So, when a bankruptcy attorney quotes you a fee, what is it, exactly, that you are paying for? What is included, what is not included, at some point will you have to come up with more money or be left abandoned in the midst of a Federal Court proceeding that strikes even a lot of lawyers as confusing and arcane?
The answer to that question is (drum roll, please) – that depends.
I know, and lawyers wonder why it is that people seem to think you can’t get a straight answer out of us. Sigh.
Here is the interpretation. When you hire a Bankruptcy lawyer (or anyone else for that matter) you do need to find out what it is that you are hiring him to do for you. Your attorney should give you some kind of agreement, that might be a letter, that outlines what he will do for you, what he won’t do for you and what he reserves the right to charge extra for.
Here are some things that go into a basic, consumer chapter 7 Bankruptcy:
- Explanation of Bankruptcy, the terminology, the players, what it will do for you, what it won’t do for you, assets, expenses, Means Test qualifications, explanation of different chapters;
- Research into your facts and circumstances;
- Advising you of any potential problems in your case and options for dealing with them;
- Preparation of Petition, Schedules and Means test;
- Filing the case;
- Providing documents to the Trustee;
- Attendance at First Meeting of Creditors;
- Dealing with secured creditors as specified in the Statement of Intention;
- Dealing with other creditors;
- Responding to any requests for information from the U.S. Trustee or the Panel Trustee
- Filing the post petition debtor education certificate.
Please, understand, that list is not intended to be all-inclusive. That would take far too much time to put together for a blog post. It is intended to be illustrative of the kinds of things that go into a Bankruptcy case.
Now, here are some things that aren’t included in that list, because they happen, but they don’t necessarily happen in most basic, consumer cases:
- Pre-Bankruptcy exemption planning, i.e., converting a non-exempt asset (i.e., an asset you would lose when you file) into an exempt asset (an asset you get to keep even though you file for bankruptcy);
- Dealing with creditors before the case is filed;
- Adding creditors or correcting addresses after the case is filed;
- Disclosing additional assets after the case is filed;
- Defending a motion to dismiss or convert based on the Means Test figures;
- Defending a Motion to dismiss for bad faith;
- Appearing at a 2004 examination (basically, a deposition);
- Defending other motions brought by creditors, most commonly a motion for relief from stay brought by a secured creditor who would rather have the collateral than the payments you may or may not be making timely;
- Defending an adversary proceeding, which is basically a separate lawsuit filed within the scope of the bankruptcy;
- Filing an adversary proceeding got for any reason including to determine if a certain debt, like some taxes, is dischargeable;
- Determining value of assets if scheduled value challenged.
There will be considerable variance between what different attorneys do and don’t include in a flat fee, and there will be wide variance if you compare attorneys from different parts of the Country.
I don’t know anyone who includes an Adversary Proceeding in a flat fee. However, the nature of Adversary Proceedings is such that your Attorney should at least suspect one might be filed before the Bankruptcy is filed – unless there is something really important he doesn’t know about. So, that should be discussed specifically at the time the attorney quotes a fee.
I generally quote a fee that I expect will be sufficient to cover the things that I expect to come up in the case. What my fee specifically does not include, other than Adversary Proceedings, is anything that the client got wrong or should have told me about and didn’t.
The easy part of that is fixing addresses and listing additional creditors. I give my clients multiple opportunities to get their list of creditors complete, and I tell them to include all addresses that might be current or correct. So, if someone is left off and needs to be added; well, I will charge extra for that.
If a client is being sued locally odds are pretty good I will find out about it before the case is filed. If the client is being sued under a name he didn’t mention or in another jurisdiction, I might not find out about it – unless the client tells me – when I ask about other names, about lawsuits, about people who might think that the client owes them money – even if the client disagrees. If the client still doesn’t think to mention it and it becomes an issue in the Bankruptcy (and it almost certainly will), then, the client shouldn’t be surprised that I will expect additional compensation for dealing with it.
Sure, mistakes happen and omissions happen; and most of them are simple mistakes. If I make the mistake, I fix it. If the client makes the mistake, then I am going to expect the client to pay me to fix it. Sure, some mistakes and omissions can be expensive to fix (some can’t be fixed at all), but most of them can be fixed for a relatively small amount of money.
However, my fee is pretty all encompassing. Not everyone’s is, but it should be spelled out in the engagement agreement what will and won’t be covered. If it isn’t, ask. If it is, but you do’t understand it, then ask. It is your job to provide the lawyer with the information he needs. It is his job to make sure that you understand what is going on, and that includes the fee agreement.