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| vol 17, num 2 | August 2019 |
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| Upshot: Multiple Sanctions Against UpRight Upheld After Bankruptcy Courts Apply Their Authority to Regulate the Conduct of Attorneys |
| In Law Solutions Chicago LLC v. United States Trustee (In re Banks), the Fifth Circuit upheld multiple sanctions against a national consumer bankruptcy law firm for misleading and neglecting clients. The district and bankruptcy court opinions thoroughly illustrate the complexities and pitfalls operating a high-volume, multi-jurisdictional law firm, and serve as a cautionary tale for debtors who search the internet for bankruptcy advice.
UpRight Law, LLC, which advertises itself as a “national law firm,” is based in Chicago and provides consumer bankruptcy referral services in many states, including Louisiana, by “partnering” with lawyers around the country. UpRight solicits consumer bankruptcy business over the internet, and collects a referral fee for signing up clients and then referring them to “partner” attorneys, who might not practice in the jurisdiction where the debtor is located. The “partner” attorneys maintain their own independent practices and are not full-time UpRight employees.
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| The Fifth Circuit’s Riley Opinion: Requesting Reimbursement of Advanced Fees Under a No‑Look Rule |
| A debtor’s attorney may be compensated or reimbursed from the estate if his fees or costs constitute an administrative expense under § 503(a). Fees and costs in a chapter 13 generally constitute an administrative expense if they are either necessary expenses to preserve the estate or are “reasonable compensation.” Debtor’s attorneys can file a detailed application to show the services rendered and expenses advanced. The bankruptcy court reviews the fee application to grant priority to the compensation deemed reasonable. Most bankruptcy courts also have a local “no-look” rule, by which fees and costs, if under a dollar threshold,
are presumed reasonable and thus payable as an administrative expense under §§ 503(b)(2) and 330(a). No-look rules ease the administrative burdens related to the approval of payment for routine fees and costs, and eliminate the need to prepare and review a detailed fee statement.
Recently, in In the Matter of Riley, the Fifth Circuit considered whether pre-filing costs for certain fees advanced by a chapter 13 debtor’s attorney could be reimbursed under the no-look rule of the Western District of Louisiana. Before its revision, that district’s no-look rule had included a provision that did not allow for reimbursement of pre-petition expense advancements beyond the threshold. But in February 2017, the rule was amended to remove that provision.
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| Ethics and Professional Compensation Committee Survey! |
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The Ethics and Professional Compensation Committee seeks your input and feedback regarding three (3) areas of interest to the Committee: (1) pro bono; (2) technology; and (3) substance abuse and mental health.
In the next few days, you will receive an email from Summer Chandler, our Special Projects Coordinator, containing a link to the survey. The survey should take approximately 10 minutes to complete, and your answers will be anonymous and confidential. The survey will be open for six (6) weeks. The results of the survey will be shared with our members and will be used to formulate future programs.
The committee leadership and ABI thank you for taking the time to assist us with this project. |
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| Ethics and Professional Compensation Committee Leadership for 2019 |
| The Ethics and Professional Compensation Committee is proud to announce our new leaders for 2019!
You can also visit the committee's homepage for more newsletter articles, relevant recordings and other committee information.
The committee is always eager to welcome new volunteers. Please contact any member of our leadership team to find out how you can get involved.
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Tara E. Nauful
Co-chair
Beal, LLC
Columbia, S.C.
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