[CLBS] Fwd: Bk Listserve question

[Robert Maynes]

Begin forwarded message:

From: Ryan Dustin <dustin at thwlaw.com<mailto:dustin at thwlaw.com>>
Subject: Bk Listserve question
Date: September 16, 2016 at 10:01:33 AM MDT
To: Robert Maynes <mayneslaw at hotmail.com<mailto:mayneslaw at hotmail.com>>

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Rob,

I can’t seem to get this to post to the bk listserve. Since you seem to be the go-to guy around here, would you mind putting this up for me?

Law firm obtained a judgment on behalf of two clients in an underlying case. Under the applicable statute, the law firm is entitled to an award of attorneys fees. After entry of the judgment, but before the judge issued an order on the attorneys fees, one of the two clients filed bankruptcy. The fee agreement between the law firm and the two clients on the underlying case states that the firm is entitled to the greater of a percentage of the total award, or the fees actually awarded by the court. The fees actually awarded by the court exceed the agreed upon percentage of the total.

The firm’s position vis-a-vis the bankruptcy is that the law firm is entitled to the entire amount awarded as attorneys fees pursuant to the fee agreement. In other words, the attorneys fees attributable to the client who filed bankruptcy are either not part of the bankruptcy estate or those attorneys fees pass through the bankruptcy estate unaffected because of the fee agreement between the law firm and both clients. Of the course, the clients are entitled to the entire amount of the judgment minus costs, per the fee agreement in the underlying case.

The client’s bankruptcy trustee believes that the fees attributable to that client’s portion of the underlying case are part of the bankruptcy estate along with the judgment and the firm would get its pro rata share rather than the entire amount of the attorneys fee. Essentially law firm and trustee disagree over the treatment in bankruptcy of the fee agreement in the underlying case. Does the agreement give the law firm the right to the entire fee award because that is not money that belongs to the client or would pass through the client’s hands without the bankruptcy; or are those fees included in the bankruptcy estate because the law firm would not have earned those fees without representing the client? Neither the firm nor the trustee is able to point to any compelling authority. Any assistance sorting this out would be greatly appreciated.


Ryan S. Dustin
2635 Channing Way
Idaho Falls, ID  83404
(208) 522-1230 (tel)
(208) 522-1277 (fax)
www.thwlaw.com<http://www.thwlaw.com/>

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