Reuters: Regulatory News: Fee overhaul for U.S. bankruptcy lawyers to take effect Nov. 1

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Fee overhaul for U.S. bankruptcy lawyers to take effect Nov. 1 Jun 11th 2013, 16:12 Tue Jun 11, 2013 12:12pm EDT * Lawyers would have to justify big rate hikes * Would also have to provide rough budgets By Nick Brown June 11 (Reuters) - Attorneys in big bankruptcy cases will soon have to make an array of disclosures on how they bill clients under new fee guidelines finalized by the U.S. Department of Justice on Tuesday. Lawyers will have to justify any increases in their hourly rates of more than 10 percent and will be asked to provide rough budgets. These were points of contention over the last year as the U.S. Trustee Program, the Justice Department's bankruptcy watchdog, rolled out early drafts of the new guidelines. The guidelines, to go into effect Nov. 1, will apply to bankruptcy cases for companies with more than $50 million in assets and $50 million in liabilities. Courts are not legally obligated to implement them, but in general, most courts follow guidelines laid out by the Justice Department. During a comment period late last year, large law firms complained that the overhaul would ignore market pricing and impose burdensome tasks on lawyers, with little benefit to clients. Advisers of a bankrupt company, as well as some of the company's creditors, are paid out of the company's estate. Because legal fees are paid ahead of other creditor claims, higher legal fees mean less money for creditors, making legal costs a hot issue in the bankruptcy realm. At first, the guidelines will apply only to lawyers, not to financial advisers and other professionals. But Trustee Program spokeswoman Jane Limprecht said new fee guidelines for investment bankers, financial advisers and accountants could be in the offing. "After making some progress on implementation and enforcement of the big-case attorney fee guidelines, we will move forward" with overhauls for other advisers, Limprecht said. Clifford White, director of the Trustee Program, scheduled a conference call for media Tuesday afternoon. Link this Share this Digg this Email Reprints

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