (such as your name, address, etc.).  If you want to submit personal identifying information as part of your comment or statement but do not want it to be posted online, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment or statement.  You must also prominently identify all personal identifying information to be redacted within the comment or statement.  Similarly, if you want to submit confidential business information as part of your comment or statement but do not want it to be posted online, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment or statement.  You must also prominently identify all confidential business information to be redacted within the comment or statement.  If a comment or statement has so much confidential business information that it cannot effectively be redacted, all or part of that comment or statement may not be posted.

In 1996, in accordance with 28 U.S.C. § 586, the United States Trustee Program (“USTP”) promulgated Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses filed under 11 U.S.C. § 330 (“1996 guidelines”).  The USTP is revising the 1996 guidelines in phases and drafted new proposed guidelines for reviewing applications for attorney compensation in larger chapter 11 cases (more than $50 million in combined assets and liabilities, aggregated for jointly administered cases) (“proposed guidelines”) [PDF - 278 KB].  The USTP invited public review of and comment on these proposed guidelines, and the comment period ended on January 31, 2012.

The USTP received 22 comments on the proposed guidelines, which are available for review below. The USTP analysis of the comments will be published in the Federal Register along with the final guidelines when promulgated.

The 1996 guidelines remain in effect for the USTP review of applications for compensation in all cases.  Only upon publication of the proposed guidelines in final form in the Federal Register will applications for attorney compensation in larger chapter 11 cases be subject to review under the new guidelines.  Until the USTP adopts other superseding guidelines, the 1996 guidelines will continue in effect for the review of applications filed under section 330 in (1) larger chapter 11 cases by those seeking compensation who are not attorneys, (2) all chapter 11 cases below the $50 million threshold, and (3) cases under other chapters of the Bankruptcy Code.

As discussed in the remarks of Director Cliff White to the National Bankruptcy Conference [PDF - 68 KB],  the USTP seeks to achieve the following with the proposed guidelines:

1. Ensure bankruptcy professional fees are subject to the same client-driven market forces, scrutiny, and accountability that apply in non-bankruptcy engagements.
2. Ensure adherence to the requirements of 11 U.S.C. § 330 so that all professional compensation is reasonable and necessary, particularly as compared to the market measured both by the professional’s own billing practices for bankruptcy and non-bankruptcy engagements and those of its peers.
3. Increase disclosure and transparency in the billing practices of professionals seeking compensation from the estate.
4. Increase client and constituent accountability for overseeing the fees and billing practices of their professionals who are being paid by the estate.
5. Encourage the adoption of budgets and staffing plans developed between clients and their professionals to bring discipline, predictability, and client involvement and accountability to the bankruptcy process.
6. Increase the efficiency and decrease the administrative burden of review.
7. Maintain the burden of proof on the professional seeking compensation from the estate to establish that fees and expenses are reasonable and necessary even absent an objection.
8. Increase public confidence in the integrity of the bankruptcy compensation process.

Consistent with these objectives, the proposed guidelines implement six key changes:

1. Electronic Data: Fee applications should be submitted in an open electronic data format.  The use of electronic billing has become common, if not standard, with respect to most significant engagements outside of bankruptcy. This requirement would impose little or no additional burden on applicants.
   
   
2. Categories and Tasks:  To more precisely capture key actions in a bankruptcy case, new project categories, as well as activity-based sub-categories, have been added.  These additions are generally consistent with the Uniform Task-Based Management System (“UTBMS”) Bankruptcy Code Set and other codes developed or ratified by the UTBMS governing bodies.
   
   
3. Verified and Other Statements:  Clients should provide verified statements in connection with a fee application to disclose, among other matters, whether the client reviewed fees and compared them to its approved budget, whether the attorney and client discussed billing rates and terms compared to the attorney’s other engagements, and whether the client gave prior approval for any rate increases.

Further, attorneys should answer specific questions regarding, among other matters, billing rates for other engagements, whether the attorney offered and agreed to any variations from standard rates, and whether the application includes any entries for reviewing and redacting billing records for privileged information.


Attorneys also should answer additional questions in conjunction with the retention application that could affect future applications for compensation, including whether the attorney informed the client how fees and terms for the engagement compare to the firm’s other engagements and whether any firm client was charged lower or higher rates in the preceding 12 months.

4. Budgets and Staffing Plans:  To bring predictability and accountability to the attorney-client relationship, and to provide a benchmark for evaluating fee applications, budgets and staffing plans will be encouraged. 
   
   
5. Additional Disclosures:  For all professionals included in a fee application, the United States Trustee will seek disclosure of the lowest, highest, and average rates billed for the preceding year for estate-paid bankruptcy work and for all other work combined. The United States Trustee will also seek disclosure of information by professional category (e.g., partner, associate, etc.) about a firm’s lowest, highest, and average rates for the preceding year in its bankruptcy practice and all its other practices combined, if any.  Applicants should also disclose the amount of fees attributable to any rate increases since the inception of the case.  Applicants representing debtors should estimate the fees sought that would have been incurred regardless of the bankruptcy.
   
   
6. Special Fee Review Procedures: The proposed guidelines set forth models and principles for the use of independent fee examiners, fee committees, and fee committees with independent chairs.