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#2308 signed 3-7-97

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS








In re:

DEBRA ANN CHAMBERLAIN,

DEBTOR(S).





CASE NO. 95-41182-13

CHAPTER 13





ORDER ON MOTION FOR APPROVAL OF

DISBURSEMENT OF SETTLEMENT PROCEEDS


This matter is before the Court on the motion of the debtor's special counsel for approval of his proposed disbursement of the proceeds of a settlement his firm obtained for her. Special counsel David W. White appeared for himself and his law firm. The debtor submitted a letter objecting to the proposed disbursement and appeared at a hearing on the matter. The chapter 13 trustee has also indicated some surprise at the proposal. The Court has reviewed the relevant materials and heard remarks from Mr. White and the debtor, and is now ready to rule.

A few months after she filed her chapter 13 bankruptcy, the debtor was visiting a resort in Missouri when she fell and broke her leg. She later contacted Mr. White, and they agreed he would represent her in seeking compensation from the resort on the theory its negligence had caused her injury. An application for approval of this employment was filed, and the Court entered an order prepared by Mr. White which indicated he and his firm would be allowed attorney fees not exceeding $110 per hour if the matter was resolved without filing a lawsuit, and fees not exceeding one-third of any recovery if suit was filed.

Counsel initially demanded $12,500 from the resort, but without filing suit, obtained a settlement of $7,500. Some of the details of Mr. White's proposed disbursement of this money are less than clear, but he certainly is asking that his firm be paid $4,499.50 in fees for 66.30 hours of work, and is probably also asking that the firm be reimbursed for $305.71 in expenses. The fees alone amount to 60% of the settlement proceeds. Under the circumstances, the Court cannot allow all the fees requested.

Even if it were inclined to allow hourly fees, the Court notes it would disallow many of the fees requested. For example, the Court could not approve sending two people on two occasions from Overland Park, Kansas, to Clinton, Missouri, to view, photograph, and investigate the accident scene. Counsel's explanation of the need for this duplication of fees was not convincing. On the whole, it seems unreasonable to run up almost $4,500 in fees trying to collect on a claim expected to be worth only about $12,500. See 11 U.S.C.A. §329(b). Rather than carefully analyzing all the hourly fees requested, though, the Court will apply counsel's potential one-third contingent fee to cap the recoverable fees even though no suit was ever filed. Otherwise, as it turned out, counsel had an incentive not to file suit simply to be able to recover more in fees. Under the agreement stated in counsel's pleadings and applied in its motion, and the circumstances that have resulted, the debtor would owe significantly less fees if instead of simply settling the matter, counsel had quickly generated a form petition and paid a state court filing fee, but taken no further action on the suit. Consequently, the Court will allow counsel to recover only a one-third contingent fee. The reimbursement of expenses that the firm seeks seems reasonable except for the travel charges for two trips to the accident scene; one of the charges will be disallowed. Expenses of $256.11 may be reimbursed to the firm. The fees and expenses allowed must be calculated as required by Rule 1.5(d) of the Model Rules of Professional Conduct, as adopted by the Kansas Supreme Court. 1996 Kan. Ct. R. Annot. 277.

Because the ambiguities in counsel's motion prevent the Court from doing so, Mr. White is hereby directed to prepare an order allowing the fees as explained above, and otherwise providing for the proper disbursement of the settlement proceeds. He should then send a copy to the debtor personally for her review, and send the original with his signature to the trustee for him to sign and forward to the Court. Ms. Chamberlain will have ten days after the copy is mailed to her to file any objection she may have to the proposed order.

IT IS SO ORDERED.

Dated at Topeka, Kansas, this _____ day of March, 1997.













__________________________________

JAMES A. PUSATERI

CHIEF BANKRUPTCY JUDGE

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