Local Rule RULE 2016-1: Applications for Compensation of Professionals.

RULE 2016-1. Applications for Compensation of Professionals.

(a) Applications. Except for applications for postpetition attorney's fees and costs pursuant to 11 U.S.C. § 506(b), or reimbursement of a petitioning creditor's fees in an involuntary case, all applications for fees and costs of professionals filed pursuant to Fed. R. Bankr. P. 2016 in cases under Chapters 7, 11, 12, 13, or 15 shall conform with Mont. LBF 17. No compensation or reimbursement of expenses shall be paid to a professional, including from a retainer, until allowed by order of the Court under this Local Rule. In all Chapter 13 plans, amended plans, or modified plans, Debtor's counsel, in conformity with Mont. LBF 19, shall estimate the total amount of their attorney fees and costs, reflect any retainer paid, and specify the total amount of attorney fees and costs to be paid through their client's plan.

U.S. Trustee has established "Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. § 330 (Appendix A to 28 C.F.R. §58). Compliance with the project billing format will only be required upon request of a party in interest and will apply only to those fees and costs incurred after such request is made.

Professional fees shall be documented through contemporaneous billing records. Each task shall be itemized separately, identifying the task performed, the amount of time involved, and the fee for each time entry. The Court may deny compensation for tasks that are lumped together in one entry if the cumulative time for those tasks exceeds one hour. Lumping shall be permitted for cumulative tasks which do not exceed one hour. Professionals shall be allowed compensation at the professional's usual hourly rate for reasonable and necessary travel time.

(b) Presumed Reasonable Fees in Chapter 13. Absent an objection by a party in interest, fees incurred in a Chapter 13 case in which a plan has been confirmed will be presumed reasonable if debtor's attorney:

(1) uses the standard form of Attorney Retention Agreement set forth in Mont. LBF 3-A;

(2) discloses the terms of compensation pursuant to Fed. R. Bankr. P. 2016(b); and

(3) seeks compensation for professional services that does not exceed $6,000.00 and costs that do not exceed $750.00. An attorney receiving presumptive compensation under this Rule may seek additional fees through an application for allowance of additional compensation and, if necessary, a motion to modify a confirmed plan.

(c) Special Rules for Chapter 11, 12, and 13 Cases. Unless otherwise approved by the Court, authorization for any professional to receive postpetition payments from debtor, or from any other sources for the debtor's benefit, must be sought by written application on proper notice and shall be granted only upon a demonstration of reasonableness and necessity. Unless the Court orders otherwise, any approved postpetition retainer or payments to professionals must be deposited into a trust account and remain in such account until the Court enters an order allowing removal. Fees in excess of the retainer held by attorney for a Chapter 12 or 13 debtor must be paid through the Chapter 12 or 13 plan as an administrative expense pursuant to 11 U.S.C. § 503(b)(2).

(d) Fees in Dismissed Cases. Within 30 days of dismissal of a case, all professionals shall file with the Court a final Fed. R. Bankr. P. 2016(b) Disclosure of Compensation, reflecting the total amount of all fees and costs that have been or will be charged to their debtor clients for all services performed through the conclusion of the case. The Court shall retain jurisdiction to order the filing of a formal fee application and to hear and rule on the reasonableness and necessity of all professional fees in dismissed cases before the entry of a Final Decree.

(e) Allowed Expenses. In addition to a professional's fees and compensation, the following expenses shall be allowed at the actual cost to the professional: postage, long-distance telephone, facsimile charges, computerized legal research, travel-related expenses, and other expenses associated with the professional's representation of the party, provided they are shown to be reasonable and necessary. Photocopy costs shall be presumed reasonable and shall be allowed at the rate of $.15 per page unless the professional proves a greater actual cost, provided they are shown to be necessary. Mileage shall be presumed reasonable and allowed at the federal rate provided by the regulations of the Internal Revenue Code for travel by private automobile unless the professional proves a greater actual cost, provided such mileage is shown to be necessary.

(f) Claims for Fees by Creditors. If a creditor wishes to recover reasonable postpetition fees, postpetition costs, or postpetition charges provided for under the agreement upon which the claim arose as a portion of creditor's allowed claim pursuant to 11 U.S.C. § 506(b), the professionals retained by such creditor must file a fee application in accordance with the standards set forth in 11 U.S.C. § 330 and Fed. R. Bankr. P. 2016(a). Each application shall also individually explain whether each of the following conditions is satisfied:

(1) The claim is an allowed secured claim;

(2) The creditor is over-secured;

(3) The fees are reasonable considering the following factors: the nature, extent, length, and value of the services rendered; the bankruptcy and non-bankruptcy experience, reputation, and ability of the lawyers; awards in similar cases; the novelty and difficulty (or lack thereof) of the questions presented; the skill requisite to perform the legal services properly; the customary fee; professional time actually spent; amount involved in potential risk; results of the cases; specialty in which attorneys may be practicing; fees sought to be applied; and distinction between partner and associates time; costs of comparable services; use (or lack thereof) of paralegals; and duplication of efforts; fees sought in proportion to the claim; and

(4) The fees are provided for under the agreement.

Reasonable fees and expenses of such professionals may be allowed by the Court as a portion of creditor's allowed claim. Prepetition fees, prepetition costs, or prepetition charges incurred before the date the debtor files the bankruptcy petition shall be itemized in creditor's proof of claim. If professional fees and costs do not exceed $900.00 plus the amount of the court filing fee for filing a motion for relief from the automatic stay pursuant to Mont. LBR 4001-1(a), such fees and costs are presumed to be reasonable, and no application will be required.

Related Authority: 11 U.S.C. §§ 330 and 506(b) Fed. R. Bankr. P. 2016 and 2017 Comment: In a Chapter 13 case, if the total amount of fees charged by debtor's attorney exceeds the presumed reasonable fee described in subpart (b) of this Local Rule, a formal fee application shall be filed with the Court detailing the total amount of fees and costs charged to debtor. If debtor's counsel anticipates that their total attorney fees may exceed the presumed reasonable fee set forth in subpart (b) of this Local Rule, they should set forth their hourly rate for services rendered beyond the no-look fee in their Fed. R. Bankr. P. 2016 disclosures of compensation (which hourly rate should be the same as set forth in the Montana Chapter 13 Model Retention Agreement, if this is employed by counsel).

All creditors are entitled to request postpetition fees if provided for in the underlying contract. See Centre Insurance Co. v. SNTL Corp. (In re SNTL Corp.), 2009 WL 1758759 (9th Cir. 2009). The Local Rule allowing fees and expenses to a creditor only applies if such creditor seeks reasonable fees and expenses as a portion of creditor's allowed claim. The Court has no interest in reviewing the fee arrangement or the fees and expenses incurred between creditor and the professional if creditor is paying such fees and expenses and is not seeking such fees and expenses as a portion of creditor's allowed claim. Pursuant to Fed. R. Bankr. P. 2002(a)(6), and Mont. LBR 2002-4, if the amount of fees and costs exceed $1,000, then debtor and all parties in interest requesting special notice must be served with the notice of application for professional fees and costs (by using Mont. LBF 18).

The factors identified above were derived from In the Matter of Lehua Hoopai, 581 F.3d 1090, 1098 (9th Cir. 2009) and In re Olson, 2020 Mont. B.R. 137, 147 (Bankr. D. Mont. 2020).