by Thomas A. Pitta
Lowenstein Sandler PC; Roseland, N.J.
Erin S. Levin
Lowenstein Sandler PC; Roseland, N.J.
On November 18, 2010, Judge Gerber of the Southern District of New York Bankruptcy Court issued a decision on payment of non-fiduciary professional fees in In re Adelphia Communications Corp. [1] The Court allowed a number of distressed investors to be reimbursed for legal fees and other expenditures spent in competing for larger recoveries from the estate. In the Chapter 11 cases, 14 ad hoc committees and individual creditors sought reimbursement under a provision of the Debtors’ confirmed and effective Chapter 11 Plan. The total fees requested by the Applicants, the overwhelming majority of whom were distressed debt investors, totaled $88 million. The Fee Provision authorized payment of the Fees subject only to reasonableness, without requiring the Applicants to demonstrate a “substantial contribution” to the case under §503(b)(3)(D) of the Bankruptcy Code.
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Bradley Arant Boult Cummings LLP; Birmingham; Ala.
Bradley Arant Boult Cummings LLP; Birmingham; Ala.
Many cases have dealt with bankruptcy petitions filed in “bad faith.” Typically, a party in interest seeks to simply have the petition dismissed, and seeks no further relief. Infrequently, however, a party may make the difficult decision to seek the imposition of sanctions against a bad faith filer and his or her counsel to deter future abuse of the Bankruptcy Code. This article discusses two recent examples of these situations and some lessons should you ever be charged with the unenviable task of requesting sanctions against opposing counsel.
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by Scott F. Gautier
Peitzman, Weg & Kempinsky LLP; Los Angeles
In a rare opinion addressing ethical and disclosure issues in the solicitation of official committees of unsecured creditors, the court in In re Universal Building Products [1]denied the applications of two proposed counsel for the committee in the case. The court found that, among other things, counsels’ contacts with potential committee members violated ethical standards and counsel failed to adequately disclose contacts it had with another professional who solicited support for counsels’ retention and was ultimately retained by the committee. This was a hot-button opinion in the debate on the ethics of committee solicitation by attorneys.
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by Whitney R. Travis
Christian & Barton, LLP; Richmond, Va
For the past several months, the American Bar Association’s Commission on Ethics 20/20 (ABA) has been soliciting commentary on various ethics issues involving lawyers’ use of the Internet as an information-gathering device. [1] The Internet, dubbed the “information superhighway” in the early 1990s, is commonly used by attorneys to gather information pertinent to a case, such as locating statutes, researching case law and getting directions to the courthouse. However, certain websites—called networking sites—can be used by attorneys to gather personal information about people who are pertinent to case, such as adverse parties and witnesses.
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by Patrick Mohan
Barton Law Firm, P.A.; Columbia, S.C.
Steve Krause
Davis Polk & Wardwell LLP; New York
Whether it is discovery, pleadings or transactions, lawyers produce enough pages to fill countless file cabinets. As a means of alleviating the cost associated with additional physical storage space, attorneys have turned to digital storage solutions for client files, including confidential information. Unlike physical file cabinets under lock and key that only have to be protected from the elements and physical intrusion, digital storage solutions are complicated by issues of electronic security and the associated risks of breaching clients’ basic confidences as well as information protected by the attorney-client and work product privileges. The risk of viruses or hackers infiltrating digital data is greater than ever, as even the use of a personal e-mail account on a firm computer may pose a risk to sensitive client data. Despite these growing threats, many attorneys fail to take the necessary precautions in adopting digital storage solutions that best protect their clients.
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Co-Chair's Corner: News of the Ethics and Professional Compensation Committee
by Judith Greenstone Miller
Jaffe, Raitt, Heuer & Weiss, P.C.; Southfield, Mich.
Gold Lange & Majoros PC; Southfield, Mich.
Office of the U.S. Trustee, Region 4; Columbia, S.C.
The beginning of a new year is a good time to look back and assess the previous year and look forward with anticipation to a new year and new challenges. The Ethics Committee and the Professional Compensation Committee merged this year and with a great group of energetic members we have had a very successful year. At the Winter Leadership Conference in Scottsdale for the first time we paired members of the Committee with new members, who are interested in the Committee’s activities, as part of the ABI’s Ambassador Program. The educational program at Scottsdale on “Rule 2019 and Attendant Conflict of Interest Issues, Including Fiduciary Duties to the Estate” with Kevin J. Carey, Chief Bankruptcy Judge for the District of Delaware, Tracy Hope Davis, U.S. Trustee for Region 2; Richard M. Kremen,; and Richard M. Pachulski was well received and enlightening.
Our Education Directors, Kelly Stapleton of Alvarez & Marsal, New York, and Steve Schwaber, Law Office of Steven A. Schwaber; San Marino, California, have planned an interesting program to be presented at this year’s ABI Annual Spring Meeting in Washington, D.C. on “Actions to Avoid and Recover Fees.” The experienced and diverse panel will include Jeffrey R. Fine of K&L Gates LLP, Dallas; Charles M. Forman, Forman Holt Eliades & Ravin LLC, Paramus, N.J.; Eve Karasik, Stutman, Treister & Glatt, PC, Los Angeles; and Andrew R. Vara, Assistant United States Trustee, Cleveland.
The committee is initiating an effort to create an ABI Ethics Hotline that will be a resource for members to query and dialogue about ethics issues they confront. Keep an eye out for more information to follow. Special Projects under the leadership of Teresa Brown-Edwards (Potter Anderson Coroon LLP; Wilmington, Del.) is continuing to work on the proposed book entitled, Professional Ethics in Chapter 11. Chip Bowles (Greenebaum Doll & McDonald PLLC; Louisville, Ky.), the prior co-chair of the Professional Compensation Committee; Ted Gavin (NHB Advisors; Wilmington, Del.), the prior co-chair of the Ethics Committee; Prof. Nancy Rapoport, (William S. Boyd School of Law at the University of Las Vegas), a law professor who specializes in ethics; and Committee Co-Chair Judy Miller, are working together on this book.
Once again Richard Carmody, Adams & Reese LLP, Birmingham, Alabama, our Newsletter Editor, with assistance from many of our members, has put together a cutting edge newsletter with articles on unethical “friending,” committee solicitation and the Adelphia decision.
As you can see exciting things are happening with the Ethics and Professional Compensation Committee. We hope that each of you have a great year in 2011 and that you have the opportunity to joining the fun by contributing to the ongoing and exciting work of this committee. John Weiss (Alston & Bird, New York), our Member Relations Director, will be glad to help you get more involved.
